Employment & Labor Insider

A federal judge in the District of Columbia has ordered that the pay data collection component of EEO-1 reports, which never took effect, be restored.

The order was issued yesterday, and we don't yet know what it will mean for employers who will be submitting their EEO-1 data for calendar year 2018. The deadline for that data would have been March 31, but the EEOC had already extended the deadline to May 31 because of the government shutdown earlier this year.

As of this afternoon, the EEOC had nothing about yesterday's pay data ruling on its website.

OK, that was the quick and dirty. Here is a little more background about the court's decision.

Technically, what U.S. District Court Judge Tanya S. Chutkan did was vacate a stay of the pay data collection requirement, if you can follow that. The pay data collection requirement was initially approved by the federal Office of Management and Budget in August 2016. However, about one year later (after the election), the OMB, through the federal Office of Information and Regulatory Affairs, notified the EEOC that it was reviewing the requirement and indefinitely staying it. Formal notice of the stay was issued by the EEOC on September 15, 2017.

Because the pay data requirement was not to take effect until March 31, 2018 (the deadline for reporting pay data for calendar year 2017), the pay data collection requirement never took effect. Employers got the benefit of the extended reporting deadline but were never required to submit pay data.

You political junkies will enjoy this fact: The memorandum staying the pay data collection requirement was issued by OIRA Administrator Neomi Rao, who has been nominated to take Supreme Court Justice Brett Kavanaugh's old spot on the U.S. Court of Appeals for the District of Columbia Circuit. (Ms. Rao's nomination cleared the Senate Judiciary Committee and is awaiting a confirmation vote in the Senate.)

Anyway . . .

Not long after the pay data requirement was stayed, the National Women's Law Center and the Labor Council for Latin American Advancement sued the OMB and its director at the time, Mick Mulvaney, Ms. Rao, the EEOC, and the EEOC's acting chair, Victoria Lipnic.

(Mr. Mulvaney is currently President Trump's acting Chief of Staff.)

After finding that the two plaintiffs had standing to sue and that the stay was, in effect, a "final agency action" that could be subject to legal challenge, the judge found as follows in yesterday's decision:

• The OMB violated its own regulations in reviewing the pay data collection requirement after having previously approved it. According to the court, once the OMB approves proposed requirements, it can undertake a review only if "relevant circumstances have changed or the [regulatory] burden estimates provided . . . were materially in error." The court found that neither of these requirements was met.
• The OMB also violated its own regulations in issuing the stay. The OMB can stay a previously approved action only "for good cause shown" and "after consultation with the agency," in this case the EEOC. The court found there was no good cause shown for the stay.
• The OMB's stay was arbitrary and capricious because it was not supported by a reasoned analysis. Although the OMB contended that the data file specifications, issued after the OMB's 2016 approval, were the primary reason for the subsequent review and stay, the court found that the OMB failed to consider comments supporting the requirement while considering objections to the requirement that did not address data file specifications at all. Even the Rao Memorandum said only that the data file specifications "may" increase the regulatory burden for employers.

So, the stay of the pay data collection requirement has been vacated. That double negative means that the pay data collection requirement is back in effect. But we don't know at this time what this will mean for employers. Will employers have to submit pay data with their 2018 EEO-1 Reports (currently due May 31, 2019)? Or can they wait until their 2019 EEO-1 Reports are due (currently March 31, 2020)? Since the court's ruling means that the stay, in effect, never existed, will employers have to supplement their 2017 EEO-1 Reports?

Of course, it is possible that the government defendants will appeal Judge Chutkan's decision to the D.C. Circuit. If Janet Dhillon is ever confirmed, the EEOC will have a quorum and can decide whether to issue new regulations rescinding the requirement (after notice and comment), or leaving the requirement in place. 

We'll keep you posted.