2023 EEO-1 Data Collection May Require Employee Pay Info

Large employers may be required to provide Component 2 employee pay data in their EEO-1 report for the first time this year.

"Watch out, it is coming," said Keith Sonderling, Commissioner of the U.S. Equal Employment Opportunity Commission (EEOC) during DirectEmployers' DEAMCon in April 2022 . "Talk to your bosses.”

Collection of EEO-1 Data for 2022 is scheduled to begin mid-July 2023, according to the EEOC,. though an official opening date has yet to be announced.

"Updates regarding the 2022 EEO-1 Component 1 Data Collection," the Commission says on their website, "including the opening date, will be posted to www.eeocdata.org/eeo1 as they become available."

A Brief History of EEO-1 Reporting

The EEOC has been collecting demographic data from large employers (100 or more employees) and Federal contractors (with 50 or more employees,) annually since 1966. This became known as 'Component 1' data, and includes information about employees' gender, race/ethnicity, and job category, regardless of their full-time or part-time status.

In an effort to further combat wage discrimination, the EEOC expanded their data collection in 2016 to include information about employee wages, broken down by the same demographic parameters as Component 1, which they called 'Component 2' data.

The expansion upset many employers, regulatory agencies, and trade groups, who claimed that gathering the extra information would be burdensome, time consuming, ineffective and, most of all, costly. Regardless, the Office of Management & Budget (OMB) approved the EEOC's request collection of Component 2 Data.

But in 2017, under the newly-elected President Trump, the OMB reversed their decision and imposed a stay on the collection of Component 2 data.

A March 2019 court ruling, National Women’s Law Center v. Office of Management and Budget, found that the OMB's stay was carried out improperly and not in accordance with Federal law. As a result, U.S. District Judge Tanya Chutkan's decision vacated the stay, calling it “arbitrary and capricious.” However, in September 2019, the EEOC announced that, despite Judge Chutkan's ruling, they would not request approval from the OMB to resume collection of Component 2 data at that time. 

Will the EEOC Require Component 2 Pay Data This Year?

Nothing is official, but Commissioner Sonderling's remarks, along with the growing number of wage transparency laws, and pay discrimination lawsuits filed against companies like LinkedIn, Riot Games, and Blizzard, have re-fueled speculation that Component 2 data collection may resume.

• California and Illinois have already mandated the collection of Component 2 pay data.
• The Biden administration has demonstrated support for pay equity through their Equity Action Plan.
• The DOL's Office of Federal Contract Compliance Programs (OFCCP) has also announced they will start using Component 2 Data in their enforcement efforts, as they feel it will "improve OFCCP’s ability to efficiently and effectively investigate potential pay discrimination.”

With the announced "mid-July" timeframe quickly approaching, 2023 may be too soon for the EEOC to start doing so. But it seems at this point to be an inevitability, and covered employers would do well to prepare as such.

How Your Organization Can Prepare for EEO-1 Component 2 Reporting 

Again, not all employers are required to file an EEO-1 report. Only large employers with 100 or more employees, or federal contractors with 50 or more employers need to file an EEO-1 report.

If you fall into either of those categories, it is recommended that you begin compiling W-2 data as soon as possible in anticipation of the change. In the event that the EEOC does require Component 2 data, a covered employer's best friend is an integrated payroll, timekeeping, and HR solution that automatically keeps track of all Component 2 data the EEOC may require. 

Complete Payroll Can Help

Reach out to us today and let us show you how our all-in-one payroll, HR, and timekeeping platform can help you navigate the EEO-1 report, and so much more!

About the Author

Kim Brown-Webster is Complete Payroll's Director of Human Resources. Kim is a SHRM Certified Professional (SHRM-CP) with over 23 years of Human Resources experience.

Learn More About Kim