The EEOC’s revised pay-data collection rule is back in force and the September 30, 2019 deadline is at our doorstep. Here is a quick overview of what employers should know and links to available resources.
Who must report? Employers, including federal contractors, are required to submit Component 2 compensation data for 2017 and/or 2018 if they have 100 or more employees during the respective workforce snapshot period selected for that year. In its FAQs, the EEOC defines the “workforce snapshot” period as “an employer-selected pay period between October 1 and December 31 of the reporting year” and employers are not required to select the same pay period for 2017 and for 2018. The EEOC FAQs also discuss how mergers, acquisitions and spinoffs impact an employer’s obligation to report Component 2 compensation data. A key takeaway from that guidance is that the company with control over the data who employed the individuals during the selected snapshot period will be obligated to report.
What is required? The revised EEO-1 form requires reporting of aggregate W-2 earnings—including the total number of full- and part-time employees—and hours worked in twelve pay bands for each of the EEO-1’s ten job categories. This adds an increased employer obligation, as the prior version of the EEO-1 simply required reporting on the number of employees across the same ten categories according to race, ethnicity, and sex. If an employee was employed during the employer’s selected “workforce snapshot” in the reporting year, the employer must report W-2 earnings regardless if the employee worked for the entirety of the year. The EEOC guides that employers should not calculate and then report the annualized earnings for employees who did not work the full calendar year and should still report the W-2 earnings even if the employee did not work the entirety of the year.
As explained in the EEOC’s Instruction Booklet, an employer with multiple establishments must submit (1) a consolidated total report, (2) a report covering the headquarters office, (3) a separate report for each establishment with more than 50 employees, and (4) a separate report for each establishment with less than 50 employees or the employer may report on such establishments in list format.
The EEOC also provides a sample form (excerpt below) to illustrate how the Component 2 EEO-1 Online Filing System is organized to collect compensation data for covered employers.
Note, California employers should be aware of S.B. 171 (2019, Jackson), which is currently moving through the Assembly. If enacted into law, California employers subject to the EEO-1 requirements would also be required to submit pay data to the Department of Fair Employment and Housing according to the EEO-1’s broad pay bands and job groupings.
When is the deadline? September 30, 2019.
How to submit? The Component 2 EEO-1 Online Filing System for data collection went live on August 15, 2019, and employers should have received system login information by USPS and email. The EEOC provides special instructions where electronic submission would create a hardship.
What next? As previously reported here, this revised requirement came under criticism during the agency’s March 2016 public hearings on the subject. Of primary concern is that the proposed data compilation will be far more summary than the individualized data OFCCP has long requested in audits. Use of W-2 income data could also be inadequate because of the way certain types of non-traditional income, like stock options, are reported (or not reported). Finally, the broad nature of jobs encompassed in EEO-1 categories may not allow a meaningful look at pay of workers who are in any way similarly situated under applicable legal standards. As such, false positives may arise and investigating them will absorb valuable EEOC and employer resources.
It remains unclear how the EEOC intends to use this new information. While the data itself may not reflect the numerous factors that impact pay decisions or account for pay differences, employers subject to the EEO-1 reporting requirements should file their required Component 2 data but should continue to monitor these changes for future filings.