Still Time to Weigh In on EEOC Proposal to Collect Pay Data

CJC Compliance, HR News

EEOC’s EEO-1 Report Changes Proposal

Employers have until April 1 to submit comments on the Equal Employment Opportunity Commission’s (EEOC’s) proposed changes to its EEO-1 report, increasing employers’ data collection and reporting burdens.

The EEOC proposal, announced in January 2016, would require employers with 100 or more employees to submit W-2 earnings data and actual hours worked for all employees beginning with the 2017 EEO-1 reporting cycle.

The data would be used for pay discrimination enforcement purposes, including targeted, systemic pay discrimination investigations by the EEOC and the Labor Department’s Office of Federal Contract Compliance Programs.

What’s Expected

Currently, certain employers report workforce data on sex, race and ethnicity over a 12-month period by September 30 each year, using the EEO-1 form. The revised form will require identification of employees who fall into each of 12 pay bands based on W-2 earnings within each of the 10 different EEO-1 job categories.

In order to distinguish between full-time and part-time workers, employers will also be required to report actual hours worked for each employee, again by race, ethnicity and gender, job category and pay band, for the same 12-month period. The actual hours for exempt employees will not be required.

For context, there will be 1,680 categories into which employees can be fit when including 12 pay bands to reporting on race, ethnicity and gender.

According to the EEOC, slight modifications to existing HRIS and payroll systems will produce the data in the required formats. This does not take into account those employers who do not house W-2 earnings and actual work hours in the same computer systems as employees’ EEO information. To comply, these employers will need to reconcile and merge data generated from from multiple systems.

In addition to collection and reporting burdens, employers are also worried about the confidentiality of their sensitive compensation data, and the agency’s proposal to publish employers’ aggregated pay data “that will help employers in conducting their own analyses of their pay practices.”

The EEOC acknowledges publishing aggregate pay data broken down by geography and industry is a risk, but has not yet developed a plan for mitigating this risk.

Employers should stay up-to-date on this proposal and voice any concerns in submitted comments here by April 1. Additionally, it’s recommended that employers:

*Get ahead of the risk and conduct self-audits of compensation data to identify and address areas of pay disparities before compliance obligations become effective in 2017. These audits should be conducted under attorney-client privilege for protection.

*Consult with your IT department and external HRIS and payroll system vendors to assess the costs associated with system modifications and prepare an implementation budget accordingly.

For assistance with this or other HR-related concerns, please contact CJC Human Resource Services