The Equal Employment Opportunity Commission, or “EEOC,” requires covered employers to report employees’ race/ethnicity and gender using the Employer Information EEO-1 report.  Covered employers include most private sector employers with more than 100 employees, and most federal contractors with more than 50 employees. 

Beginning with the 2017 EEO-1 report, private employers and federal contractors with more than 100 employees also must report specified summary pay data.  The deadline for filing the EEO-1 report has been extended by six months, to March 31st of each year, beginning with the 2017 EEO-1 report. According to the EEOC, collection of pay data will provide information that the EEOC can use to identify discriminatory pay practices, eliminate the wage gap, and help it focus enforcement resources on employers that are more likely to be out of compliance with federal laws.

The EEOC since 1966 has required covered employers to categorize information about the race/ethnicity and gender of its employees into specific job categories and report this information on the EEO-1 report.  The categories are Executive & Senior Level-Officials and Managers, First/Mid-Level Officials and Managers, Professionals, Technicians, Sales Workers, Administrative Support Workers, Craft Workers, Operatives, Laborers and Helpers, and Service Workers.

Employers are required to take a “workforce snapshot” of all employees on the payroll during one two-week pay period.  During the workforce snapshot period, if a private employer has over 100 employees, or if a federal contractor has over 50 employees, then it must complete the EEO-1.  Employers must include all full-time and all part-time employees employed during the workforce snapshot period in the EEO-1, even if the employee is not employed the full year.

New Reporting Elements

In addition to the demographic and job category data previously reported, the EEOC now requires private employers and federal contractors with more than 100 employees to report information about their employees’ pay and aggregate hours worked on the EEO-1.  However, federal contractors with 51 to 100 employees do not need to report the additional information, but must continue to report the demographic and job category data.

Employers must report the total number of employees by the demographic categories in each of 12 pay bands (pay ranges) for each job category.  The pay bands are the same as those used by the Bureau of Labor Statistics for the Occupation Employment survey.  Employers must use the wages it reported on the employee’s W-2 that year to identify the appropriate pay band in which to count an employee.

Additionally, employers must report the number of hours worked that year by all employees accounted for in each pay band.  Employers must report the actual number of hours worked during the year for all employees who are classified as “non-exempt” under the Fair Labor Standards Act.  For exempt employees, employers have a choice:  either use the number of hours actually worked by the exempt employee, or they may use a proxy of 40 hours for each full-time employee, and 20 hours for each part-time employee.  Employers do not have to pick one system or the other for all of their exempt employees.  Instead, they can track some exempt employees’ actual hours and use the proxy of 40 or 20 (as applicable) hours a week for others.  

The EEOC moved the workforce snapshot period to October through December 31 of the reporting year.  The workforce snapshot period previously fell between July 1 and September 30.  Thus, employers must choose a two-week pay period in the last quarter of the year in which to count and identify the set of employees for the EEO-1 report.  The new deadline for the 2017 EEO-1 report is March 31, 2018.

Tips for Employers

The EEOC has unambiguously stated its intent to use employers’ data from the EEO-1 report to focus its enforcement resources on employers who appear to be out of compliance with federal anti-discrimination laws. These include not only Title VII of the Civil Rights Act of 1964, but also the federal Equal Pay Act. Thus, employers should conduct their own analysis of the data to determine if any pay gaps exist and the reasons for those gaps.  

Pay differentials naturally may result from decisions made about individual employees’ performance, length of service, etc. rather than discriminatory pay practices.  Employers should consider tracking this type of information, as it may be relevant in assessing whether a potential pay gap violates pay discrimination laws or is simply a result of individual employee choices. 

Although the March 31, 2018, reporting date seems a long way off, employers must act now to ensure that their systems can track the pay and hours worked by employees throughout 2017.  Employers’ systems must be able to link the pay and hours worked data with each employee’s job category, and each employee’s race/ethnicity and gender data.  Employers using payroll service companies will need to work with those companies to obtain the necessary payroll data to complete the EEO-1.  

Employers also should decide now whether they are going to track exempt employees’ actual hours worked per week, in lieu of using a proxy of 40 hours for full-time and 20 hours for part-time employees for reporting on the EEO-1. If so, they should develop policies for tracking exempt employee hours.

X