We are often contacted by an employer that realizes, well after the filing deadline, that it failed to submit an annual EEO-1 Report to the Equal Employment Opportunity Commission (EEOC) / Joint Reporting Committee. Sometimes the employer has gone several years without filing an EEO-1 Report – maybe never. The typical first question asked by a sheepish human resources manager is what the consequences may be for failing to file an EEO-1 Report.
While there are specific statutory and regulatory consequences, those enforcement "teeth" are fairly weak against an employer that fails to file an EEO-1 Report. Perhaps the more real and meaningful consequence is a practical one of not having an EEO-1 Report to submit upon a federal agency's demand: for example, during a federal contractor's enforcement audit or during investigation of an employee's/former employee's discrimination charge.
How Does This Happen?
Despite the well-publicized nature of the national EEO-1 reporting program, every year some organizations still fail to complete an EEO-1 Report. Some employers are simply not aware they have an annual filing obligation. This is especially true for smaller businesses that are just over the coverage threshold based on employee headcount. Other times there is turnover among HR department staff members who have been tasked with preparing and filing the employer's EEO-1 Report. A new HR replacement may not even be aware of what the EEO-1 Report program involves.
Several years ago, many employers failed to file their EEO-1 Report when the Joint Reporting Committee first implemented its web-based filing system and began accepting online submission of EEO-1 forms. From that point on, the EEOC eventually phased out paper reporting. As a result, some HR managers or business owners waited years for a paper EEO-1 form to arrive by mail (that never came) and jog their memory about the annual Report filing. Virtually all EEO-1 Report filing has now been transitioned to online via electronic submission (www.eeoc.gov/employers/eeo1survey), unless an employer submits a request to the EEOC claiming undue hardship over having to file electronically. However it occurs, HR professionals are left wondering about the possible penalty for the oversight.
Back to Basics: Which Employers Must File an EEO-1 Report?
As an initial matter, are you even required to file an EEO-1? The EEO-1 Report program has been around for some 50 years. All employers with at least 100 employees are required to file an annual EEO-1 Report. Excluded are state and local governments, public school systems, institutions of higher education, and local unions – each of which have a separate type of reporting form and submission schedule. Federal contractors and subcontractors with at least 50 employees and a federal contract or subcontract of at least $50,000 are also required to file an annual EEO-1 Report. Lastly, so must financial institutions that are depositories of federal government funds, or hold a federal contract.
Despite the Recent Controversy, Data Reporting is Unchanged
If you are obligated to file an EEO-1, what needs to be included? The information to include on an EEO-1 Report has come full circle, and the net result today is unchanged from the way it has stood for decades. In February 2016, EEOC proposed requiring covered employers to greatly expand the amount of data to be reported. EEOC proposed that, in addition to race/ethnicity and gender, all workers be slotted into "grids" of compensation pay ranges. This would have involved a complex form with up to 1,680 cells of data measuring occupation, gender, race, and pay bands, as well as aggregate hours worked. That proposal was halted in August 2017 when the Office of Management and Budget (OMB) determined that this additional data violated the Paperwork Reduction Act. In sum, OMB concluded that EEOC's pay reporting proposal was overly burdensome, and the employee pay/hours worked data lacked sufficient practical utility to allow EEOC and the U.S. Department of Labor's Office of Federal Contract Compliance Programs (OFCCP) to identify evidence of compensation discrimination. As a result, the data reported today on an EEO-1 Report is unchanged from past decades.
Despite all of this discussion, the only significant change is that the workforce "snapshot" and due date has changed to now be a measurement of an employer's workforce in October-December of any one year, with a report submission deadline of March 31 in the subsequent year.
What's the Failure to File Remedy?
Section 709 (c) of Title VII of the Civil Rights Act of 1964 provides that a court may compel completion of any reports required by the EEOC. This is echoed in an EEOC regulation that specifies a consequence for an employer that fails to file an EEO-1 Report:
- Any employer failing or refusing to file Report EEO-1 when required to do so may be compelled to file by order of a U.S. District Court, upon application of the Commission.
