The Office of Federal Contract Compliance Programs (OFCCP) has published a notice in the Federal Register that the agency is reversing its position regarding EEO-1 “Component 2” compensation data. The OFCCP is announcing that the agency will now analyze the data to see if it can be used to “inform” enforcement and compliance efforts and/or to identify “neutral criteria” for audit selection.
We will not rehash the entire EEO-1 Component 2 compensation data reporting saga here, but in short and after some fits and starts, the EEOC eventually collected summary compensation data as part of the annual EEO-1 filing for the 2017 and 2018 reporting years. This new compensation data report (which included total W-2 compensation and average hours worked) was referred to as “Component 2,” causing us all to start referring to the “main” EEO-1 report as “Component 1.” The EEOC then suspended Component 2 collection in 2019, stating that the agency needed to evaluate the utility of the data collected so far in order to determine if the effort should continue. Then the pandemic hit and we haven’t had a “normal” EEO-1 filing season since 2016. Despite the fact that there is no longer a “Component 2,” we still somewhat confusingly refer to the remaining EEO-1 report as “Component 1.”
Perhaps seeing the controversies that the EEOC was dealing with and under what most thought of as a more “business-friendly” administration, the OFCCP published an official notice that the agency would not “request, accept, or use Component 2 data” because the agency did not expect the data to provide “significant utility.” In other words, the agency officially announced that it wanted nothing to do with the whole mess. The OFCCP is now reversing that decision, at least in part.
The OFCCP’s new notice states that the agency’s 2019 decision was “premature.” After all, the collection of Component 2 data for the 2017 and 2018 reporting cycles was not even completed until February, 2020, three months after the OFCCP’s notice. The agency now admits that at the time it had little information about things like response rates, completeness of the data, or how the data was submitted and assembled—all key data points for determining the data’s “utility.”
Interestingly, the agency does not note any actual hard information that has come to light that would lead the agency to believe there is utility to be found in the two years’ worth of Component 2 data. The OFCCP is simply committing “further agency resources to evaluate the data’s utility.”
To those who know anything about the career of the OFCCP’s current Director, Jenny Yang, this should come as no surprise. She was a driving force behind the EEOC’s Component 2 initiative and has not been shy about her priorities for the OFCCP, particularly in closing pay gaps for women and people of color.
Let’s not panic, though. The OFCCP is far from trying to haul anyone into court by waving around years-old EEO-1 compensation data. In fact, that sort of outcome is highly unlikely for a variety of reasons, not the least of which being that the data is simply not granular enough to constitute evidence of discrimination in almost any imaginable circumstance.
But will we see contractors scheduled for audit and/or ranked on the audit list based on some analysis of that data? Could we see perhaps a new “compensation focus” component that might be triggered by some threshold test? I think the answers are “yes,” and “yes,” but not any time soon.
The OFCCP first needs to evaluate the data already submitted and determine if the data is actually useful, then someone—either the OFCCP or the EEOC—is going to need to fire up a new reporting requirement so that the agency can work with “fresher” data.
The National Academies of Sciences, Engineering, and Medicine—a nonprofit formed to provide independent and objective advice to inform policy—has also convened a panel to evaluate the quality of data collected from the short-lived Component 2 requirement. While the panel intends to provide conclusions and recommendations to the EEOC, they do not appear to be limiting the scope of their examination to EEOC-related uses.
The EEOC tends to be more interested in the data’s utility in the aggregate, potentially revealing national or industry-wide trends, not its utility regarding the reflection of EEO practices of a particular employer, much less at a particular employer facility. But the National Academies panel intends to assess the data’s “quality and usefulness for different uses.” Their findings are likely to be of interest to the OFCCP but are unlikely to be available until sometime in 2022.
If you have questions about this, or any other OFCCP initiative, do not hesitate to contact us at BCGi@Biddle.com.