September 30 deadline nearing for employers to submit Component 2 data to the EEOC

The PIOGA Press

(by Stephen Antonelli and Alexandra Farone)

For more than 50 years, the Equal Employment Opportunity Commission (EEOC) has required large and mid-sized employers to submit an annual report known as the EEO-1 Report, which identifies the number of employed workers in job categories based on sex, race and ethnicity. This data is now known as “Component 1” data because in 2016 the Obama administration proposed requiring a second component to this annual report that would require employers to also disclose the hours worked and annual earnings of these employees, in an effort to identify pay disparities. Known as “Component 2” data, the newly collected information should include employees’ W-2 earnings as well as hours worked in 12 pay bands for each of the 10 EEO-1 job categories.

In 2016, the Office of Management and Budget (OMB) approved the proposed requirement, and the requirement was slated to take effect in 2018. However, in 2017 the Trump administration stayed the implementation of this requirement, citing the burden of compliance upon employers. The validity of the stay became the subject of litigation in November 2017. The United States District Court for the District of Columbia vacated the stay in March 2019, and ultimately ruled to extend the Component 2 reporting deadline until September 30, 2019.

The court’s ruling had no effect on the standard May 31, 2019 deadline for employers to submit their yearly EEO-1 Reports for Component 1 data. The Department of Justice has appealed the ruling, but the requirement to comply and produce the data by September 30 remains in full force and effect during the pendency of the appeal. Therefore, by September 30 all employers with at least 100 employees are required to collect and submit Component 2 Data for a “workforce snapshot period” as selected by the employer for the reporting years 2017 and 2018. The EEOC portal website through which employers can submit information can be found at eeoccomp2.norc.org. Employers should keep the following steps in mind when preparing to produce Component 2 data:

  1. Identify an appropriate workforce snapshot period—one pay period—for each reporting year.
  2. Gather, sort and verify the relevant Component 2 data including employees’ race/ethnicity, sex, W-2 payroll information and hours worked.
  3. Provide actual hours worked by employees who are not exempt under the Fair Labor Standards Act (FLSA). For employees who are exempt from the FLSA, employers can provide either proxy hours or actual hours worked.
  4. Determine the number of full- and part-time employees pursuant to each of the ten EEO-1 job categories.
  5. Identify the number of employees who fall within each of the 12 compensation bands for each of the EEO-1 job categories. Employers must use Box 1 of an employee’s IRS Form W-2 to determine the appropriate compensation band to which each employee will be assigned.
  6. Tally the number of employees in each compensation band and job category by race/ethnicity and sex.
  7. Calculate the total number of hours worked (by race/ethnicity and sex) for the total number of employees who fall within the same compensation band for each job category. “Hours worked” should not include paid leave time such as PTO, holidays or vacation days.
  8. Decide whether to manually enter the data in an online form, or to create a separate data file for upload. Data file specifications have been released by the EEOC, and employers opting to create a data file are encouraged to develop the files in advance to ensure accurate and timely compliance.

Employers are encouraged to prepare and submit their Component 2 data prior to September 30 to avoid any potential technical difficulties due to the likely high influx of employers utilizing the EEOC portal website on the day of the deadline. The EEOC has not yet released guidance as to whether extensions may be granted in the event that technical difficulties affect accessibility of the EEOC portal website on September 30.

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