Last week the U.S. Equal Employment Opportunity Commission announced a proposed revision to the Employer Information Report (EEO-1) to include collecting pay data from employers. EEOC says this new data will assist the agency in identifying possible pay discrimination and assist employers in promoting equal pay in their workplaces. Symbolically, the announcement came on the seventh anniversary of the Lilly Ledbetter Fair Pay Act.
The EEO-1 is a well-established, annual report. Every year by September 30, private employers with at least 100 employees (or 50 employees for covered government contractors) must tally and report their employee numbers by job category and then by sex, race, and ethnicity. There are ten job categories and seven race and ethnicity groups. The new proposal would build on the existing structure to also require employers to collect and report aggregate pay data, based on 12 specified pay bands, beginning with the September 2017 report. Thus, employers would have to tabulate and report on the number of employees whose W-2 wages for the prior 12 months fell within each of the 12 pay bands, within each of the 10 job categories, broken down by sex and race/ethnicity, as well as the total number of hours worked by the employees within each sex and race/ethnicity group within each pay band within each job group. That adds up to 3,600 data fields! And to make matters more complicated, the W-2 wages and total hours worked are not calendar year totals, but are for the 12 month-period prior to the date on which the EEO-1 data is compiled.
EEOC and the U.S. Department of Labor intend to use this data to focus agency investigations, assess complaints of discrimination, and identify existing pay disparities that may warrant further examination. The EEOC said, “Too often pay discrimination goes undetected because of a lack of accurate information about what people are paid. The proposed pay data collection will provide a much needed tool to identify discriminatory pay practices where they exist in order to ensure that fair pay practices are put in place. Similarly, the Labor Department touts the proposed new EEO-1 report as a “powerful tool” to help it “root out discrimination” in pay.
EEOC estimates that it will take each filer eight hours in the first year to develop and implement the queries and process necessary to provide the new pay data. This estimate is based on the assumption the employer already has in place a human resources information system that is integrated with the employer’s timekeeping and payroll data. EEOC further estimates that it will take only 6.6 hours to complete and submit the new pay data form each year. These estimates seem ridiculously low. And they do not account for the time and cost to implement a new HR information system if the employer does not already one with the required capabilities.
The public has until April 1, 2016, to submit comments about the proposal.