By September 30, 2019, businesses with 100 or more employees must provide pay information categorized by race, ethnicity, and sex for calendar years 2017 and 2018. For many businesses, this means reviewing their internal systems and coordinating with vendors to collect requisite information ahead of the fast approaching deadline. The EEO-1 reporting requirement applies equally to covered businesses that were acquired, merged, or spun-off in 2017 or 2018. The big question: Which entity is responsible for meeting the reporting requirements? Not surprisingly, the best answer seems to be: “it depends.”
Fortunately, the EEOC recently issued guidance on this issue (https://eeoccomp2.norc.org/Faq). Generally speaking, in the acquisition or merger context, the acquiring company bears the burden of meeting the new EEO-1 Component 2 (“Component 2”) reporting requirements. However, an acquiring company may not have access to the necessary data depending on when the acquisition or merger closed. If that is the case, the acquiring or merged company should note as much in a comment box when uploading the information to the EEOC (https://eeoccomp2.norc.org/).
The answer for spun-off companies appears to depend on when the company, well, spun-off. For example, a company that spun-off in January 2018 would not be responsible for reporting the 2017 Component 2 data because it was part of the former parent company in 2017. Of course, the spun-off company in this example would be required to submit Component 2 data for 2018 (the year in which it spun-off). In this case, the reporting responsibility is tied to the timing of the transaction.
The employee pay information has been embroiled in litigation since 2017 when the Trump administration halted the collection of the pay data, which was implemented in the waning years of the Obama administration. In March 2019, a district court in Washington, D.C. ordered the EEOC to collect employee pay data by September 30, 2019. Although the Department of Justice is appealing the district court’s order to collect the pay data, the Department of Justice did not request a stay from the order, which means the September 30 deadline remains in place. Considering the potential complexity for compiling the pay information, especially if a company was acquired, merged, or spun off in 2017 or 2018, businesses should get moving and start compiling the relevant information now.