The Equal Employment Opportunity Commission (EEOC), in coordination with the Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP), has proposed changes to the Employer Information Report (EEO-1) affecting the 2017 reporting cycle. The proposal would require employers to report employee W-2 wage data and number of actual hours worked. The change would impact all employers with 100 or more employees, not just federal contractors. This second proposed revision, issued July 14, 2016, is based on public comments received from the initial proposal earlier in 2016.
Currently, the EEO-1 form requires employers to report employees grouped by job category, race, ethnicity, and sex. The proposal would add a second section to the form requiring employers to report employees by pay band (for example, less than $19,239, $19,240 to $24,439, $24,440 to $30,679, etc., up to $208,000 and over), as well as total hours worked for each of the ten job categories.
Although EEO-1 reports historically have been due no later than September 30, the EEOC proposal would extend the 2017 reporting deadline to March 31, 2018. The additional time would enable employers to use already compiled 2017 W-2 wage data to complete the report. The EEOC assures employers that it intends to keep the information confidential to the extent permitted by law under the Trade Secrets Act and exceptions to the Freedom of Information Act (FOIA). The information will, however, be used to publish industry-specific aggregate data.
The proposed changes will allow the EEOC to more easily identify pay disparities and potential discrimination. The agency will also easily be able to identify pay outliers based on comparisons from others in the industry.
Employers who need to access multiple systems to complete the proposed EEO-1 form may need to budget for additional costs associated with the new reporting requirements. Likewise, employers should consider whether to change current systems and practices for increased efficiency. Software vendors likely will be preparing new system updates and releases which could cost employers more money.
Finally, employers should begin reviewing compensation data now to identify whether pay disparities exist and whether those disparities can be justified by legitimate non-discriminatory explanations. In the event compensation changes may be needed, employers should carefully consider and plan for an appropriate implementation strategy – likely with the assistance of skilled employment law counsel. Employers should consider including legal counsel to conduct compensation audits to allow for the protections of the attorney-client privilege.
The EEOC will take public comments on this second proposed rule until August 15, 2016. The final rule will be published sometime thereafter.
Content included in the Summer 2016 Benefits and Employment Briefing provided by our partner, United Benefit Advisors