Businesses have been submitting information on the Employer Information Report, or EEO-1, for years. However, in September of 2016, the EEOC announced that employers would be required to begin submitting pay data on the EEO-1. This is a big change in the reporting process for companies.
Purpose of the Change
Prior to this change, the EEO-1 collected data from employers on employee:
- Job categories
- National origin
The decision to also collect pay data is designed to help the EEOC study, prevent, and punish pay discrimination particularly as it relates to sex, and race or ethnicity.
Who the Change Affects
Private employers that have 100 or more employees will be required to report the pay data. These employers were already reporting demographic data on the old EEO-1. Federal contractors and subcontractors with 50 to 99 employees will not be required to submit pay data, but will still continue to be required to submit the other information collected on the old EEO-1.
What Pay Data is Required?
Employers subject to the new requirement will first categorize employees according by job category, and then sex, race or ethnicity as they have done for years. Then, they will have to place employees into one of 12 different pay bands as laid out in the regulation.
Employers are instructed to refer to Box-1 on the employee’s W-2 to determine the appropriate pay band for the EEO-1.
Timeline for Compliance
The EEOC is allowing businesses up to 18-months to make the changes on the EEO-1 reports. This 18-month period started September 30, 2016 and extends to March 31, 2018. This means that the 2017 EEO-1 deadline will be March 31, 2018.
This extension does not change the deadline for the 2016 EEO-1. The 2016 EEO-1 report will not require employers to submit the pay data and was not changed from September 30, 2016
Uses for the Data and Self-Assessment
The EEOC has detailed several uses for the new data. It states that individual business data will remain confidential, unless the data is the subject of litigation. The data will be used for at least two purposes:
- Statistical analysis of the data in investigations of violations of the Equal Pay Act
- The EEOC plans to periodically publish aggregate EEO-1 data, including pay data
The EEOC claims the published aggregate data will be useful to private companies and federal contractors so that they undertake a voluntary self-assessment to remedy pay disparities.
The new EEO-1 requirements will create an additional burden for businesses in terms of compliance with the new requirements, but will also give the EEOC additional tools when investigating employers for various discrimination allegations.
Businesses would be wise to undertake what the EEOC calls “self-assessments” to mitigate against the threat of future litigation and to ensure that there are no data anomalies that could lead to the suspicion of pay disparity based on protected classes such as sex and race.
DHR understands the burdens and complexities of reporting and compliance. DHR specializes in providing HR services and solutions - including HR compliance issues with state and federal employment laws. Contact us today to learn more.