Form EEO-1 Summary Compensation Data

On March 4, 2019, a D.C. Federal District Court Vacated the review and stay described below.  Further commentary on the court’s Order follows at the end.  On August 29, 2017 the EEOC announced that it had received a Memorandum from the OMB (OIRA), which put a hold on the previous OMB authorization for the new information collection (summary compensation data) for reporting year 2017, and left the traditional Form EEO-1 reporting requirements unchanged from previous years.  The “stay” required the EEOC to file a new request for the information collection in order to reinstate it. The OMB Memorandum explains that the request for information collection does not meet the requirements for approval under the Paperwork Reduction Act (the form of data collection and the burden it would create - data file specifications required by EEOC which were not disclosed or included in its analysis in the initial request for the information collection, and substantive merits - utility of information not justifying the burden).  While the OMB determination left open the possibility of the summary compensation reporting being reinstated, because the basis for the stay included a rejection of the EEOC’s previous analysis of the utility versus the burden of the information collection, that outcome seemed unlikely in the near term. The utility versus the burden of providing compensation data on Form EEO-1 is viewed more skeptically by the current administration as well as one EEOC Commissioner (see comments of EEOC Acting Chair Victoria Lipnic).  Businesses and members of congress were critical of the new requirement and petitioned the OMB to reconsider its earlier approval under the previous administration (see February 2017 U.S. Chamber of Commerce Request for Review).  The Chamber argued that the (under) estimated costs of complying and lack of benefits demonstrated by the EEOC did not meet the standards of the Paperwork Reduction Act in order to justify approval of the data collection requirement.

The District Court’s Memorandum Opinion (MO) likely won’t affect the current EEO-1 filing requirements (2018 filing year currently set to open in late March 2019 and extend to May 31, 2019).  The decision can and no doubt will be appealed to the D.C. Circuit Court of Appeals. The issue before the Court was did the OMB’s stay of the previous authorization meet the standards of “good cause” under 5 C.F.R. 1320.10(g) based on the intervening factor of additional data / burden requirements disclosed (or decided) since the original OMB approval, or because the original burden estimates by the EEOC were possibly extremely low; or, should that authorization have required detailed data specifications before being given?  The Court said no. The MO itself gives short shrift to the OMB’s (and stakeholder) burden concerns, and found that the OMB stay was “arbitrary and capricious” - the standard to overturn agency action by courts. The MO focuses primarily on the OMB’s objection to the data file specifications which were not included in the EEOC’s public notice, comments, and review (the EEOC described the type of information it would seek regarding compensation, but not the scope of detail / preparation time the later published specifications would require).  The OMB Motion for Summary Judgement (MSJ) in the case pointed out that the after the original OMB approval, the data points required for preparing Component 2 became substantially higher (and the February 2017 U.S. Chamber of Commerce Request for Review contested the EEOC’s estimated burden for the collection even prior to the data specifications - that the actual cost would be 4 times higher than EEOC estimates, based on the Chamber’s survey of its member employers). The MO dismisses these concerns, and gives little or no consideration to the OMB’s objections related to the EEOC’s justification of the utility of the collection, or to its concerns for the confidentiality and privacy of the information collected.  The OMB’s questioning of the EEOC’s burden estimates in light of stakeholder comments and the post-authorization data file specifications seems not only reasonable but responsible, considering the massive burden this collection would require.

One other possible outcome of this, is that the EEOC withdraws the request, which would make the lawsuit moot (though that decision would no doubt result in a similar suit by the same plaintiffs).  The Commission has been without a quorum (currently 2 of 5 Commissioners are in place, with the required third commissioner’s nomination pending in the Senate) and it’s possible the current nominee could agree with Acting Chair Lipnic that the utility does not justify the burden.  

A side note for federal contractors is that as originally authorized, while the Form EEO-1 race / ethnicity and gender reporting requirements apply to contractors with 50 or more employees (which would not change), the compensation reporting requirements would have applied to contractors (as any other business) with 100 or more employees.