After a series of delays, the Equal Employment Opportunity Commission (EEOC) is now moving forward with their new process for collecting pay data from employers with at least 100 employees and federal contractors. This new data is due to the agency this Fall, so employers should begin working to compile the necessary data now.
Who Does This Apply To?
For many years, private employers with 100 or more employees have been required to file Form EEO-1 with the EEOC, reporting workforce demographics by job category, race, ethnicity, and gender. Beginning this year, these employers also must submit data on the compensation of employees in their workforce.
What’s Going On?
During the Obama administration, the EEOC proposed revising Form EEO-1 to add the collection of pay data to the demographic data which was already required by the form. The pay data collection requirement was placed on hold, however, by a separate federal agency and then was litigated. Earlier this year, a federal court ordered that the revised EEO-1 form should take effect this year and that the EEOC must collect the required pay data for 2018 by September 30, 2019. The EEOC also decided to collect 2017 pay data along with the 2018 data.
What Do Employers Need to Do?
In addition to the usual data on race, ethnicity and gender (which is now known as Component-1 data) which was due by May 31, 2019, the new pay data (known as Component-2 data) must be submitted by September 30, 2019. The Component-2 data must be drawn from one single payroll period of the employer’s choosing occurring between October 1 and December 31 for each reporting year (i.e., 2017 and 2018). The data is comprised of pay and hours worked, broken down into 12 pay bands across 10 job categories, by the same racial, ethnic, and gender groups used for the existing Component-1 data.
Employers should start gathering the required pay data now, as the EEOC began accepting Component-2 data reporting on July 15, 2019 and the deadline is September 30, 2019.
The first step is to determine the appropriate payroll period from each reporting year. The employer can pick any payroll period during the applicable year and the period selected does not have to be the same for years 2017 and 2018.
The next step is to ensure that each employee has been assigned to one of the 10 job categories provided by the EEOC.
Employers then must identify how many employees (based on race/ethnicity and gender) fall into each of the EEOC’s 12 compensation bands. The reported compensation must come from Box 1 of IRS Form W-2.
Next, employers must determine the total number of hours worked during the reporting period by all employees (again, based on race/ethnicity and gender) within the same compensation band. Employers are permitted to make assumptions about hours worked by exempt employees whose hours are not tracked.
Finally, all Component-2 data must be reported via the EEOC’s online filing system.