5 Hidden Cost of Inaccurate Compensation

EEOC Requests Final Comments on the Revision of the Employer Information Report (EEO-1)

proposed eeo-1 form

The clock is ticking.  The public has 30 days to submit comments on or before August 15, 2016.

Background:

On February 1, 2016 the EEOC published its first notice to revise the EEO-1 employer information report.  The revisions were intended to support EEOC’s pay discrimination investigations by requiring employers that meet certain criteria  to submit pay data with their EEO-1 submissions. 

The standard EEO-1 report requires employee counts by location, job category and by race/gender and would remain unchanged (Component 1).  The first notice or proposed changes described an additional submission referred to as Component 2; component 2 would require reporting pay data by pay bands as well as hours worked, also further separated by race/gender.  The public was invited to submit comments during the 60-day Notice and 322 comments were received in total.  On March 16, 2016,  a public hearing was held to hear 15 witnesses and learn more about their support of or opposition to the first notice.  The EEOC has considered and reviewed all the comments and submissions from the public hearing and on July 14, 2016, it published the final proposal (30-day notice) to revise the EEO-1.  The public now has 30 days from the publishing date to submit their comments on the final proposal, on or before August 15, 2016.

Highlights of the revised proposal:

Who will report on Pay Data in revised EEO-1? 

The EEOC did not change the definition of who is required to file the EEO-1 Component 1 and 2.  All employers with 100 or more employees will be subject to Component 1 and 2.  Federal Contractors with 50-99 will not file Component 2, but will still be required to submit Component 1. All federal contractors with less than 50 employees and all other employers with less than 100 employees will be exempt from filing the EEO-1 altogether.

When to file?

The 2016 EEO-1 submission remains unchanged.  The 30-day notice proposed to change the filing deadline to March 31st of the year following the reporting year.  Notice that the 2017 EEO-1 reports would be due on March 31, 2018.  The workforce snapshot for the 2017 reporting year would be a pay period between October 1st and December 31st as proposed. 

What Pay Data to include in the report?

The 30-Day notice proposes that employers use Box 1 of the W-2 for pay.  That means that the pay data will represent income received between January 1st and December 31st of the relevant year for Component 2.

Which data to use for hours worked?

For exempt employees, the employer can choose a proxy of 40 hours for full-time and 20 hours for part-time or provide actual hours worked by exempt employees.  For Nonexempt employees, employers will report “total hours” as recorded by FLSA for nonexempt employees in Component 2.

Impact:

Employers will need to ensure they have a bridge between their HRIS and payroll systems so that W-2 pay data and hours worked can be reported for Component 2. 

Employers must proactively review and analyze their pay data in advance of their EEO-1 submission.  The EEOC will use data analytical tools to flag significant disparities in pay.  These results will be used to determine where the agency will focus its investigations and requests for additional information from the employer.  Therefore, it is critical that employers analyze their pay practice in advance of EEOC’s analysis and subsequent actions.  Under current OFCCP requirements, Federal Contractors should be analyzing their pay practices on an annual basis.

Learn more about how PeopleFluent can empower federal contractors with the tools and information they need to stay compliant with the latest revisions and regulations.

For more information on the overall EEO-1 revisions or 30-day notice, please contact PeopleFluent at 1-800-782-1818, option 3 or email us at eeosales@peoplefluent.com. 

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