On September 29, 2016, the Equal Employment Opportunity Commission (EEOC) and Office of Federal Contract Compliance Programs (OFCCP) formally adopted a new rule modifying their EEO-1 Report to require covered enterprises (generally locations with 100 or more employees and most federal contractors) to submit detailed pay data for all employees by gender and race/ethnic group. The EEOC’s stated purpose for these changes is to “use this data to more effectively focus agency investigations, assess complaints of discrimination, and identify existing pay disparities that may warrant further examination.”
The previous version of the EEO-1 Report, which has been filed on or before September 30 every year, requires employers to report the number of workers it employed within ten different job categories (from laborers to executives/senior managers) by gender and race/ethnicity. The Report did not require submission of any pay-related data.
In the newly-revised EEO-1 Report, which will be the required form as of March 31, 2018, employers will be required to state how many employees, by gender and race/ethnic group, fall within 11 wage bands within each job classification.
In addition to reporting the number of employees falling within each salary band, employers will also be required to report the total number of hours worked by those workers, again using the same gender and race/ethnicity categories. Accordingly, the EEOC and OFCCP will have access to data to calculate approximate hourly rates for workers by gender and ethnicity. Again, these agencies hope that this increased information will allow them to identify and remedy perceived instances of illegal pay inequalities.
Ultimately, we believe the pay data required by the EEOC and OFCCP is of very limited usefulness and fails to provide enough information to draw meaningful conclusions regarding a particular employer’s compliance with federal equal pay laws. In any event, the process of gathering this information should benefit employers by allowing them to self-audit this data to identify discrepancies that cannot be easily explained by non-discriminatory factors before the information is submitted to the federal government.
Affected employers will have 18 months to prepare to comply with these more robust pay reporting requirements. If you have any questions regarding the new rule or how to comply, feel free to contact me or any other member of our Labor & Employment Group.