For decades, the Equal Employment Opportunity Commission (EEOC) has required many employers to provide the federal government with information about the racial, ethnic, and gender composition of their workforces. That may soon change.
On July 23, 2026, the EEOC published a proposed rule that would eliminate the long-standing EEO-1 reporting requirement, along with several other federal workforce reports and related recordkeeping requirements. The proposal represents a significant change in how the federal government collects and uses workforce demographic information and could have practical implications for employers beyond the filing of an annual report.
Importantly, however, the proposal is not yet final. Employers should continue complying with existing requirements unless and until a final rule takes effect.
A Significant Shift in Federal Workforce Reporting
The EEO-1 report has been part of the federal equal employment opportunity landscape since 1966. Generally, private employers with 100 or more employees, as well as certain federal contractors with at least 50 employees, have been required to report workforce data categorized by job classification, race and ethnicity, and sex.
The EEOC’s proposal would rescind the EEO-1 requirement and five other federal workforce reporting requirements: EEO-2, EEO-3, EEO-4, EEO-5 and EEO-6. These reports apply to various entities, including certain labor organizations, state and local governments, public school systems and institutions of higher education. The proposal also would eliminate recordkeeping and record-preservation requirements specifically tied to preparing those reports.
The EEOC estimates that eliminating the reporting requirements could save employers, governmental entities, unions, educational institutions, and the agency approximately $278 million annually.
The proposal is noteworthy not simply because it would eliminate paperwork, but because the EEOC is questioning the underlying value, and even the legality, of the reporting system. The agency argues that the demographic information collected through these reports is not sufficiently connected to specific discrimination investigations and therefore is unnecessary to enforce federal equal employment opportunity laws. It also expresses concern that requiring employers to classify employees by race and sex could encourage employers to focus on achieving particular statistical outcomes rather than making employment decisions based on individual qualifications and performance.
The agency further raises constitutional concerns, arguing that government-mandated racial classifications may implicate the Equal Protection Clause and that the reporting requirements may not be sufficiently narrowly tailored to satisfy constitutional scrutiny.
The EEOC also points to the cost of administering the program. According to the proposal, the agency spent more than $18 million on federal contractors to collect EEO data over the previous five years, in addition to federal personnel costs.
For employers, the most immediate impact—if the rule is finalized—would be the elimination of the annual EEO-1 filing obligation and the specific recordkeeping requirements associated with preparing that report. But employers should not assume that demographic information would no longer be relevant to employment-law compliance.
The New York Landscape
New York employers should be particularly careful about treating the proposed federal changes as a reason to stop collecting or reviewing workforce information.
Eliminating federal EEO-1 reporting would not eliminate the underlying federal prohibition against employment discrimination. Title VII of the Civil Rights Act, the Americans with Disabilities Act, the Age Discrimination in Employment Act, and other federal laws would remain in effect. Employers also would continue to face potential discrimination claims, EEOC charges, and government investigations.
New York employers must also contend with the state’s extensive protections against workplace discrimination. The New York State Human Rights Law prohibits discrimination based on numerous protected characteristics and generally applies to employers with four or more employees.
New York’s approach to pay equity and transparency provides another reason demographic and compensation information may remain important. New York’s pay equity law prohibits unequal pay based on a protected characteristic for substantially similar work, subject to specified exceptions. New York also requires employers with four or more employees to disclose compensation ranges in job postings for covered positions, promotions, and transfers.
These requirements make workforce and compensation data potentially valuable to employers evaluating their own compliance. Voluntary review of workforce data may reveal disparities in hiring, promotion, compensation, or termination decisions that warrant further investigation before they result in a complaint or lawsuit.
Multistate employers should also remember that federal changes do not necessarily eliminate state or local reporting obligations. For employers operating in multiple jurisdictions, maintaining a consistent national data-collection process may remain more practical than creating different systems for different states.
Looking Ahead
For now, employers should not change their EEO-1 compliance practices based solely on the proposed rule. Until a final rule takes effect, existing federal reporting and recordkeeping obligations remain in place.
Employers can, however, begin evaluating what the potential change could mean for their internal practices. They should identify which demographic and employment information they currently collect solely for purposes of completing the EEO-1 or other federal reports and consider whether that information serves other legitimate purposes, including compliance reviews, compensation analyses, workforce planning, or responding to employment-related claims.
Employers also should review applicable state and local requirements before eliminating existing data-collection practices. For New York employers, that analysis should include the New York State Human Rights Law, pay equity requirements and other applicable workplace protections.
Finally, employers should resist the temptation to view the proposed rule as evidence that demographic workforce information is no longer relevant. In some circumstances, the opposite may be true. Without a routine federal reporting obligation, employers may have greater flexibility in deciding what information to collect and how to use it—but that flexibility also places greater responsibility on employers to develop thoughtful, legally sound compliance practices.
Underberg & Kessler’s Labor & Employment attorneys are closely monitoring the legislation and will continue to provide updates as it moves through the legislative process. If you have any questions regarding this article or any Labor or Employment law issue, please contact Ryan T. Biesenbach at (585) 258-2865 or rbiesenbach@underbergkessler.com.
