Post-Closing: Buyers Must File New EEO-1 Info for Acquired Companies
Companies with at least 100 employees & some federal contractors with more than 50 employees have to file EEO-1s containing with certain workforce demographic information with the EEOC. In March, a DC federal court ordered the EEOC to begin collecting what’s known as “Component 2” data from companies required to file EEO-1s. That means that in addition to workforce demographics, these companies must now report employee pay data & hours worked by job category, & by race, ethnicity and sex.
Since this website isn’t called “EmploymentLawyers.com,” you may be wondering why I’m talking about EEOC requirements. Well, the thing is that the EEOC just released guidance saying that if you bought a company during 2017 or 2018, you’re on the hook to provide the required information for the acquired company – in some cases, even if the pay period used to measure that data occurred before the closing. This excerpt from this recent Proskauer blog explains:
In its guidance, EEOC advises, among other things, that acquiring companies are responsible for submitting Component 2 data of their acquired entity – whether the transaction occurred before or after the acquiring company’s workforce snapshot period. Similarly, where two companies merge to form a new entity, the new entity must report its Component 2 data, regardless of whether the merger occurred before or after the workforce snapshot period.
Where a purchasing or newly formed company does not have access to a former entity’s Component 2 data, they should note that in the comments box on the certification page in the EEO-1 online portal. For acquisitions closing in 2018, an acquiring company would not be required to report the 2017 Component 2 data of a purchased company, if the purchased company would not have been obligated to report its own 2017 Component 2 data (i.e., if it had less than 100 employees in 2017).
What if you sold or spun-off a business during the relevant period? Here’s what the blog says about that:
With respect to spinoffs occurring in 2018, newly created subsidiaries are not responsible for reporting their 2017 Component 2 data. The former parent company, however, would be responsible for filing the 2017 Component 2 data for the employees of the spun off company. Parent companies that sold a part of their business in 2018 are not required to file the 2017 or 2018 Component 2 Data for the sold entity – the purchasing company has that responsibility.
If this is the first you’re hearing of this, you’d better get moving – the Component 2 data is due by September 30th.
-John Jenkins, DealLawyers.com August 28, 2019
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