OFCCP Reverses Course: Actually, Let’s See Those EEO‐1 Pay Data Reports

September.17.2021

This month, OFCCP officially rescinded a Notice from nearly two years ago (which we reported on here), which stated that it would not “request, accept, or use Component 2 data” that the EEOC collected with the 2017 and 2018 EEO-1 reports. The rationale offered at the time was that OFCCP “d[id] not expect to find significant utility in the data given limited resources and its aggregated nature[.]”

Component 2 of the EEO-1 collected information for the years 2017 and 2018 regarding aggregated employee pay and hours worked. Specifically, the revised EEO-1 form required reporting of aggregate W-2 earnings—as well as the total number of full- and part-time employees—and total hours worked in twelve pay bands for each of the EEO-1’s ten job categories. It was thereafter discontinued by the EEOC following several years of controversy (as we covered here, herehereherehereherehereherehere, and here).

In an abrupt reversal, OFCCP now says in a new Notice that its previous position was “premature and counter to the agency’s interests in ensuring pay equity.” It cites “substantial reasons” to believe the data could be useful, including “analyzing compensation data in conjunction with other available information, such as labor market survey data, [to] help OFCCP identify neutral criteria to select contractors for compliance evaluations.”

Yet OFCCP appears to recognize the utility of the Component 2 data remains in doubt. It states it “could” help OFCCP, and that it “intends to devote further agency resources to evaluate the data’s utility” and “plans to analyze [it] to assess its utility[.]” Indeed, as we reported previously here, the National Academy of Sciences, Engineering, and Medicine is analyzing the same issue, studying the “quality and utility” of the data for the EEOC’s use. Both quality and utility have been called into doubt by critics pointing to multiple issues, including the Component 2 form’s reliance on W-2 earnings (as opposed to base pay or total compensation awarded for work performed in a given year); the problem of over-aggregation because of the breadth of the pay bands and job categories used; and the inability for most employers to accurately track or report hours worked by exempt employees. We previously outlined this host of issues hereherehereherehereherehereherehere, and here

OFCCP has said it will provide further information about its expected use of the Component 2 data in a public meeting next week, along with the EEOC. Stay tuned for updates.