The EEOC announces proposed addition of compensation data to annual EEO-1 Reports

On January 29, 2016 the Equal Employment Opportunity Commission (EEOC) along with the White House announced a proposed revision to the Employer Information Report (EEO-1) that will require employers with 100 or more employees to report compensation data for their employees. This will include collecting pay data from federal contractors. For a definition of what employers must comply with the EEO-1 filing click here.

It is anticipated that this compensation data will be collected on 63 million employees nationwide. “More than 50 years after pay discrimination became illegal it remains a persistent problem for too many Americans,’ said EEOC Chair Jenny R. Yang “Collecting pay data is a significant step forward in addressing discriminatory pay practices. This information will assist employers in evaluating their pay practices to prevent pay discrimination and strengthen enforcement of our federal anti-discrimination laws.”

This is one of the steps that the President’s Administration will take to advance “equal pay for all workers and further empower working families.” According to Secretary of Labor Thomas E. Perez, “The data collection also gives the Labor Department a more powerful tool to do its enforcement work, to ensure that federal contractors comply with fair pay laws and to root out discrimination where it does exist.”

What compensation data needs to be collected?

Starting in 2017, the EEO-1 Report will have to include compensation data from employees’ W-2 earnings along with the hours worked. It should be noted that the EEOC does not appear to be proposing that data be collected that is not maintained in the ordinary course of business (such as salaried employees). However, it is seeking comments on how to handle reporting compensation data for salaried employees. The proposed form can be viewed here.

What should employers do now?

• Make comments on the proposed regulations by April 1, 2016.
• Review the 2/1/2016 Federal Register to determine the definition of additional data you will need to collect.
• Begin to review current Compensation Policies to identify possible problem areas
• Take action now to correct any discrimination issues (be sure to include legal counsel)
• Fully document areas that have pay disparities for valid business reasons (aka experience, years of service, education/skill level, etc.)
• Ensure all management levels are aware of the company’s compensation policies
• Ensure that payroll vendors or in-house payroll/HRIS systems W2 data and hours worked can be compiled by September of each year (when EEO-1 forms are traditionally due)

Prudent employers should begin to review their compensation policies as soon as possible in anticipation of the targeting enforcement activities that are sure to follow once the new reporting requirements are in place. Failure to do so could not only trigger an audit but could also place the company at risk for legal action based on any findings the audit may produce.

Finally, a reminder that this year’s EEO-1 Report’s due date was extended to October 30, 2015.

This information is not meant to provide legal advice and a legal professional should always be consulted. This entire article is protected by Copyright and any unauthorized use is strictly prohibited. For permission to utilize this article, please contact BCL Systems, Inc. at robinb@bclsys.com.