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2017 EEO-1 Report, with addition of compensation data, due March 31, 2018

September 30th, 2016  |  Cynthia L. Hackerott

Beginning in March 2018, the Employer Information Report, commonly known as the EEO-1 Report, will include the collection of summary pay data from employers with more than 100 employees, the EEOC announced on September 29, 2016. The deadline for the new 2017 EEO-1 report will be March 31, 2018, which gives employers 18 months to prepare, the announcement notes. This revision does not change the reporting deadline for the 2016 EEO-1 Report, which is due on September 30, 2016. EEO-1 respondents must continue to use the July 1st through September 30th workforce snapshot period for the 2016 report. On its website, the EEOC has a landing page with a sample of the new form and instruction booklet, and well as a Q&A and other information.

The Office of Management and Budget (OMB) approved the changes to the form on September 29, 2016, and that approval expires on September 30, 2019. An EEOC spokesperson confirmed to Employment Law Daily that there will not be a Federal Register notice regarding the finalized changes.* However, the EEOC’s supporting statement for this new information collection, as submitted to the OMB on September 28, 2016 is available at on the RegInfo.gov website.

The new data will improve investigations of possible pay discrimination, which remains a contributing factor to persistent wage gaps, according to the EEOC announcement. For purposes of self-assessment, employers can use published aggregated data to compare or benchmark their own data with data from other employers in their industry or geographical area, the EEOC says.

Current reporting obligations. Federal regulations currently require that all employers in the private sector with 100 or more employees, and some federal contractors with 50 or more employees, annually file the EEO-1 Report, with the Joint Reporting Committee (a joint committee consisting of the EEOC and the OFCCP) by September 30. The current EEO-1 Report requires covered private sector employers to provide workforce profiles by race, ethnicity, sex, and job category. The EEOC refers to this data as “Component 1.”

New compensation data collection. The new requirements, which the Commission says was formulated in partnership with the OFCCP, will add aggregate data on pay ranges and hours worked to the form, in addition to the Component 1 data. The EEOC refers to this added data collection as “Component 2.” The new information will be reported for each of the 10 EEO-1 job categories and by each of 12 pay bands. The 10 EEO-1 job categories have not changed with this revision. Employers will count the number of employees they have in each pay band for each job category. If no employees are in a job category or pay band, employers will leave the cell blank. Reporting of specific salaries of each individual employee will not be required.

Covered employers will be required to tally and report the number of hours worked that year by all the employees accounted for in each pay band. Hours worked data is being collected so that the EEOC and the OFCCP can account for part-time and partial year employment when they analyze EEO-1 pay data.

Pay bands. The EEO-1 pay bands track the 12 pay bands used by the Bureau of Labor Statistics for the Occupation Employment Statistics survey, and are as follows:

(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.

How to determine appropriate pay band. To identify the pay band on the revised EEO-1 in which to count an employee, employers will rely on the pay reported for income tax purposes that year in Box 1 of the W-2 form. The EEOC notes that wages earned after the conclusion of the last full pay period in December are often paid to employees in the next calendar year. For EEO-1 purposes, these wages will be reported for the same year in which they are reported for W-2 purposes.

Reporting demographic information. After tallying the total number of employees in each pay band by job category, employers will enter this data in the appropriate columns of the EEO-1 Report based on the sex and ethnicity or race of the employees. For example, a financial services firm may report that it has 10 employees in the “Professionals” job category in pay band 6, which is $49,920 – $62,919, who are men and black; and that it also has 35 Professionals in pay band 6 who are men and white.

Measuring and reporting hours worked. For the new EEO-1 Reporting requirements, hours worked will be counted by consulting employer records already required under the Fair Labor Standards Act (FLSA):

  • For non-exempt employees, for whom the FLSA already requires employers to keep records of hours worked, employers will consult these records to identify the number of hours worked.
  • For employees who are exempt from the FLSA, employers have a choice. They may either: (a) Report 20 hours per week for each part-time employee and 40 hours per week for each full-time employee; or (b) Report actual number of hours worked by exempt employees, full- or part-time, if they prefer to do so.

Hours worked data will be reported on the EEO-1 by tallying the total number of hours worked by all the employees counted in each pay band, for the W-2 reporting year.

Coverage. Federal contractors with 50-99 employees will not be required to report pay data but will continue to report ethnicity, race, and sex by job category. Consistent with current practice, non-contractor employers with 1-99 employees and federal contractors with 1-49 employees will not be required to file the EEO-1 Report.

Date changes. The due date of the 2017 report has been moved from September 30, 2017 to March 31, 2018, to simplify employer reporting by allowing employers to use existing W-2 pay reports, which are calculated based on the calendar year. Employers will use Box 1 of Form W-2 (W-2 income) as the measure of pay for Component 2 of the EEO-1 Report.  By definition, W-2, Box 1 includes income that is received between January 1st and December 31st of the relevant calendar year.

Each employer may choose any pay period during the three-month “workforce snapshot period” to count its full and part-time employees for the EEO-1 report. For reporting years 2016 and before, the “workforce snapshot period” was July 1 to September 30. The final rule will change the “workforce snapshot” to a pay period between October 1st and December 31st of the reporting year, starting with the EEO-1 Report for 2017.

Filing process. Consistent with current reporting practices, employers will submit EEO-1 reports via the EEO-1 Online Filing System on the EEOC’s website or utilize that portal to electronically transmit a data file containing the EEO-1 data. The Joint Reporting Committee file specifications for the revised EEO-1 collection are available on the 2017 EEO-1 Survey landing page.