29 C.F.R. §1602.9.
As you can imagine, with federal budget cuts, staff shortages, and allocation of enforcement resources to higher priorities, the likelihood of the EEOC utilizing its litigation staff to compel an employer to file an EEO-1 Report is probably minimal. Therefore, while the consequences are plainly set forth in Title VII and the EEOC's implementing regulations, the enforcement "teeth" of this happening is likely weak and remote.
In addition, the EEO-1 Report itself requires certification of accuracy and truthfulness, similar to an employer's certification on an I-9 form. An example of EEO-1 falsification might be an employer that changes employees' race/ethnicity self-identifications in order to inflate the number of minorities in its workforce. Another falsification would be for a federal contractor to check "No" on EEO-1 box C.3., thus indicating that it is not a federal contractor (to remain out of the OFCCP's audit selection system database). Under federal law and EEOC regulations, the penalty for making a willfully false statement on an EEO-1 Report is a fine, imprisonment of up to 5 years, or both (29 C.F.R. §1602.8, as authorized by 18 U.S.C. §1001). Again, the likelihood of a federal enforcement agency discovering a false statement, and then initiating enforcement/criminal procedures to prove willfulness, are probably remote.
Practical Consequences of Failure to File
The more practical and realistic consequence of failing to file an EEO-1 Report for one or more years is that an employer will be unable to comply with federal agency enforcement efforts, and therefore lose employer credibility in an investigation. For federal government contractors or subcontractors selected for an enforcement audit by the OFCCP, the failure to file an EEO-1 Report can be significant. In every enforcement audit, the OFCCP will issue a Notice of Desk Audit accompanied by an "Itemized Listing" that details a myriad of information and documents that must be submitted to the federal government. Itemized Listing No. 15 specifically requests copies of a federal contractor/subcontractor's recent EEO-1 Reports ("Copies of your Employer Information Report EEO-1 (Standard Form 100 Rev.) for the last three years"). Failing to maintain and submit EEO-1 Reports for the last three years will most likely trigger a Conciliation Agreement as a consequence for the technical violation of OFCCP's rules. And entering into a Conciliation Agreement may enhance the odds that OFCCP will initiate another compliance review in the future.
Perhaps more importantly, it will create a negative impression in the OFCCP Compliance Officer's mind. In other words, if the contractor being audited has failed to comply with its EEO-1 Report obligation, the contractor may similarly be violating other nondiscrimination and equal employment opportunity obligations. This impression may influence the Compliance Officer's perception of the employer in other, more significant aspects of the enforcement audit, such as during OFCCP's search for evidence of adverse impact against females and/or minorities in hiring, promoting, terminating, and compensating the contractor's workers.
For non-federal contractors, the consequences of failing to file an EEO-1 Report can be significant as well. In many individual discrimination charges investigated by the EEOC (and in jurisdictions with a state non-discrimination enforcement agency), the EEOC may request a recent EEO-1 Report in order to determine the general demographic makeup of the organization. If the discrimination charge involves allegations of gender or race discrimination (which relates to the data reported on an EEO-1 Report), it will be difficult for an employer to argue that the EEO-1 Report information is irrelevant to the investigation. If the employer is forced to admit that it does not have an EEO-1 Report to provide, the EEOC (or state agency) will likely take a dim view of the employer's non-discriminatory philosophy and policy, which impacts the investigator's subjective assessment of the discrimination allegations.
Title VII and EEOC regulations provide a consequence for failing to file an EEO-1 Report. However, compelling completion of an EEO-1 Report is unwieldy and impractical for the federal government to enforce in court. The practical "penalty" is falling out of favor with OFCCP or EEOC during a compliance review audit or discrimination charge investigation by having to admit to a failure to file. And the practical "penalty" is likely a more serious consequence to a contractor or other employer.
The author, Gary Chamberlin, is the Chair of Miller Johnson's Affirmative Action & Government Contractors practice group. For questions about this article, or OFCCP/affirmative action and government contractor compliance matters, contact Gary directly at email@example.com or (616) 831-1709. Other resources are available on Miller Johnson's website (www.millerjohnson.com).
The information in this article has been prepared for informational purposes only. This is not legal advice, nor intended to create or constitute a lawyer-client relationship. Before acting on the basis of any information or material, readers who have specific questions or problems should consult their lawyer.