Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.
The Office of Federal Contract Compliance Programs (OFCCP) has announced that it will not request, accept, or use “Component 2” compensation data submitted on the EEO-1 form. This statement comes just over two months after the Equal Employment Opportunity Commission (EEOC) announced it would not seek approval from the Office of Management and Budget (OMB) to collect compensation data on its Form EEO-1 next year. In its Notice slated for publication in the November 25, 2019 edition of the Federal Register, the OFCCP claims “it does not expect to find significant utility in the data given limited resources and its aggregated nature,” although the agency will continue to accept Component 1 data.
Generally, each year employers with 100 or more employees, and federal contractors with 50 or more employees, are required to file the EEO-1 report, providing the EEOC with data on the number of individuals employed, their distribution by legal entity and location, and their demographic characteristics. The EEOC and the OFCCP share this information to reduce duplicative employer filing. During the Obama administration, the EEOC sought to expand government records on pay gaps by gender and race by collecting pay data that could be correlated to employee demographic groups. To that end, in September 2016, the EEOC announced that it would collect data on employee compensation and hours worked sorted by job category, pay band, race, ethnicity, and gender, on revised EEO-1 reports. The revised reports would have required employers to continue to report demographic information (Component 1 data) as well as new Component 2 compensation data. The utility of this data has been questioned, and on September 11, 2019, the EEOC announced that it would not seek approval to collect such information next year. As noted in the fall regulatory agenda, however, the EEOC is considering a new rulemaking “that may include a new reporting requirement by which employers would submit pay data or related information as reasonable, necessary, or appropriate for the enforcement” of Title VII and the Equal Pay Act.
In the new announcement, the OFCCP explains it does not consider Component 2 data necessary to ensure that contractors are not using discriminatory pay practices because OFCCP receives employee-level pay data from contractors when they are undergoing compliance evaluations. This more granular pay data helps the office identify pay disparities that may violate Title VII standards whereas the data in EEO-1 Component 2 is more general and does not provide the necessary level of detail to compare similarly situated employees. “Although the data could potentially inform OFCCP’s scheduling process for compliance evaluations, it is too broad to provide much utility to OFCCP.” In addition, the OFCCP states that its limited resources do not allow it to undertake the larger scope of data review that would be necessary to make use of Component 2 data.
The agency notes, however, that it will continue to receive and make use of the EEO-1 Component 1 data from covered contractors and subcontractors.