As Michael Melbinger, Partner Winston & Strawn, LLP, observes, “This (Equal Employment Opportunity EEO-1 reporting requirements) may be out of the wheelhouse for executive compensation professionals.”
Here are Mike’s timely insights:
You almost certainly have seen the headlines screaming: Employers Must Submit EEO-1 Hours and Pay Data [reporting the number of individuals employed by job category, sex, race, and ethnicity] by September 30, 2019! This indeed will be another significant burden on many employers. But wait. The deadline still might be postponed (or canceled).
This may be out of the wheelhouse for executive compensation professionals, so first some background. Since 1966, the EEOC has required private employers with 100 or more employees to file annual reports, known as “Employer Information Report EEO-1” or “EEO-1” reports, that report the number of individuals employed by job category, sex, race, and ethnicity. In 2016, in an ostensible effort to strengthen enforcement of equal pay laws, the EEOC formally announced its intention to expand the EEO-1 reporting requirements to include data regarding employees’ W-2 earnings and hours worked in 12 pay bands for the 10 EEO-1 job categories. Pursuant to the Paperwork Reduction Act, this new data collection requirement was subject to the approval of the Office of Management and Budget (OMB), which initially was granted in September 2016.
However, in August 2017, following the change in Administration, OMB reversed course and ordered the EEOC to stay enforcement of the new data collection requirements. Litigation predictably ensued (see National Women’s Law Center et al. v. Office of Management and Budget, et al.). In March 2019, a judge on the U.S. District Court for the District of Columbia issued an order reinstating the new data collection requirement, finding OMB’s decision to stay the requirement “arbitrary and capricious” in that it “totally lacked [a] reasoned explanation.” Then, on April 25, the judge issued a further order, directing the EEOC to collect 2018 hours and pay data from employers by September 30, 2019, including the number of their employees, separated by job category, sex, race, and ethnicity, that fall within 12 pay bands, as well as the total number of hours worked by the employees in each pay band.
However, the government has appealed the District Court’s ruling, and here is where it gets tricky. I don’t want to get “political” and I won’t take a side, but in the current world in which we live, it is certainly no secret that judges appointed by a President of one political party are frequently reversed by judges appointed by a President of the other political party.
So what is an employer to do? For now, covered employers probably should operate on the assumption that the September 30 deadline for submission of 2018 data will hold and begin making necessary preparations. But keep your eyes open for the next headline!
Advisory services offered through CapAcuity LLC and Valmark Advisers, Inc. SEC Registered Investment Advisors. Securities offered through Valmark Securities, Inc. Member FINRA, SIPC. Fulcrum Partners is a separate entity from Valmark Securities, Inc. and Valmark Advisers, Inc.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. Any tax advice contained herein is of a general nature. You should seek specific advice from your tax professional before pursuing any idea contemplated herein.
Securities offered through Lion Street Financial, LLC (LSF) and Valmark Securities, Inc. (VSI), each a member of FINRA and SIPC. Investment advisory services offered through CapAcuity, LLC; Lion Street Advisors, LLC (LSF) and Valmark Advisers, Inc. (VAI), each an SEC registered investment advisor. Please refer to your investment advisory agreement and the Form ADV disclosures provided to you for more information. VAI/VSI, LSF and CapAcuity, LLC. are non-affiliated entities and separate entities from OneDigital and Fulcrum Partners.
Unless otherwise noted, VAI/VSI, LSF are not affiliated, associated, authorized, endorsed by, or in any way officially connected with any other company, agency or government agency identified or referenced in this document.