EEOC Proposes to Add Compensation Data to EEO-1 EEOC Proposes to Add Compensation Data to EEO-1

EEOC Proposes to Add Compensation Data to EEO-1

The Equal Employment Opportunity Commission (EEOC) has proposed revisions to the EEO-1 report that would significantly increase the amount of data "large employers" (employers with 100 or more employees) will be required to provide in the future.  The EEO-1 is a report filed annually in September by most employers with 100 or more employees and by federal contractors with 50 or more employees.  The EEOC proposes that, in 2017, all filers with 100 employees or more will not only provide the currently-required data about their employees' ethnicity, race, and sex by job category, but also provide data on their employees' "W-2 earnings" and hours worked.  A copy of the proposed new EEO-1 can be found here.  According to the proposal, the EEOC (along with the Office of Federal Contractor Compliance Programs (OFCCP) – the agency that enforces the affirmative action requirements for federal contractors) plans to use the data collected to better assess complaints of discrimination, focus its investigations and identify employers with pay disparities that "warrant further examination."  The proposal, which is published in the Federal Register today (February 1), will be open for public comment until April 1, 2016.  Employers and employer organizations should review the proposal and consider submitting comments.  While the EEOC apparently believes the required data collection will be a small burden on employers, a close look at the proposal raises some logistical quandaries.  In addition, the likely value of the data collection is questionable, at best.
 
Here are some of the highlights of the proposal:
 
  • As of 2017, all employers who are required to file an EEO-1 will be required to do so electronically, which most employers are already doing. 
  • In 2017, large employers filing an EEO-1 will be required to report the number of employees by race and gender in each EEO-1 category that fall within one of 12 "pay bands" based on their W-2 wages.  In addition, large employers will be required to report the total (aggregate) number of hours worked by the employees who fall into each pay band.  The EEOC is seeking input on how hours should be reported for salaried employees, given that many employers do not keep that data.
  • The wage ranges contained within the proposed pay bands vary significantly.  The bands use the same pay intervals that the U.S. Bureau of Labor Statistics (BLS) uses in its Occupational Employment Statistics survey. The lower ranges are separated by approximately $5,000, while the higher ranges are separated by $20,000 or more.  In addition to the fact that the reporting does not account for differences in job duties, the varying (and increasingly larger) wage ranges make it difficult to conduct a meaningful analysis of the data.
  • Because nearly all EEO-1 filers already file electronically, the EEOC assumes that the added burden on employers to provide the additional wage and hour data electronically will be "minimal" – a one-time implementation burden (for "programming" data queries or fields) of 8.8 hours per filer and a yearly burden of an additional 3.2 hours per filer (beyond what would be required to provide the data already requested on the EEO-1).  This assumption is based on a belief that all employers either use HRIS software that keeps a running calculation of an employees' W-2 wages and hours worked (and that can produce that data as of a pay period occurring in the months of July through September), or can compile the data easily through a report from the employer's payroll system.   While this may be true for many employers, the information likely cannot be sorted in the manner requested at the push of a button (without the additional programming).  The EEOC has requested comments on the manner in which it calculated the "burden" to employers. 
  • According to the proposal, the EEOC and the OFCCP are working to develop a statistical tool that can be used to conduct a meaningful analysis of the reported wage and hour data.  The EEOC and the OFCCP have been trying to develop such a tool (and a valuable data collection mechanism) for many years.  Some federal contractors may remember the EO Survey that the OFCCP used, and abandoned, several years ago.  Similarly, the Equal Pay Report proposed by the OFCCP in August 2014 for federal contractors was not implemented, favoring the "coordinated" approach being proposed by the EEOC.
  • According to the EEOC, the wage and hour data will be treated confidentially and, if it is used for publications, will only be included in aggregate data without the employer identified.
Again, the EEOC is accepting comments on this proposal until April 1, 2016.  Once the comment period ends, the EEOC will take some time to review the comments submitted and determine if changes to the proposal need to be made.  A hearing related to the proposal will also need to take place.  We are not likely to see anything in final form before the summer (and maybe the fall), assuming the EEOC issues something in final form at all.  Even if the proposal is not finalized, it reflects a continuing effort by the government to find ways to collect valuable data that will help identify areas where pay disparity is a concern for minorities and females.  Employers should look at their own data (preferably working with legal counsel so that any applicable privileges can be used to protect potentially harmful analyses) and make sure any pay disparities in their workforce can be explained.
 
If you have questions about this or any other employment-related matter, please contact Tami A. Earnhart at (317) 236-2235, tami.earnhart@icemiller.com, or any other member of our Labor, Employment & Immigration Group.    

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances. 
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