The day employers have been waiting for, has finally arrived. The government has indefinitely stayed the requirement that companies begin reporting “Component 2” wage data in their EEO-1 Reports. Companies around the country are breathing a collective sigh of relief.
On August 29, 2017, the EEOC announced that new compensation reporting requirements for employers will not go into effect as planned. The White House’s Office of Management and Budget (OMB) informed the EEOC that it has initiated “a review and immediate stay of the effectiveness of the pay data collection aspects” of the EEOC’s EEO-1 form.
The revised EEO-1 Report would have required covered employers to report, for the first time, data on employee compensation and hours worked, in addition to demographic information. Covered employers are private companies with 100 or more employees, and covered federal contractors. The new requirements would have applied to EEO-1 Reports for 2017, which would have been due by March 31, 2018.
Employers have been anxious about the potential new wage reporting since the requirement was first announced in January 2016. Companies immediately voiced concerns about: the substantial cost of compliance, the security and confidentiality of their information, its use by the federal government to target companies for audit, and the uselessness of such generalized data for any pay equity purpose. The revised report called for highly aggregated pay data in broad, artificial ranges that were created by the EEO-1 Joint Reporting Committee. Analyses of such data —which would not account for company compensation structures or any relevant pay variables – could neither identify nor explain valid pay differentials.
The decision to stay the wage reporting requirement is likely a response to such complaints and criticisms from the business community. The wage report had its detractors within the government as well. Victoria Lipnic, the Acting Chair of the EEOC, is one such person who has been outspoken in her critiques of the revised EEO-1 Report.
The EEOC is expected to provide more information about the revised EEO-1’s status, and what employers should expect, in the near future. While the announcement doesn’t kill the new regulations entirely, or prevent the EEOC from requiring such information in the future, it appears likely that employers will not be facing these requirements anytime soon. It is certainly a good sign that the new report has been stayed for further study.
We will provide more updates as they become available.