Executive Summary: In accordance with the Obama administration's efforts to combat a perceived gender gap in compensation, the EEOC has proposed revising the Employer Information Report (EEO-1) to require employers to provide information on employee earnings and hours worked in addition to the information currently collected (data regarding employees' race, ethnicity and sex by job category). The agency will accept comments on the proposed revision until April 1, 2016.
Background: Covered federal contractors with more than 50 employees and private employers with 100 or more employees are required to file an EEO-1 annually. Employers provide data on this form regarding the number of individuals they employ by job category and by race, ethnicity, and sex. The data include seven race and ethnicity categories and ten job categories, by sex.
Proposed Revisions: Under the EEOC's proposal, beginning in 2017, employers with 100 or more employees will be required to submit information on pay and hours worked, in addition to the data currently collected. Contractors subject to the EEO-1 reporting requirement that have between 50 and 99 employees will continue to submit the same information that is currently required. The deadline for submitting EEO-1 reports will continue to be September 30th of the relevant year. Additionally, beginning in 2017, filers will be required to submit the EEO-1 form electronically.
The proposed revision would require employers to report pay information as reflected on the employee's W-2 form. The wage data would be aggregated into 12 pay bands (which were established by the EEOC) for the ten EEO-1 job categories. In the proposed revision, the EEOC claims that reporting wage data in this manner will enable it to discern potential discrimination while preserving confidentiality.
The EEOC has requested specific comments from employers on how to collect data on hours worked by salaried employees. The agency has commented that one approach would be to use an estimate of 40 hours per week for full-time salaried employees. The EEOC "is not proposing to require an employer to begin collecting additional data on actual hours worked for salaried workers, to the extent that the employer does not currently maintain such information."
How Would the Data be Used? Both the EEOC and OFCCP intend to use the compensation data to gain "insight into pay disparities across industries and occupations and strengthen federal efforts to combat discrimination." The agencies will likely analyze the pay data within a separate establishment and/or within a corporate structure to "assess discrimination complaints and better focus agency resources where there may be disparities."
Employers' Bottom Line: While this is only a proposed rule at this time, the EEOC's final rule likely will require employers to report information on pay and hours worked in some format. The proposed rule would impose additional administrative burdens on employers and creates concerns over the confidentiality of wage data. As federal contractors have been doing for years, non-contractor private sector companies with 100 or more employees are should analyze their compensation data well in advance of 2017, to address any issues uncovered.