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eLABORate: EEOC Revises Proposal to Collect Pay Data, Extends Comment Period

July 18, 2016

The U.S. Equal Employment Opportunity Commission (“EEOC”) on July 14 published its revised proposal to collect pay data through the Employer Information Report (“EEO-1”). The pay data shall include W-2 income data and hours worked data. The EEO-1 is a longstanding information collection mechanism used by the EEOC and the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (“OFCCP”) to collect data on the nation’s workforce.

All private employers that are covered by Title VII and have 100 or more employees now file an EEO-1 report about the sex, race and ethnicity of their employees. Federal contractors with 50 or more employees also file the EEO-1 if they are not otherwise exempt. The revised proposal would require that private employers and federal contractors with 100 or more employees add summary data to report workers’ pay ranges and hours worked.

Federal contractors with between 50 and 99 employees would only be required to submit data reflecting the existing sex, race and ethnicity requirements. Federal contractors with fewer than 50 employees and private employers with fewer than 100 employees will not be required to submit an EEO-1, as is consistent with current practice.

Reporting Employee Pay Ranges

In the revised proposal, employers will report on the number of employees within twelve different pay bands, using W-2, Box 1 income data. The pay bands track the 12 pay bands used by the Bureau of Labor Statistics in the Occupation Employment Statistics survey:

  1. $19,239 and less;
  2. $19,240 - $24,439;
  3. $24,440 - $30,679;
  4. $30,680 - $38,999;
  5. $39,000 - $49,919;
  6. $49,920 - $62,919;
  7. $62,920 - $80,079;
  8. $80,080 - $101,919;
  9. $101,920 - $128,959;
  10. $128,960 - $163,799;
  11. $163,800 - $207,999; and
  12. $208,000 and more.

The decision to rely on W-2, Box 1, income data differs from the EEOC initial proposal whereby the EEOC described five different measures of individual compensation. After the initial 60-day public comment period, the EEOC now proposes that employers use Box 1 of Form W-2 as the measure of pay in the pay reporting component. According to the EEOC, the W-2, Box 1 income data, is more useful because it includes not only wages and salaries, but also commissions, tips, bonuses, overtime and other supplemental pay. The EEOC contends that access to supplemental pay is a key indicator in evaluating potential pay disparities across race, gender and ethnic categories. Therefore, the total income measure will help it to more easily identified possible pay disparities.

The revised proposal also extends the due date for employers to submit the EEO-1 survey from September 30, 2017 to March 31, 2018. In other words, EEOC moved the reporting date for pay data until after the end of the calendar year, which allows employers to rely on actual W-2 data. In the EEOC’s original proposal, employers had to report W-2 pay data by September 30, which would have required a proxy for the data, rather than the actual information.

It is important to note that employers are not required to report individual payroll information for each employee. Rather, employers will tally the number of employees in the 12 pay bands for each EEO-1 job category. For each pay band, employers shall be required to enter the number of employees whose W-2 pay for the calendar year falls within that band. Employers must then report the summary pay data for that band of employees. Employers are not required to report individual pay or salaries.

Reporting “Hours Worked”

The revised proposal also requires that private employers with more than 100 employees and federal contractors with more than 50 employees report the “hours worked” or all nonexempt employees as recorded for FLSA purposes (e.g., employees paid by the hour and who receive overtime pay for hours worked more than 40 in a workweek).

For exempt employees, the EEO-1 instructions will give employers the option to:

  1. report a proxy of 40 hours per week for full-time exempt employees and 20 hours per week for part-time exempt employees, multiplied by the number of weeks the individuals were employed during the EEO-1 reporting year; or
  2. provide actual hours of work by exempt employees during the EEO-1 reporting year if the employer already maintains accurate records of this information.

The EEOC’s revised proposal, however, does not require the employers to report individuals’ pay rates or hours worked. Instead, employers will collect pay and hours worked in aggregate form. Pay data will be reported in 12 pay bands (e.g., pay band 5 is $39,000 - $49,919) and by race, ethnicity, sex and job category (e.g., 13 black female professionals in pay band 5).

Privacy and Confidentiality

Information submitted to the EEOC through the EEO-1 is confidential. In particular, Title VII forbids the EEOC or any EEOC officer or employee from making public any information, including EEO-1 data, before a Title VII proceeding is instituted that involves that information. Confidentiality protections are also imposed on the OFCCP by E.O. 11246.

According to the EEOC, “the pay data will assist the agencies in identifying possible pay discrimination and assist employers in promoting equal pay in their workplaces.” The U.S. Office of Management and Budget (“OMB”) will accept written public comment on the revised proposal until August 15, 2016. If finalized without revision, the proposed changes will take effect March 31, 2018. The next EEO-1 report due September 30, 2016 may be submitted without any changes to this report.

The proposed changes reflect the federal government’s increased emphasis to investigate perceived pay disparities across race, gender and ethnic categories. As such, employers should examine their current pay practices now to ensure they are in compliance with all federal laws and regulations.