In an extraordinary Hearing in Judge Tanya Chutkan’s courtroom at the federal District Court for the District of Columbia, the EEOC announced its plans to start the process with employers to collect so-called “Component 2” “Pay” and “Hours Worked” data. Starting July 1, 2019, the EEOC will say to employers:
“This is exactly where you’re going to go to input the data and we’re going to open that [the EEO-1 Component 2 Pay Data and Hours Worked reporting portal] on July the 15th.” (emphasis added)
The EEOC also currently plans to close the Component 2 reporting portal September 30, 2019 (but allow “straggler” employers to report as late as two weeks later). See important EDITORIAL NOTE, below, answering the usual questions we get about no or late reporting of EEO-1 data.
Testifying on the stand on behalf of the EEOC under close examination from Judge Chutkan, Dr. Samuel Haffer, the EEOC’s Chief Data Officer, also testified that the EEOC would typically keep the EEO-1 reporting window open for “stragglers” who failed to file by September 30, 2019. However, in response to concerns that DirectEmployers and the American Society of Employers had filed with the Court a Survey of DE Members in their Amici Curiae brief reporting that MOST employers would be unable to report pay and hours worked data by September 30, 2019, Dr. Haffer also testified that he would NOT recommend keeping the reporting portal open longer than two weeks past the September 30, 2019 reporting date.
Dr. Haffer, new to the EEOC in November 2017, also described finding the EEOC struggling just to collect Component 1 race, sex, ethnic information using antiquated and poorly constructed data collection tools, He described an agency woefully unprepared even to begin to reliably and securely collect and analyze Component 2 pay and hours worked data.
Dr. Haffer also reported that he started work at the EEOC only to be summonsed three days later to an ongoing Office of Inspector General investigation into his office looking into “…that the current processes and systems that the agency used for its data and analytics functions were outdated, antiquated, that we weren’t getting maximum benefit out of the use of our data, that we weren’t exploring the potential of using other data from other federal agencies to meet our agency goals and missions.”
BY THE COURT (questioning Dr. Haffer about a lengthy and detailed written declaration he had written and which USDOJ had filed with the Court on behalf of the EEOC):
“In your declaration you stated that the EEOC—and I quote—had not revised the EEO-1 instruction manuals and training materials to reflect the 2017 data collection requirement and methods for data submission. *** How does that statement comport with the EEOC’s prior efforts to prepare employers for Component 2 pay data collection?”
“Your Honor, it comports in that I was attempting to show that the EEOC [as it readied itself for the March 2019 EEO-1 collection of 2018 employer data] was not well prepared to collect data—Component 1 data that they had been collecting for decades, and that the potential of problems in collecting a new source of data that had never been collected could potentially have overwhelmed the system, and EEOC may not have been prepared to collect the data.” TR p. 35, lines 4-19
EDITORIAL NOTE: Readers will recall that the EEOC this year again struggled to open the EEO-1 reporting portal and delayed its Component 1 reporting opening to continue needed preparations.
Dr. Haffer also testified that the contractor the EEOC currently uses to help collect Component 1 data “…is a small business who just does not have the capacity to be able to stand up Component 2”. TR p. 75, lines 8-11.
Dr. Haffer also testified that the EEOC does not have the computer server capacity and security necessary to collect Component 2 Pay and Hours Worked data.
Other Notable Occurrences at the Hearing
Dr. Haffer reported, in fact, his decision to outsource the entire Component 2 pay and hours worked data reporting function, including servers, and communications with employers, to the University of Chicago’s National Opinion Research Center (“NORC”) which devised a timeline and identified September 30, 2019 as the earliest possible time it could be ready—on an emergency all hands on deck basis–to open the EEO-1 Component 2 reporting portal.
BY DR. HAFFER:
“Because we have limited human resources, and we—and because there are contractors who have decades of experience collecting data, valid and reliable data, they know what they’re doing. They know how to get people to be respondents. They have the secure systems in place to store the data and do some basic data quality checks of the data; that that whole process would be contracted to NORC, and they would deliver to us, at the end of the process, a clean data set.” TR p. 74, lines 4-12.
EDITORIAL NOTE: Dr. Haffer also testified that NORC reported to him that “any faster than September 30th they would walk away because it would not meet anything resembling professional standards for data collection”. TR, p. 46: lines 16-19
In fashioning its timeline to collect Component 2 Pay Data, the EEOC did NOT consider the amount of time employers would need to comply and report Component 2 data:
BY THE COURT:
“In putting together–in NORC’s estimate of its time frame, do you know if that estimate took into account employer burden concerns or employers’ estimated—there’s an assertion the employers had made that it would take them some time to comply?”
“It did not.”
“(Pause)” [TR p. 69, lines 15-21]
Judge Chutkan also firmly rebuffed USDOJ’s entreaty to the Court to understand the complexity and difficulty of the Component 2 Pay and Hours Worked data reporting as it sought to convince the Court to defer to the EEOC’s predicted new timeline to make operational the Component 2 reporting:
BY THE COURT:
“I understand the realities. That does not allay my concern that the defendants are slow-rolling this process, and that is what I’m trying to avoid here.”
