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OMB suspends pay data rules

September 14, 2017

Article courtesy of NSBA

On Aug. 29, the Office of Management and Budget (OMB) informed the Equal Employment Opportunity Commission (EEOC) that it is initiating a review and immediate stay of the pay data collection aspects of the EEO-1 form.

The expanded EEO-1 form requiring certain employers to report pay data of their employees was under review by the Office of Information and Regulatory Affairs (OIRA), an office within the OMB, for compliance with the Paperwork Reduction Act (PRA). Acting Chair of the EEOC, Victoria Lipnic, announced on Aug. 3, 2017 that she had sent the Administrator of OIRA, Neomi Rao, a memorandum asking OIRA to decide by the end of August 2017 whether to implement or discard the wage data collection portion of the revised EEO-1.

In her response memorandum, Administrator Rao explained the three reasons why OIRA decided to issue an immediate stay. First, it determined that the relevant circumstances related to the collection had changed since OIRA (under the Obama Administration) had previously approved the new form. Specifically, since that time EEOC released data file specifications for employers to use in submitting EEO-1 data. Because those specifications were not contained in the Federal Register notices as part of the public comment process or outlined in the supporting statement for the collection of information, the public did not receive an opportunity to provide comment on the method of data submission to EEOC.

Second, OIRA found that the EEOC’s calculation of burden estimates of the new form on employers failed to account for these new data specifications and how the specifications could affect the EEOC’s initial burden estimate.

Third, Administrator Rao expressed concerns with the form itself – specifically, that “some aspects of the revised collection of information lack practical utility, are unnecessarily burdensome, and do not adequately address privacy and confidentiality issues.”

As a result, EEOC must publish a notice in the Federal Register announcing the immediate stay of new compensation and hours worked reporting requirements contained in the revised EEO-1 form and confirming that businesses may use the previously approved EEO-1 form in order to comply with their reporting obligations for FY 2017.

OIRA’s decision is welcome news for employers who have been struggling with the practical challenges presented by the revised EEO-1 Form, including how to merge HRIS and payroll data in an efficient and accurate manner and nuances in how to calculate and report hours worked data. Those employers no longer have to worry about preparing for the expanded EEO-1 Form.

If the rule had remained in effect, larger employers would have been required to report to the EEOC pay data for workers broken down by gender, race and ethnicity by March 31, 2018.

Larger employers will continue to report to the EEOC – as they have for decades – information on the gender, race and ethnic composition of their workforce by occupational category, with the next filing due by March 31. The EEO-1 report is mandatory for private employers with 100 or more employees and for federal contractors and subcontractors with 50 or more employees.

Click here for background and NSBA official comments on the pay data issue.

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