While the Equal Employment Opportunity Commission (EEOC) contemplated the Component 2 filings in 2016, the filing process was not fully developed before the Trump administration postponed it. Since Judge Chutkan reinstated the pay data filing requirement and imposed the September 30 deadline, the path forward has been rocky. The EEOC has contracted with the National Opinion Research Center (NORC) at the University of Chicago to handle these filings, and NORC is not only building an online filing system, but also simultaneously developing the pay data reporting requirements. NORC seems to be in the unenviable position of building an airplane while simultaneously trying to fly it. This is illustrated by NORC’s pay data filings home page, which has a long list of updates at the top, including one from September 17 stating that due to the high volume of phone calls and emails, HelpDesk hours have been extended.
In trying to understand the pain of the pay data filing process, it helps to look at several root causes. One is that the pay data filing process was not fully developed by the EEOC when NORC was tasked to complete the filings by September 30. While the EEOC has developed a consistent and predictable EEO-1 Component 1 filing process, the pay data filings were taken from a partially developed concept and rushed into use. This process did not allow the EEOC or NORC to work through the many data, interpretation, and practical considerations that employers are now encountering. While the concept of reporting Box 1 W-2 and hours worked for every employee for 2017 and 2018 sounds relatively simple, this task requires the completion of numerous underlying steps. Those steps require employers to make numerous decisions as to how to interpret the Component 2 Instruction Booklet and, more importantly, the Component 2 FAQs maintained by NORC. While the Component 2 Instruction Booklet provides basic guidance on the pay data filings, the Component 2 FAQs deal with many of the more difficult questions. The FAQs have changed as the pay data filing process has progressed. Changes to the FAQs include a new section dealing with professional employer organizations and updates relating to mergers/acquisitions/spin-offs, multi-establishment reporting, summary compensation data, and other issues.
Another issue with Component 2 filing is its online filing system, which is difficult to navigate and has a difficult manual data entry process. The Component 2 establishment level form has over 1,500 data fields for each pay data establishment, compared to 120 data fields for the Component 1 establishment report. The sheer number of data fields and their presentation on a computer monitor make keying pay data into the online forms tedious and time-consuming. This is driving many filers to consider building data upload files for the first time. While the Component 2 data upload files are more streamlined than the Component 1 upload files, the Component 2 upload files specifications and verification procedures have been updated several times since they were made available.
Another filing issue that has surprised employers is that the Component 2 filing system does not allow companies to create downloadable versions of uploaded but uncertified reports, which is possible with the Component 1 reports. Downloading uncertified reports allows the circulation and review of the reports by multiple people beyond those who directly input the information. There is also no way to download the final certified reports from the Component 2 filing site. This means that companies will not be able to save a complete copy of their certified Component 2 filings. In contrast, the Component 1 filing site allows employers to access up to 10 years of prior filings. There are also data and interpretation problems that employers are encountering, including issues stemming from mergers and acquisitions, data access concerns, and payroll/HRIS system limitations.
Therefore, the Component 2 filing site may stay open past September 30, but there is no guarantee.Preparing and filing the Component 2 reports are confusing tasks that many employers and their lawyers and consultants will be working on up to the September 30 deadline. The EEOC and NORC have made it clear that they will not grant extensions for the pay data filings. Per the terms of Judge Chutkan’s April 25 order, the Component 2 filing site will stay open until the percentage of Component 2 filers equals or exceeds the average percentage of EEO-1 filers that submitted Component EEO-1 reports in the last four years. Employers do not know what this percentage is or when it will be met. Therefore, the Component 2 filing site may stay open past September 30, but there is no guarantee.
Meanwhile, all nonexempt federal contractors and subcontractors with a contract or subcontract for $150,000 or more are still required to make their annual VETS-4212 filings by September 30. There are no known changes to this year’s VETS-4212 filing requirements, but the main challenge with getting these done on time is that so much time may have been devoted to the Component 2 filings that the VETS-4212 filings may have been neglected. Normally, these filings are due several months after the Component 1 EEO-1 filings; thus, they are not competing with each other for attention. This year, they are due on the same date as the Component 2 filings, which is why they might be brushed aside.
As we approach the September 30 deadline for Component 2 and VETS-4212 filings, spare a thought for those individuals who are working to complete both of these filings on time and correctly. These types of filings are never easy, and the process has been made more difficult this year by the uncertainty and messiness of the Component 2 filing requirements coupled with the simultaneous due date for the VETS-4212 filings.