Yesterday was “Equal Pay Day” – this is the day that the average pay for women catches up to the average pay for men from the preceding year alone. I had no idea until I received an EEOC email update proclaiming this to be true. For what it’s worth, apparently today is National Make Lunch Count Day, National Scrabble Day, National Peach Cobbler Day, National Thomas Jefferson Day and, my favorite, National Bookmobile Day. All worthy causes, to be certain. On to the EEOC’s latest administrative burden on employers.
EEOC Seeks Revisions to EEO-1 Survey.
On February 1, 2016, the EEOC proposed revisions to add wage and hour information to employers’ yearly EEO-1 report. This is old news, of course, but as the comment period closed on April 1, 2016, and the EEOC sent me the email of what’s on its radar, I thought it might not be bad to revisit what is likely coming down the pipeline. The EEO-1 report is required by the EEOC, pursuant to its authority in Title VII of the Civil Rights Act of 1964 (Title VII), and sets forth information aimed at detecting discriminatory practices. The proposed revision is the recommendation of a 2010 Equal Pay Task Force between the EEOC, DOL and the President’s National Equal Pay Task Force.
The EEO-1 survey is used by the EEOC and the OFCCP (Office of Federal Contract Compliance Programs) to analyze and enforce non-discriminatory employment (such as a contractor who hires no minorities). The EE0-1 survey must be filled out by all employers subject to Title VII with 100 or more employees (this includes corporate enterprises and/or shared ownership) and federal contractors / first-tier subcontractors subject to Executive Order 11246 (government contract over $10,000) with 50 or more employees and a prime contract or first-tier subcontract of $50,000 or more.
However, the EEOC has taken mercy – not all employers will have this additional pay and hours worked data burden (now called “Component 2” of the EEO-1). Employers with 50-99 employees would not need to report this new pay information, just the current information such as race, gender, etc. (“Component 1”). In any event, the September 2016 EEO-1 reporting cycle will not have any changes for any employer from previous reporting. However, the proposal would change the September 2017 reporting cycle for employers with 100 or more employees – they would need to add the pay and related information.
What New Data Must Be Reported?
The proposed regulation would require covered employers to provide data on employees’ W-2 earnings and hours worked. Specifically, aggregate W-2 data in 12 “pay bands” (pay range, for the rest of us) for the various job categories. Employers then must count and report the number of employees in each pay band. This information will enable the EEOC to compute and compare pay between men/women and various races and ethnicity – finding potential discriminatory pay practices. As for how to report the “hours worked” component for full-time salaried employees, the EEOC doesn’t have an answer for that yet (they sought comments on this issue specifically), but proposed that employers be required to collect additional data on actual hours worked for salaried employees (*gasp*).
How Can W-2 Pay Data Be Accumulated for September?
The proposed rule seeks to require employers to report total W-2 earnings…in September. Think about that. The EEOC has – and their solutions are thus: (1) “because payroll records are cumulative, generating reports at any given point in time should not be complicated for employers with automated payroll systems”; (2) the “W-2 data can be imported into a HRIS, and a data field can be established to accumulate W-2 data for the EEO-1”; or (3) the employer could use quarterly payroll reports for the previous four quarters. The EEOC states that in-house payroll can report this data using “most major payroll software system or by using off-the-shelf payroll software that is pre-programmed to compile data for generating W-2s. For employers that outsource their payroll, there would be a one-time burden of writing custom programs to import the data from their payroll companies into their HRIS systems.”
What Should Employers Do Now?
Prepare for the worst and hope for the best. If enacted, the proposed regulation will take effect September 2017. Seems far away until you consider that means the data must be collected for the year prior – which means, 2016. Accordingly, depending on how your company processes payroll, it would not hurt to identify how you are going to accumulate your pay data, and notably, whether your HRIS needs to be (or even can be) modified accordingly – certainly it will take more time than you’d think to get this figured out and the last thing you want to be is scrambling. If the regulation stalls out, worst case you have a system that can track the information for when this comes around again in the future, and you may find a benefit to tracking and knowing the actual hours spent by salaried employees (remember however, with some limited exceptions, don’t deduct their salary for less than 40 hours worked!). Stay tuned; I’ll keep my radar on this issue as well.