EDITORIAL NOTE: Employers appear unfortunately caught in the middle of a dispute between the Plaintiffs and the EEOC as to whether and when to cause reporting, but without factoring the most important part of the Pay and Hours Worked data reporting equation: the employer reality (irrespective of the Plaintiff’s wishes and the EEOC’s capability to competently open a reporting portal.) And, meanwhile, the court is VERY skeptical that the EEOC and OMB are playing fair and not trying to “time out” the reporting so that no reporting occurs at all. See more about that, below. So, employers are caught in the middle. Hence, the DirectEmployers Survey of response times to try to assist the Court by inviting its consideration of the third leg of the reporting stool: when employers could realistically be ready to report.
EDITORIAL NOTE: DE’s Member Survey reported that only about 40% of the 179 DE Members responding could be ready to report by September 30, 2019. There is no financial or economic penalty for failing to report EE0-1 data. Also, while it is little understood, and many Blogs have gotten this wrong, there is NO obligation of covered Government contractors to report Component 2 pay and hours worked data—rather, only “employers” affecting interstate commerce and employing 100 or more employees must report Component 2 pay and hours worked information (should a final enforceable Order emerge from the lengthy and difficult administrative and court processes). Accordingly, there is NO debarment threat.
What the EEOC can do–and it is the ONLY thing it can do, as to any employer which fails to report EEO-1 data–is to file a Complaint in federal District Court seeking an injunction to require reporting. Of course, should Judge Chutkan order the EEOC to open the reporting portal on July 15, 2019 and collect Component 2 data through September 30, 2019–as she very much appears poised to momentarily order–tens of thousands of employers across the United States will likely be confronted with forced non-compliance since they will be unable to report, in fact. (The percentage of employers which can report by September 30, 2019 shrinks daily without guidance as to how to report, and the EEOC now reports only a July 1 notification to employers, as noted above.)
Given that scenario, and given that the EEOC collection and analyses of Component 2 data will have missed the vast majority of employers in the United States, it seems highly unlikely the EEOC would divert precious lawyer resources away from prosecuting alleged discrimination law violations to try to chase down Component 2 data reports all over the country in likely every federal district court in the nation: like trying to herd cats in the mountains. So, it very much appears that if you are not ready, you will not be ready and you will miss the too-fast-moving train about to thunder out of Washington D.C.
The Court may well try to Order the EEOC to collect Component 2 Pay and Hours Worked data FOR 2019 (next’s year EEO-1 report), in lieu of the missed 2017 Pay and Hours Worked data reporting.
THE COURT (addressing Dr. Haffer on the witness stand):
“I’m going to give you a hypothetical. Assume, ***, that I agree that collecting the 2017 pay data along with the 2018 pay data would too risky. If OMB used its emergency extension power to allow Component 2 data collection to be completed after September 30, 2019, and had the 2017 reporting cycle be replaced by the 2019 data collection in 2020, would that resolve the risks you identified?”
Dr. Haffer answered “…yes”.
TR 55, lines 1-24
NORC Notifications to the Employer Community
Dr. Haffer testified that “…the notification from the contractor (NORC) to the employers would begin as soon as the contract is awarded (to NORC).
“Well, we would do e-mail blasts. We would do snail mail. We would do webinars. We would work through stakeholder groups.”
TR p. 67, lines 10-17
Dr, Haffer also mentioned that the EEOC (not NORC) would publish on its website FAQs and other website information. Dr. Haffer currently has no timeline as to when the EEOC will finish drafting and sign a contract with NORC.
The EEOC is planning to change the Component 2 Reporting Format for 2018 reporting due before September 30, 2019.
Dr. Haffer testified that the “content” of the reporting spreadsheet the EEOC had posted on its website before the OMB stay in 2018 would stay the same. However, he plans to change the “format”:
“This is an unwielding—an unwieldy instrument for trying to fill out, and what I’ve discussed with NORC is building a data intake portal that would be much more understandable and customer-friendly than this form.”
TR p 57, lines 17-21
EDITORIAL NOTE: Since the EEOC is going to change the reporting format, employers need to wait on plans to finalize their reporting formats until July 1, 2019 to get the EEOC’s latest and greatest instructions as to how to report Component 2 data.
The Court, and the Plaintiffs, are VERY concerned that OMB’s current authorization under the Paper Work Reduction Act to collect Component 2 Pay and Hours Worked data will expire (“time out”) on October 1, 2019 (the end of OMB’s current three-year approval period for the Component 2 data collection) and that the EEOC and/or OMB will NOT renew it.
The Court was very interested to know why the EEOC did not spend its time since the Plaintiff’s lawsuit in the Fall of 2017 getting employers and the agency ready to collect Component 2 Pay and Hours Worked data should the Court rule, as it did, to lift the OMB Stay of the Component 2 data collection (and thus requiring Component 2 reporting)?