Compliance assistance. The EEOC will offer free webinars for interested employers and stakeholders on October 20 and October 26, 2016. Individuals may submit questions or request assistance by contacting the EEO-1 Coordinator at: EEOC Survey Division — Room 4SW22G, 131 M Street, N.E. Washington, D.C. 20507, or by email at: Suggestion Box on EEO-1 Additional Documentation or eeo1.suggestionbox@eeoc.gov.

Background. Starting in 2010, the EEOC and the OFCCP participated in the President’s National Equal Pay Task Force; following the task force’s recommendation, the EEOC commissioned a National Academy of Sciences (NAS) study on how to collect pay data from employers. The NAS issued its report in 2012, and based on a recommendation from that report, the EEOC contracted to conduct an independent pilot study on collecting pay data, which was completed in September 2015. In 2012, the Commission also convened human resources information systems (HRIS) experts, information technology specialists, and employer stakeholders, to discuss EEO surveys, including the EEO-1 and pay data.

The EEOC published its original proposal in the Federal Register on February 1, 2016 (81 FR 5113- 5121), and the comment period for that original proposal closed on April 1, 2016. A revised proposal was published in the Federal  Register on July 14,  2016 (81 FR 45479-45497), and the public comment period closed on August 15, 2016.

According to the Commission, it considered, in total, written comments from thousands of individuals, employers and their representatives, civil rights and women’s organizations, human resources and payroll associations, and Members of Congress.

OFCCP dropped separate Equal Pay Report proposal. The “OFCCP plans to utilize [the EEOC’s proposal for] EEO-1 pay data [collection] for federal contractors with 100 or more employees instead of implementing a separate compensation data survey as outlined in its August 8, 2014, NPRM,” the initial EEOC proposal states in a footnote (#63). The OFCCP’s now defunct proposal would have required covered federal contractors and subcontractors to submit an annual “Equal Pay Report” on employee compensation as a supplement to the EEO-1 Report (79 FR 46562- 46606; corrections published on August 20, 2014 at 79 FR 49260-49261). The extended deadline for public comments on that proposal ended on January 5, 2015.

In its original proposal, the EEOC said it discussed the above-referenced OFCCP pay data proposal with the OFCCP and considered the public comments submitted in response to that proposal prior to issuing the EEOC proposal. The Commission further stated that it and the OFCCP together consulted with the Department of Justice, focusing on how EEO-1 pay data would be used to assess complaints of discrimination, focus investigations, and to identify employers with existing pay disparities that might warrant further examination. The two agencies plan to develop statistical tools that would be available to staff to use the EEO-1 pay data for these purposes. They also anticipate developing software tools and guidance for stakeholders to support analysis of aggregated EEO-1 data.

Confidentiality. Addressing data privacy concerns that have been expressed by employers throughout the rulemaking process, the Commission maintains that is has “robust cybersecurity and privacy programs, in compliance with the Federal Information Security Modernization Act and based on NIST Special Publication 800-53, Security and Privacy Controls for Federal Information Systems and Organizations.”  These privacy and security controls protect organizational operations and information system assets against a diverse set of threats, including malicious attacks, natural disasters, structural failures, and human error, according to the Commission.

Further, “the hosting service for the EEO-1 data collection system provides a defense-in-depth security program with many layers of security utilizing different physical and software components in order to provide a high level of protection.  Security monitoring – both inside and outside the network, ensures the detection and rejection of unauthorized use.  These security controls and measures are monitored continuously with automated vulnerability and compliance software suites,” the agency says.

In addition, the EEOC notes that it does not disclose EEO-1 data for a specific employer; it only publishes large-scale aggregated EEO-1 data in a way that fully protects employer confidentiality and employee privacy. At a minimum, the EEOC does not publish data if it does not include at least three firms, or if one firm represents more than 80 percent of the data. The EEOC says it will ensure that any published aggregate data based on the revised EEO-1 will continue to protect the privacy and confidentiality of individual employers and employees.

The Commission also notes that the OFCCP holds EEO-1 data for federal contractors and subcontractors confidential to the maximum extent possible under the Freedom of Information Act and the Trade Secrets Act. The OFCCP will notify contractors of any FOIA request for their EEO-1 pay and hours worked data. If a contractor objects to disclosure and the agency determines that the contractor’s objection is valid, the OFCCP will not disclose the data. FOIA Exemptions 3 and 4 recognize the value of this data and provide, in combination with the Trade Secrets Act, the necessary tools to appropriately protect it from public disclosure, the EEOC points out.

Moreover, the EEOC has a current privacy impact assessment for the EEO-1, which is published on the EEOC website for employers that file the EEO-1 report. The Joint Reporting Committee’s information technology system will be fully compliant with recently revised Circular A-130 well before the first deadline for the new EEO-1 in March 2018, the Commission states, adding that the privacy impact assessment for the EEO-1 will be updated to address these revisions.

Justification for compensation reporting requirements. “More than 50 years after pay discrimination became illegal it remains a persistent problem for too many Americans,” said EEOC Chair Jenny R. Yang in the Commission’s September 29, 2016 statement. “Collecting pay data is a significant step forward in addressing discriminatory pay practices. This information will assist employers in evaluating their pay practices to prevent pay discrimination and strengthen enforcement of our federal antidiscrimination laws.”

“Collecting data is a critical step in delivering on the promise of equal pay,” said U.S. Secretary of Labor Thomas E. Perez. “Better data will not only help enforcement agencies do their work, but it helps employers to evaluate their own pay practices to prevent pay discrimination in their workplaces.”

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*On October 3, 2016 an EEOC spokesperson confirmed to Employment Law Daily that there will not be a Federal Register notice regarding the finalized changes.

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