Why it matters

Tweaking its initial plan, the Equal Employment Opportunity Commission (EEOC) released an updated proposal about the collection of pay data from employers. Earlier this year, the agency announced that as part of an effort to eliminate unequal pay, it would begin to collect aggregate data on pay ranges and hours worked from Employer Information Reports (EEO-1). After reviewing 322 comments on the proposal, the EEOC has published a revised version with some substantive changes. For example, the updated proposal would provide more time before the first data collection (pushing it from September 2017 to March 2018) and permit employers to use existing W-2 pay reports. In a statement, U.S. Secretary of Labor Thomas E. Perez backed the proposal. “Better data means better policy and less pay disparity,” he said. “As much as the workplace has changed for the better in the last half century, there are important steps that we can and must take to ensure an end to employment discrimination.” The EEOC also tried to alleviate concerns about data safety by providing for additional employee training, emphasizing that it has “successfully protected the confidentiality of EEO-1 data for over 50 years.” Interested parties now have until August 15 to comment on the updated plan.

Detailed discussion

In January, the Equal Employment Opportunity Commission (EEOC) proposed a revision to the Employer Information Report (EEO-1) that would require employers to report information about the wages paid to their workers.

Private employers with at least 100 employees (and federal contractors with 50-99 workers) are currently required to file an EEO-1 report sharing the number of individuals they employ by job category and by race, ethnicity, and sex. The report—delivered to the EEOC and the Department of Labor (DOL)—contains ten job categories, ranging from Executive/Senior-Level Officials to Service Workers.

Pursuant to the EEOC’s initial proposal, these employers would additionally submit pay data as of September 30, 2017. Each year, employers would provide the agency with their employees’ W-2 earnings for a 12-month period starting on October 1 and ending the following September 30. Within the ten EEO-1 job categories, the proposal would have 12 pay bands, starting at $19,239 and under and working up to $208,000 and over. So an employer would report that it employs ten African-American men who are Craft Workers in the second pay band ($19,240 to $24,439), for example.

More than 300 individuals and entities commented on the proposal, and the agency held a public hearing in March to gather additional feedback. Based on the input from industry groups, individuals, employers, members of Congress, civil rights groups, law firms, and academics, the EEOC then published an amended proposal on July 14.

The most marked changes were the extension of time for the first data report and the agency’s decision to allow the use of existing W-2 pay reports in lieu of having to create a second calendar year for the pay data collection (the October to September schedule). Pushing back from the September 2017 date, covered employers will now have an additional six months to submit their 2017 EEO-1 reports until March 31, 2018. “The EEOC is providing more time to employers … to change their EEO-1 recordkeeping and reporting,” the agency explained.

Going forward, each EEO-1 report will be due on March 31 of the following year to coordinate with employers’ end-of-year income reporting obligations. W-2 Box 1 income will be the measure of pay, based on a calendar year basis ending December 31. Employers will not have to calculate a special W-2 income figure for an EEO-1 reporting year of October 1 to September 30, a switch that “will ease reporting requirements for employers,” the EEOC said.

“The EEOC decided to use W-2 income after carefully considering feedback from stakeholders,” the agency explained. “Supplemental pay, such as overtime, premium pay, and bonuses, is increasingly common in business today, and the EEOC cannot overlook its importance in a pay survey. Supplemental pay can reflect discrimination in an employer’s decisions and policies, for example, discriminatory assignments for overtime and more lucrative shifts.”

To address concerns about the confidentiality of the data collected by the EEOC, the agency emphasized the steps it will take to protect such information. EEOC employees and officers are prohibited from making information public—including EEO-1 data—and any staff member who violates this ban is subject to criminal penalties. The agency directly imposes this confidentiality requirement on all of its contractors, it added, and only shares information with other agencies if they agree in writing to comply with the confidentiality requirements.

Additional training for EEOC employees will be provided, the agency noted, with enhanced technical assistance and support available for employers. The EEOC also stressed efforts with regard to data security, including the maintenance of “a robust cyber security and privacy program.”

What remains consistent between the two proposals? The employee thresholds for reporting pay data, the use of W-2 wages (and not base pay), the requirement to report the number of hours worked for both exempt and nonexempt employees, and the use of the same 12 pay bands and 10 job categories.

To read the revised proposal and view the proposed EEO-1 form to collect pay data, click here.