EEO-1 Compensation Data - Tolling, Trolling, and Controlling

How many activist federal judges does it take to change a lightbulb?  Three.  One to ask the courtroom deputy to call maintenance; one to help the Defendant evade the I.C.E. agents waiting in the hall; and one to appoint themselves Chair (and exclusive voting Commissioner) of the EEOC.

Two weeks after the District Court’s March 4th Order, the Plaintiffs petitioned the Court to expand its role in the implementation of the Order by overseeing the EEOC and OMB’s efforts.  The Court agreed and scheduled a status conference between the parties the following morning.  The Court then asked the EEOC to provide a description of the practical requirements for collecting the Component 2 compensation data during the (now open) collection period, which the EEOC did on April 3.  The EEOC’s response included a sworn statement (Declaration) from the Director of its Office of Enterprise Data and Analytics (OEDA, responsible for administering all of the Commission’s EEO data collections), which stated that despite the 2016 approval for the collection, the agency had not fully prepared for an effective collection when he arrived at the agency in late 2017, and that he had focused most of his efforts since his arrival on improving the process of the existing EEO-1 data collection (the OMB Stay on Component 2 data collection occurred shortly before his arrival at EEOC).  The Declaration indicates that upon his arrival, existing EEOC data collection processes were not properly designed or administered for Component 1, nor was the agency prepared for Component 2 data collection, nor was the “pilot study” for Component 2 data performed properly.  The Declaration further asserts that completing the Component 2 data collection during the 2019 fiscal year (ending September 30), would require the use of an outside contractor to provide an ad hoc system that could not be re-used by the Commission in subsequent years (because of new systems planned for subsequent years at the time of the Declaration), and which would produce data of dubious accuracy or validity because of the rush to implement, all at a cost to the agency of $3+ million dollars.  The Declaration provides a rare glimpse into the inner workings of the EEOC, and paints an unflattering picture of not only the Commission (who asked for the data collection) but also the 2016 OMB (who approved it) with apparently less than informed opinions about how it would be accomplished, the true technological requirements or costs to the Commission and to employers, the validity of the data it would produce with their systems and processes, and very little concern for the costs versus the utility of the collection.  Recall that it was the current OMB’s questioning of that process which the Court found to be “arbitrary and capricious” under the Administrative Procedure Act (APA).

Additionally, several associations of employers filed Amicus briefs with the court, which included assertions both that their respective member employers currently lacked the ability or resources to accurately compile and report the Component 2 data by September 30, 2019, with most employers stating that they would need until the 2020 collection period to provide accurate data, and that previous changes to EEO-1 reporting requirements (2006 new Form EEO-1 and 2016 new Component 2) provided employers advance notice of the requirements of 20 months and 18 months respectively.

Against this backdrop, the Court had several options: 1. leave the March 4 Order in place and leave it to the agencies to figure out how to implement (or appeal) it, 2. “toll”  the expiration of the OMB approval to collect Component 2 data for some period of time (the stay was in effect for 17 months), or 3. order a date for the EEOC to complete a collection of the Component 2 data (with or without a tolling of the approval expiration).  The original issue in controversy in this case was OMB’s stay of its own earlier approval for the data collection, which the court overturned as an “arbitrary and capricious” decision by the OMB.  If that determination by the Court was upheld, its safest basis of authority to act on the original issue in controversy would be to “toll” (extend) the period of the prior 2016 approval by the OMB for the time the later OMB stay was in effect, which it did, and which resulted in the approval period ending April 5, 2021.  If the OMB’s stay indeed violated the standards of the APA, then the tolling of the approval period was all that was required to remedy the stay.  The agencies go back to implementing the laws (and Order, or appealing it) and the Court goes back to interpreting the laws.  Instead, we got something else entirely, and this is where the train went off the track. 

Though named as a Defendant (which was never challenged by the DOJ), the EEOC is more accurately only a party in interest in this case (it was essentially in support of the EEOC’s right to collect the data that the Plaintiffs sued) - the EEOC applied for the approval of the data collection, received it, later received a stay and honored it; and, indeed the Court’s Memorandum Opinion did not find that the EEOC’s actions violated the APA or Paperwork Reduction Act (PRA).  The issue of whether the Court has jurisdiction to direct actions of the EEOC as a result of an APA violation by the OMB is questionable, legally or equitably, and defies logic, practically.  (“Your brother stayed out past curfew last night, so you’re both grounded for a week, and give me a 500-word essay by dinner on the importance of following the rules…. you heard me.”)  However, not to miss out on the opportunity to troll the EEOC, the Court decided the date, method and years of data to collect for the EEOC, and also required the EEOC to publish notice about the September 30 deadline in 2 working days, decide whether it would collect 1 year or 2 years’ worth of compensation data on September 30 in 10 calendar days, and provide the Plaintiffs and the Court updates every 21 days until September 30 on its progress to prepare for the Component 2 data collection. 

