Significant Changes to EEO-1 Reporting Obligations
Many private employers are familiar with the Employer Information Report (EEO-1) that must be submitted to the Equal Employment Opportunity Commission (EEOC) each year. Currently, private employers with 100 or more employees must submit an EEO-1 every year to report company data categorized by race/ethnicity, gender and job category. In September 2017, this obligation will be expanded significantly.
On January 29, 2016, the EEOC announced the proposed revisions it will undertake in the coming year. Under the new rules, private employers with 100 employees or more must continue to report the usual company data, with some new and additional information. Employers will be required to report employees’ specific race and gender, aggregate W-2 earnings, hours worked in the last year, job category and pay band.
According to the EEOC, the new reporting requirements are intended to “assist” employers in evaluating their pay practices in order to encourage voluntary compliance and prevent pay discrimination, but the additional categories will likely be burdensome. Each employee must be placed into one of ten job categories:
- executive/senior level officials and managers;
- first/mid-level officials and managers;
- sales workers;
- administrative support workers;
- craft workers;
- laborers and helpers; and
- service workers.
Employees must then be placed into one of twelve pay bands, using their aggregate W-2 wage data. Although using W-2 earnings likely will be easiest for employers, the information could prove unreliable as it ignores subjective factors related to pay, such as seniority. Finally, employers must report the hours that each employee worked for a 12-month period looking back from any pay period between July 1st and September 30th of that reporting year. The EEOC has not advised how it will recommend employers report hours worked for salaried employees.
Predictions vary as to how cumbersome the new reporting requirements will be. On one hand, employers already possess all of this information, so filling in the reports could take minimal effort. On the other hand, gathering the data and completing the reports could be an administrative nightmare. However, there is one thing that all agree on – the EEOC will undoubtedly use this data to bring a flood of enforcement actions.
So what can be done now to prepare for the new reports due on September 30, 2017? Employers should look closely at job descriptions and compensation guidelines, including starting wages, merit, bonus and other adjustments. Many employers are surprised to discover pay disparities, because they are often inadvertent. Many disparities are simply a function of turnover and hiring in an unstable job market. Employers are advised to review compensation data to identify disparities that cannot be explained by legitimate, non-discriminatory factors. Now is the time to identify what, if anything, should be done to correct pay disparities. Although it can be uncomfortable to notify employees their pay history was not aligned with their colleagues’, employers are advised to act sooner rather than later.
Disclaimer: The article in this publication has been prepared by Eastman & Smith Ltd. for informational purposes only and should not be considered legal advice. This information is not intended to create, and receipt of it does not constitute, an attorney/client relationship.