On January 29, 2016, the U.S. Equal Employment Opportunity Commission (EEOC) published a proposed revision to the Employer Information Report (EEO-1) that would require covered employers to provide pay data with respect to their employees, beginning in 2017. The EEOC would compile and publish aggregate pay data to help employers analyze their own pay practices and to help federal agencies assess discrimination complaints, focus agency investigations, and identify existing pay disparities for further investigation. If this proposal goes into effect, affected employers will want to audit their pay practices for potential issues before pay data disclosure is required.
EEO-1 Report and Need for Pay Data
Under current law, employers with 100 or more employees and federal contractors with 50 or more employees are required to file an annual EEO-1 report that includes data on the race, ethnicity, and sex of their employees, broken down by job category. The EEOC has proposed adding pay data to the EEO-1 report to provide federal agencies with insight into pay disparities across industries, occupations, and protected classes. The EEOC has stated that this is a much-needed tool to identify discriminatory pay practices and strengthen federal efforts to combat discrimination. The EEOC and other federal agencies are part of a task force aiming to improve enforcement of federal laws prohibiting pay discrimination.
Proposed Revisions to EEO-1 Report
Beginning in 2017, employers with 100 or more employees would be required to include pay data on the revised EEO-1 report. Federal contractors that are subject to EEO-1 reporting and that have between 50 and 99 employees would not be required to provide the new pay data. The EEO-1 report would continue to be due by September 30th of each year. The EEOC also proposes that, beginning in 2017, all employers be required to file the EEO-1 report electronically (the majority of filers already do).
Under the proposal, covered employers would be required to include on their annual EEO-1 reports employees' W-2 earnings and hours worked. To preserve the anonymity of employee pay data, the EEOC has proposed reporting such data using twelve specified "pay bands" for each of the existing EEO-1 job categories. The EEOC has stated that pay bands will allow it to compute pay variations within job categories, across job categories, and overall, which would further the EEOC's ability to identify potential discrimination while preserving confidentiality.
In addition, the revised EEO-1 report would collect information on the number of hours worked by the employees included in each pay band, to allow analysis of pay differences while considering aggregate variations in the hours worked by employees. The EEOC is seeking input from employers on how to report hours worked by salaried employees, whose hours are not normally tracked by employers. The EEOC noted that it is not proposing requiring employers to begin collecting additional data on actual hours worked for salaried employees, to the extent that such data is not already maintained.
The EEOC has published a proposed revised EEO-1 form to collect pay data, available here.
The EEOC is seeking public comments on the proposed revisions to the EEO-1 report, which must be submitted by April 1, 2016. The EEOC has announced its intention to hold a public hearing about the proposal at a future date.
Employer Action Items
Employers should consider what changes the EEOC proposal would have on their current business practices if the proposal is finalized, for example administrative or systems changes to facilitate reporting the new data and making changes in pay practices to address disparities. Employers may wish to perform privileged audits of their pay practices this year, to identify any disparities that might be flagged by the EEOC in connection with the proposed reporting requirements and remedy any potential problem before the proposed reporting requirements take effect. Employers should stay tuned for further developments regarding this EEOC proposal.