In a surprising development, on March 4, 2019, U.S. District Judge Tanya S. Chutkan of the U.S. District Court for the District of Columbia issued an order lifting the Office of Management and Budget’s (OMB) stay of an Obama-era initiative to add a compensation data collection component to the annual EEO-1 reporting requirement. In her order, Judge Chutkan recounted the administrative process through which the Equal Employment Opportunity Commission (EEOC) studied and proposed the collection of pay collection data to the annual EEO-1 survey including a discussion of the various steps to publish the proposed change and OMB’s approval of the change in September 2016.

The order recounted that in August 2017, OMB changed course stating that it was reviewing its earlier decision to allow the collection of pay data and immediately staying the collection of pay information. As the basis for this decision, the OMB stated that the EEOC’s release of the pay collection data file specifications as part of its revised EEO-1 instruction booklet demonstrated that

1. These specifications changed the circumstances related to this data collection without allowing public comment.
2. OMB’s initial burden estimate did not account for the changes explained by the data file specifications, which may mean that the initial burden estimate was flawed.

Judge Chutkan rejected the OMB’s decision to stay the pay data collection requirement finding that the OMB had failed to prove either basis for its decision allowing it to stay its prior approval of a data collection request. Specifically, the OMB had failed to show either (1) relevant circumstances surrounding the data collection had changed or (2) that the original burden estimates were materially in error. Judge Chutkan noted that the later released data file specifications were previewed in the EEOC’s filings seeking approval of the EEO-1 changes and that the data file specifications were not shown to have actually impacted the OMB’s initial burden estimate. Judge Chutkan also found that the OMB’s actions in staying the pay data collection requirement were arbitrary and capricious and that the proper remedy was to vacate the stay of the data collection requirement.

Key Takeaways

For employers that are preparing to submit their 2018 EEO-1 filings the big question is what this ruling means for these filings, which are due on or before May 31, 2019. It seems quite likely that the OMB and EEOC will appeal Judge Chutkan’s decision and seek to have any changes to the EEO-1 form postponed until their appeal has been heard. If Judge Chutkan were in charge of this year’s EEO-1 survey, it appears from her decision that she would include the pay data collection. In reacting to the government’s argument that vacating the stay would upset the current expectations of EEO-1 filers, Judge Chutkan writes that “[t]his speculation is unsupported by the record” as the pay collection requirement was “in place for almost a year by the time it was stayed” and that vacating the stay “will not have potentially disruptive consequences.”

For contractors involved in the submission of EEO-1 filings, this ruling feels like it could be quite disruptive. Not only does this ruling come right as the 2018 survey is opening, it also comes after a significant partial government shutdown, which has pushed this year’s filing process back nearly two months. Additionally, many employers have already pulled their data for the 2018 EEO-1 filings, meaning that a substantial amount of work would need to be redone if the pay data collection requirement is added to this year’s survey. Obviously, it is too early to know how that process will play out so we will all have to stay tuned to understand how this ruling will affect this year’s filings.