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EEOC tweaks EEO-1 proposal, changes reporting deadline to sync with W-2s

By Cynthia L. Hackerott, J.D.

The EEOC has revised its proposal that would add the collection of summary pay data from employers with more than 100 employees to the existing Employer Information Report, commonly known as the EEO-1 Report. Among other things, the updated proposal would move the due date of the 2017 report 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. The revised proposal is slated for publication in the Federal Register on July 14, 2016, and public comments are due by August 15, 2016, the agency stated in a press release.

The EEOC announced its original proposal on January 29, 2016, and published it in the Federal Register on February 1, 2016 (81 FR 5113- 5121). The public comment period for that proposal closed on April 1, 2016.

Proposed changes. Current regulations 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 data provides the federal government with workforce profiles from private sector employers by race, ethnicity, sex, and job category. In its revised proposal, the EEOC refers to this data as “Component 1.”

In both the original and revised proposals, which the Commission says were made in partnership with the OFCCP, the EEOC proposes adding aggregate data on pay ranges and hours worked to the form, in addition to the Component 1 data. The revised proposal refers to this added data collection as “Component 2.” The new information would be reported across 10 job categories and by 12 pay bands and would not require the reporting of specific salaries of each individual employee. Federal contractors with 50-99 employees would not report pay data but would 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 would not be required to file the EEO-1 Report.

This pay data collection would permit the EEOC to compile and publish aggregated data that will help employers in conducting their own analysis of their pay practices to facilitate voluntary compliance, according to the EEOC. A separate compensation data collection proposal, published by the OFCCP in August 2014, which would have applied only to federal contractors, will not be implemented. Both agencies would use this pay data to assess complaints of discrimination, focus agency investigations, and identify existing pay disparities that may 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.

Public hearing and comments. The EEOC received 322 timely public comments in response to its original proposal. The comments were submitted by individual members of the public, employers, employer associations, members of Congress, civil rights groups, women’s organizations, labor unions, industry groups, law firms, and human resources organizations, the agency reports. Over 120 of the 322 comments were part of mass mail campaigns mostly supporting the proposal, although one mass mail campaign opposed the proposal. The mass mail campaigns included submissions from organizations that collected up to thousands of signatures from their members or supporters.

On March 16, 2016, the Commission held a public hearing where it heard from 15 witnesses who provided the views of employers, employees, and academics, an agency statement reported. Some stakeholders disputed the usefulness of the proposed data collection as well as its estimated recordkeeping burden and representations regarding confidentiality. Yet others saw the proposed changes as an important path to narrowing a persistent wage gap.

Date changes in revised proposal. In formulating the revised proposal, the EEOC considered the public comments submitted to the OMB as well as the hearing testimony. The agency stated that it also considered academic literature on compensation practices on discrimination, as well as studies about trends in compensation and collecting pay information. Among the specific suggestions adopted in the revised proposal is moving the due date for the 2017 EEO-1 Report 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 would 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.

The revised proposal would also 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. Notably, the reporting schedule for 2016 data remains unchanged; EEO-1 respondents must comply with the September 30, 2016, filing requirement for the currently-approved EEO-1, and must continue to use the July 1st through September 30th workforce snapshot period for that report.

Software concerns. Because HRIS tools, such as ADP Enterprise, PeopleSoft, and UltiPro, allow for the collection of EEO-1 demographic data, and all three offer the capacity to record year-to-date gross and paid earnings, the EEOC states in the revised proposal that “creating software solutions for the EEO-1, Components 1 and 2, may not be as complex or novel as some comments suggested. Moreover, the EEOC intends to support employers and HRIS vendors as appropriate to accommodate Component 2 of the proposed EEO-1. For example, the EEO-1 Joint Reporting Committee plans to post online its new Data File Specifications for Components 1 and 2 of the modified EEO-1 as soon as OMB approves the information collection. The EEO-1 data file specifications will be for data uploads (submitting EEO-1 data in one digital file), but they also will describe the formatting of data for direct data entry onto the firm’s secure EEO-1 account with the Joint Reporting Committee.

Training. The revised notice also provides that the EEOC will supplement existing training for EEOC statisticians, investigators, and attorneys about how EEO-1 pay data and the updated EEO-1 analytics tool can be used to improve the agency’s enforcement work. Further, the EEOC would provide enhanced technical assistance and support to employers.

Confidentiality. Maintaining that it “has successfully protected the confidentiality of EEO-1 data for over 50 years, since this data was first collected,” the EEOC states in the revised proposal that it “would continue to ensure that staff is trained with regard to confidentiality obligations with respect to pay data.” The agency also asserts that it takes extensive measures to protect the confidentiality and integrity of EEO-1 data in its possession, including the maintenance of “a robust cyber security and privacy program, in compliance with the Federal Information Security Modernization Act of 2014.”

The online EEO-1 portal of the Joint Reporting Committee allows firms that currently upload EEO-1 data files to encrypt their data or even create a file transfer site for EEOC to download the data, the EEOC points out. After collecting and reconciling EEO-1 data through a process that may involve input from the employer or contractor, the Joint Reporting Committee at the EEOC provides the database to OFCCP on an encrypted storage device, the revised proposal explains.

In addition, the revised notice provides that the OFCCP will notify contractors of any FOIA request for their Component 2 data. The OFCCP will protect the confidentiality of this data to the maximum extent possible consistent with FOIA, and will not disclose the data if the agency determines that a contractor’s objection is valid. 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 revised notice states.

Revised burden estimate. In the revised proposal, the EEOC adjusted its methodology for calculating the annual burden on employers. It took into account the time and pay rates for a range of employees at both the firm- and establishment- levels who are responsible for preparing and filing the EEO-1. Also, the EEOC states it no longer assumes that all the EEO-1 reports for 2017 and 2018 will be submitted by one data upload filed by the firm on behalf of all the establishments. The agency now recognizes that there are certain tasks that will be performed at the establishment level for employers who enter their EEO-1 data directly onto the Joint Reporting Committee’s secure portal. Therefore, the revised burden calculations are based on the number of hours needed to complete the tasks at the firm level and also at the establishment level for the proportion of EEO-1 filers who do not now use centralized, secure data uploads. Accordingly, the agency revised its total estimated annual burden hour cost in 2017 and 2018 for those contractors that will complete and submit only Component 1 (contractors with 50-99 employees) to $1,872,792.41, and the total estimated annual burden hour cost in 2017 and 2018 for employers and contractors that will complete both Components 1 and 2 to $53,546,359.08.

Justification for change in reporting requirements. Additionally, the notice of the revised proposal sets forth the EEOC’s conclusions about the ways the proposed pay data collection will be used to enhance and increase the efficiency of enforcement efforts while facilitating employer self-evaluation and voluntary compliance. It provides the EEOC’s rationale as to the legal authority it has to implement the proposal and explains why the agency believes that revisions to the EEO-1 Report are necessary for the enforcement of Title VII, the Equal Pay Act, and Executive Order 11246. “Despite voluntary compliance and the strong business case for fair pay, pay discrimination persists as a serious problem that EEOC and OFCCP are statutorily required to address,” the revised notice states. Currently, the agencies lack the employerand establishment-specific pay data thatprior to issuing a detailed request for information or a subpoena, would be extremely useful in helping enforcement staff to investigate potential pay discrimination.