New Reporting Requirement: EEO-1 to Collect Summary Pay Data in Effort to Identify Wage Gaps

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By Michael A. Shadiack & Michael J. P. Schewe

The Equal Employment Opportunity Commission (“EEOC”) recently announced that, starting March 31, 2018, it will collect additional pay data from certain employers on their Employer Information Report (commonly referred to as the “EEO-1”).  The additional data to be collected will assist the EEOC in identifying any discriminatory pay practice causing a “wage gap” for women and minorities.  With assistance from the Department of Labor’s Office of Federal Contract Compliance Program (“OFCCP”), the EEOC will monitor and test employer data in order to investigate employers whose data suggests pay disparities.

The current EEO-1 collects data about the number of employees by job category, sex, and race or ethnicity.  The revised EEO-1 will collect “summary pay data,” which is the total number of the employer’s full and part-time employees during that year in each of the 12 pay bands listed for each job category on the EEO-1 form.  The revised form can be found here.

The EEOC cautioned that, under no circumstance, should an employer disclose individual pay, salaries or personally identifiable information.

The summary pay data change will only affect private employers with 100 or more employees, including federal contractors and subcontractors.  Federal contractors and subcontractors with 50-99 employees (and a contract, subcontract or purchase order of $50,000 or more) will still have the same reporting requirements - i.e., reporting on employees by job category as well as by sex, ethnicity and race - but these employers will not be required to submit the new summary pay data.  The reporting requirements will not apply to private employers with 99 or fewer employees, or to federal contractors and subcontractors with 49 or fewer employees, consistent with current practice.

In addition to the summary pay data, the revised EEO-1 report will include aggregate hours-worked data.  Essentially, employers will need to calculate and report the total numbers of hours worked by all employees accounted for within each pay band for the W-2 reporting year.  This change should be less of a burden as to non-exempt employees, since employers are already required under the Federal Labor Standards Act (“FLSA”) to keep detailed records of hours worked.  However, employers will have a decision to make regarding their exempt employees: they may either report 40 or 20 hours per week for each full-time or part-time employee, respectively, or they may report the actual hours worked.

Lastly, the new rule changes the reporting time period from July 1st through September 30th, to October 1st through December 31st.  After the first reporting date in 2018, all EEO-1 reports moving forward will be due March 31st.

What should employers do now?

Employers should consider engaging in a self-audit, which would enable them to identify any equal pay issues based on gender, race and ethnicity.  It is imperative that employers learn what their pay data currently shows before they report that information to the government agencies, and to consider proactively addressing any pay disparity.  An employer is well-advised to conduct the self-audit under the protections of the attorney-client privilege, as regulatory bodies may request evidence of internal surveys and analyses done by an employer.