The most important questions surrounding the Component 2 collection were not addressed in this case - the utility of the collection and the burden it puts on employers.  In vacating the stay, the Court only reviewed the OMB’s 2018 decision under a “changed circumstances” provision of OMB regulations as a basis for a stay or review of a previous approval, and limited that review to the data specifications, not addressing the apparent original under-estimation of time and costs to employers by the EEOC, or the original OMB approval not questioning the validity of EEOC’s estimates sufficiently.  In light of the picture painted about the 2016 EEOC’s ability to process Component 1 data, let alone Component 2, the OMB’s approval for the collection in 2016 seems to be much more arbitrary and capricious than the subsequent decision to review it.  Since it is now certain that the OMB and EEOC’s decisions with regard to Component 2 will be decided by a court, a review of the original estimates of costs and the utility of the data in the ultimate outcome would benefit the current administration.  Those are the essential standards for which the PRA is designed to require analysis; in this case, the previous administration’s OMB appears to have glossed over them, and the Court seemed unwilling to consider that possibility.  The Court seemed very concerned about getting the data at any cost.  Employer organizations having to scramble to convince the Court not to require Component 2 data in 2019 because most employers can’t be ready is an unfair burden to put on them, the EEOC having to disclose its shortcomings publicly in an effort to do the same and spend millions on a one time rushed collection is unseemly, the DOJ not effectively objecting to the process is regrettable, and the Court making rulings that seem to be explained best by a strong public policy preference for the collection which would be outside its authority and troubling; it didn’t have to go that way.  There are administrative processes in place that could have and should have been used in this case to determine the timing and method of this collection, as well as a substantive determination of the utility of the whole exercise.  Instead the Court took it upon itself to do all of that, and in a condensed period which will put unwelcome costs on both the EEOC and employers.  In order to justify its ruling, the Court essentially had to conclude that it could not trust the OMB and EEOC to faithfully execute its Order in the best interests of everyone involved, or that the best interests of the Plaintiffs were more important than the agencies’ and employers’ and a hasty (and possibly unreliable) data collection was in the Plaintiffs’ best interests, or that any future review of agency action to comply with the Court’s Order would be inadequate in the absence of absolute control over the process.  To justify its conclusions, the Court took a heavy-handed view of the Defendants’ conduct - apparently a failure of the EEOC to have all the steps in a complicated process worked out in two weeks’ time is sufficient evidence of bad faith.  The end result of this ad hoc administrative process run by a federal judge is that most applicable employers won’t comply with the September 30 deadline, and the Court addressed that possibility by retaining jurisdiction of the case and stating that the Court’s Order will not be deemed to be fulfilled until the number of Component 2 filers meets or exceeds Component 1 filers, leaving the possibility of the Court keeping open the Component 2 deadline indefinitely until all applicable employers have complied.  In other words, the EEOC not only has to lead the horses to water, it also has to make them drink.

For private employers, failure to file the EEO-1 results only in the EEOC’s option to compel filing against each individual filer by court order (EEOC regulations 29 C.F.R. Part 1602, Subpart B).  For federal contractors, representing compliance with its current requirement to file Form EEO-1 under existing contracts, is required to be made as part of subsequent contract (or subcontract) awards (41 C.F.R. 60-1.7(b)), and is one of the annual representations required in SAM (FAR 52.204-8 [see paragraphs (b), (c)(1)(xiii), and (d)]).  The OFCCP published a Proposed Rule (amending its regulations for EO 11246 to incorporate Component 2 data into the required reporting of Form EEO-1 (41 C.F.R. 60-1.7(a)) in 2014, but never finalized it, therefore the Component 2 portion of Form EEO-1 is not included in the requirements of 60-1.7(a) or therefore the definition of “compliance report” referenced in the FAR.  This puts contractors in the same position as any other employer with regards to Component 2 - in the event a contractor fails to file Component 2 data, there are no penalties under a contract(s), the sole recourse for the government is to compel an individual filer through court order as described above.  The requirement for employers (including contractors who are also subject to Title VII), if they have 100 or more employees, to submit Component 2 data comes from the EEOC 30 day notice of intent to file the collection request with the OMB, published July 14, 2016 (81 FR 45479, at 45484 Sec. IV.D). 

Both of the Court’s rulings now seem certain to be appealed, and they leave employers in a difficult position.  How much of an employer’s fire drill will be completed when (if) the D.C. Circuit Court overturns the September 30 deadline?