Newly Implemented Changes Adding Pay Data Information to Annual EEO-1 Reports Will Increase Reporting Burden and Potential Liability for Affected Employers
The U.S. Equal Employment Opportunity Commission (“EEOC”) and the Office of Management and Budget (“OMB”) recently approved the EEOC’s revised proposal to collect summary employee pay data information through the Employer Information Reports, or EEO-1s. Under the new rule, employers (including federal contractors) with 100 or more employees will be required to provide annual data on employee pay ranges and hours worked in addition to the information already collected from EEO-1s. The agency says these changes will help it identify possible pay discrimination and assist employers in promoting equal pay in the workplace. The EEOC will also use the information to assess employee discrimination complaints and guide its investigations.
For years, the EEO-1 report has provided the federal government with information regarding the race, ethnicity, and gender of an employer’s workforce. The new version of the EEO-1 has been substantially expanded to require affected employers to submit, on an annual basis, aggregated data regarding their employees’ W2 earnings and hours from January 1, 2017 forward. The first report is not due until March 31, 2018 – but it must include such information from January 1, 2017 forward.
To comply with the rule, an affected employer must assign each of its employees to one of ten broadly defined job categories (examples include “First/Mid-Level Officials and Managers,” “Technicians,” “Sales Workers,” “Operatives,” and “Service Workers”) and one of twelve “pay bands” (i.e., payment brackets ranging from “$19,239 and under” to “$208,000 and over”). There are 120 combinations of job category/pay band, and the employer must specify the number of employees by ethnicity, race, and gender for each combination so the EEOC can look for patterns of discrimination. The report does not allow the employer to provide additional information – such as employee work history, education, seniority or requirements for specific jobs within a category – that might account for some apparent pay disparities.
The additional pay data will almost certainly result in an increase in EEOC investigations, as well as individual and class action equal pay lawsuits. Therefore, affected employers should consider the rule’s potential implications for their own businesses and take appropriate action, which could include conducting pay equity analyses and adjusting compensation. As noted above, the first revised EEO-1s reflecting pay data are not due until March 31, 2018, they will include information for the reporting period starting January 1, 2017, so employers should evaluate their practices before the end of 2016 and be ready to implement any compensation changes by January 1.
You should seek the advice of counsel to assist you in this process. A member of the Employment Law Group at Trenam Law would be happy to help you.