EEOC Announces Collection of Summary Pay Data with Annual EEO-1 Reports
On September 29, 2016, the Equal Employment Opportunity Commission (“EEOC”) announced that beginning March 2018, it will require certain employers to submit summary pay data on an annual basis through a revised EEO-1 Report. The EEOC claims the new data will assist the agency in identifying possible pay discrimination and assist employers in promoting equal pay in their workplaces.
What is the EEO-1?
The current EEO-1 requires (1) certain federal contractors with 50-99 employees, and (2) private employers with 100 or more employees, to submit an annual report detailing the number of individuals they employ by job category and race, ethnicity, and gender. Historically, this report must be submitted by September 30 of each year. Moving forward, the reporting deadline will be March 31.
As a refresher, the ten EEO-1 job categories are:
1.1: Executive/Senior Level Officials and Managers;
1.2: First/Mid Level Officials and Managers;
4: Sales Workers;
5: Administrative Support Workers;
6: Craft Workers;
8: Laborers and Helpers; and
9: Service Workers.
The seven race and ethnicity groups are:***
Hispanic or Latino;
White (Not Hispanic or Latino);
Black or African American (Not Hispanic or Latino);
Native Hawaiian or Other Pacific Islander (Not Hispanic or Latino);
Asian (Not Hispanic or Latino);
American Indian or Alaska Native (Not Hispanic or Latino); and
Two or More Races (Not Hispanic or Latino).
What Does the New EEO-1 Now Require?
Under the new EEO-1, private employers with 100 or more employees will have to submit data about pay. Notably, however, federal contractors with 50-99 employees who would otherwise have to submit an EEO-1 will not have to report pay data. Instead, they will continue to report only information about ethnicity, race, and gender by job category. Non-contractor private employers with 1-99 employees, and federal contractors with 1-49 employers would not be required to file any form of the EEO-1 (as is currently the case).
How Must the Wages Be Reported?
Covered employers must report employees’ total W-2 earnings for a 12-month period looking back from a pay period between October 1 through December 31. In other words, for the first report due by March 31, 2018, employers must report using a pay period from October 1, 2017 through December 31, 2017. For each employee included on the pay period selected, the employer will refer to employees’ W-2, Box 1, income for the year January 1 through December 31, 2017.
For each of the EEO-1 job categories, employers must tabulate and report the number of employees whose W-2 earnings for the prior 12 months fell within each of 12 pay bands. For example, an employer would report on the EEO-1 that it employs 10 African-American men who are Craft Workers in the second pay band ($19,240-$24,439).
The pay bands correspond with the 12 pay bands used by the Bureau of Labor Statistics in the Occupation Employment Statistics survey:
(1) $19,239 and under;
(2) $19,240 – $24,439;
(3) $24,440 – $30,679;
(4) $30,680 – $38,999;
(5) $39,000 – $49,919;
(6) $49,920 – $62,919;
(7) $62,920 – $80,079;
(8) $80,080 – $101,919;
(9) $101,920 – $128,959;
(10) $128,960 – $163,799;
(11) $163,800 – $207,999; and
(12) $208,000 and over.
The new form will also account for part-time workers, those who worked less than a full 12 months, and workers with W-2s from multiple employers. It does so by collecting the total number of hours worked by the employees counted in the pay bands. For example, an employer would report on the EEO-1 that the total hours worked for 10 African-American men who are Craft Workers in the second pay band ($19,240-$24,439) is 10,000 hours.
For exempt employees, employers may either (1) report 20 hours per week for each part-time employee and 40 hours per week for each full-time employee; or (2) report the actual number of hours worked by exempt employees, full- or part-time, if they prefer to do so. For non-exempt employees, for whom the employer is already tracking hours worked for compliance with the FLSA, the aggregate hours requirement may not be as problematic, although managing such a calculation may involve some administrative burden.
What Will Be Done With the Data?
The EEOC intends to publish aggregate data from employers in an annual salary report that would show the average compensation for workers in different geographic regions and/or industries. It will also review the information for specific employers relative to any pay discrimination claims filed with the EEOC.
The OFCCP will use the information as part of its EO 11246 compliance reviews.
What Should Employers Do Now?
The next EEO-1 submission is not due until March 31, 2018, so employers have some time to prepare for compliance. Specifically, private employers with more than 100 employees should review their payroll and/or HRIS systems to determine whether they can readily collect the summary pay data information and the aggregate hours data required in the revised EEO-1. Likewise, employers should consider using this timeframe to conduct proactive compensation analyses to assess risk before this information must be turned over to the federal government. Contact your legal counsel to discuss the best way to conduct such analyses under the auspices of attorney-client privilege.
We discussed this topic, and other other recent Federal Contractor/Affirmative Action developments in a webinar in early October. You can purchase the archived webinar here.
***We note that on September 30, 2016, the Obama Administration proposed a new racial category for people from the Middle East and North Africa. The proposal is open for public comment through the end of the month (October 31, 2016). The proposal seeks comments on how best to define this category, whether it should, in fact, be a separate category, and what such a category should be called. Under the current race/ethnicity categories, individuals of Middle Eastern descent are to report as “White.” If such a category would be added, employers may have to incorporate it into their affirmative action plans, and their EEO-1 reports.