September 30, 2016

Controversial Revisions to EEO-1 Report Approved

On the eve of the filing deadline for the 2016 Employer Information (EEO-1) Reports, the Office of Management and Budget (OMB) approved the U.S. Equal Employment Opportunity Commission’s (EEOC) highly anticipated and controversial proposal to revise the EEO-1 Report. Beginning in 2018, all U.S. employers with more than 100 employees will be required to report compensation and hour data for all of their employees on an annual basis. 

Going forward, the reporting deadline for EEO-1 Reports will be March 31 of the year following the EEO-1 report year. For example, the 2017 EEO-1 report will be due on March 31, 2018 (rather than as previously required by September 30). The new EEO-1 form can be found on the EEOC’s website, along with the EEOC’s questions and answers pertaining to the summary pay data.

Notable changes to new EEO-1 report include:

  • The "workforce snapshot" will be changed to a pay period between October 1 and December 31 of the reporting year. Employers may choose any pay period during this three-month period to count their full- and part-time employees for the EEO-1.
  • Employers will report the total number of full- and part-time employees employed during that year in each of these 12 pay bands in each EEO-1 job categories.
  • Employers should rely on Box 1 of Form W-2 as the measure of pay for the new component of the EEO-1, which includes supplemental pay (e.g., overtime, shift differentials, bonuses).
  • The number of "hours worked" is defined in accordance with the Fair Labor Standards Act and will require employers to report hours worked for exempt employees by either:
    • Reporting 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 numbers of weeks the employees were employed during the EEO-1 reporting year; or
    • Providing actual hours of work by exempt employees during the EEO-1 reporting year if the employer already maintains accurate records of this information.

The revised EEO-1 Report was approved despite significant concerns raised by employers, including the use of 12 pay bands to collect broad aggregates of data from dissimilar jobs in arbitrary groupings, which is likely to lead to preparation of meaningless statistical analyses of such data with unfounded inferences of discrimination. 

Despite the March 31, 2018, reporting deadline, the new EEO-1 report will be based on 2017 pay data, which will begin shortly with the next calendar year. Best practice is to begin early to evaluate any necessary adjustment to software tracking systems and related practices to ensure that the newly required data is available in the format mandated by the EEOC. With the continuing increased attention being given at state and federal levels to pay equity, employers are also advised to consider a careful and privileged review of legal risks associated with their current pay practices, processes for identifying pay disparities, documentation of job-related reasons for disparities and steps for remedying unexplained disparities.

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