DR. HAFFER: “We were still subject to the stay, which meant that we could not contact employers directly and make any representation that we were going to begin to collect data or to signal to them that they should begin to collect data.”
EEOC “Pilot Study” of its Pay Data and Hours Worked data Collection did not meet professional standards and was not in fact a “Pilot Study.”
Dr. Haffer reported that the “Pilot Study” the National Academy of Sciences (“NAS”) had recommended in 2012 to the EEOC when the agency was considering in earnest to collect Pay and Hours Worked data, and which the EEOC reported undertaking in deference to the NAS’ six Formal Written Recommendations, was not in fact a “Pilot Study:” meeting professional standards, even though the EEOC had titled its report a “Pilot Study.” TR p. 48 (entire page) and p. 49, lines 1-10
Judge Chutkan questioned the veracity of the USDOJ lawyer representing the EEOC and the OMB about why she never informed the Plaintiffs or the Court that the EEOC would require nine months in the regular course of business to comply with the Court’s March 4, 2019 Order which struck down the OMB stay of the EEOC’s Component 2 reporting. Rather, the US DOJ lawyer let the record stand that the OMB (without reference to the separate EEOC spool-up process) would take only one-day to approve the opening of the EEO-1 Component 2 Pay Data Reporting portal at a time the Court and Plaintiffs were very concerned about the time it would take to open the portal.
Background: In early December 2018, the USDOJ asked for an extension of time to respond to the Plaintiff’s Motion for Summary Judgment (which eventually brought on the Court’s March 4, 2019 Order opening the Component 2 Pay and Hours Worked reporting portal.) The Plaintiffs, very concerned about delaying the case and perhaps missing employer reporting during the scheduled March 2019 EEO-1 reporting cycle (because EEOC/OMB were perhaps “slow rolling” the process), asked USDOJ how long it would take for the federal government to open the EEO-1 reporting portal should the Court rule for Plaintiffs. USDOJ reported the OMB answer (“one day”) while noting it did not have the EEOC’s answer (which USDOJ received the next day, but AFTER the Plaintiffs relied on the “one-day” quote and agreed to USDOJ’s request to extend the time for USDOJ to respond to Plaintiff’s Motion for Summary Judgment.
BY THE COURT:
“Well, it’s not that you didn’t share it, and I understand you’re an officer of the court, but you–your language to the Court certainly implies that you hadn’t gotten that information when you had.”
EDITORIAL NOTE: The USDOJ lawyer never answered Judge Chutkan’s repeated questions as to why the USDOJ lawyer did not apprise the Plaintiffs, and later the Court in formal live-in-court Status Hearings, about this important timing of portal-opening information. The reason for that is not clear. What is clear, though, is that USDOJ’s lack of forthrightness and candor to the Plaintiff’s and the Court about the EEOC’s time to respond to the Court’s March 4 Order lifting the OMB Stay of Component 2 reporting hangs over and haunts these timing Hearings casting doubt on the EEOC’s/OMB’s intentions to in fact open the reporting portal on the time frame the EEOC, through Dr. Haffer, has now projected. We may well see the Judge, as a result, seek to enjoin the EEOC/OMB to “toll” (i.e. extend) the 3-year Paperwork Reduction Act (“PRA”) authorization for Component 2 Reporting BEYOND September 30, 2019. So, if NORC somehow runs late in preparing the Component 2 Reporting Portal and has to leave it open after September 30, 2019, the Court may well seek to Order the EEOC and OMB to extend the PRA authorization to continue past September 30, 2019 and allow the EEOC to continue to collect Component 2 Pay and Hours Worked data.
WHAT’S NEXT: Wait for Judge Chutkan to issue an Order in which she seeks to implement the remedy appropriate for her March 4, 2019 Order that OMB’s Stay of the EEOC’s Component 2 reporting was illegal and not enforceable. Employers should also watch to see if the EEOC/OMB will appeal Judge Chutkan’s Order (probably not if the Judge endorses the EEOC’s September 30, 2019 timeline for reporting but probably so if Judge Chutkan orders immediate reporting (impossible for EEOC to comply) or writes a broad remedial order beyond her equity powers to enforce her March 4, 2019 Judgement.
And, then, whether employers will finally get on the playing field to challenge Component 2 in the Courts given that everyone (including the EEOC) realizes that reporting pay data by “Pay Bands” is an exercise in futility and will not assist the EEOC’s non-discrimination mission (since broad pay band information will never prove unlawful pay discrimination or even narrow down which jobs the EEOC should properly investigate).
John C. Fox, Esq. is President and Partner at Fox, Wang & Morgan P.C. where he represents companies and tries cases in state and federal courts throughout the United States. Mr. Fox has extensive trial experience, having spent more than 300 days in trial. Mr. Fox was also lead trial counsel in the first of the six wage-hour class actions known to have been tried in California and was lead trial counsel in what are believed to have been the two largest disability law suits in the United States. He is an across-the-board employment lawyer representing management nationwide. Full Bio »