Showing posts with label eeo-1. Show all posts
Showing posts with label eeo-1. Show all posts

Monday, February 1, 2016

EEOC Proposes to Revise EEO-1 to Include Data on Annual Pay and Hours Worked

On Friday, the EEOC announced that it planned to revise the EEO-1 form to include burdensome requirements to annually collect and report pay and hours worked by all employees.  Its proposal was published in today’s Federal Register.  Currently, the EEO-1 must be filed before September 30 every year by employers with over 100 employees and contractors/subcontractors with 50 or more employees (and contracts over $50,000).   The forms identify how many employees (by gender and ethnicity) are employed in certain job classifications.  The new requirements would take effect in September 2017 and would require the employer to complete two pages (instead of just one).  One page would identify the number of employees (again by job classification, gender and ethnicity), but would also break them out by twelve identical pay bands in each job classification.   The second page is identical, except that instead of indicating the number of employees, the employer would need to research and insert the number of hours collectively worked by all of the employees in that pay band by job classification, gender and ethnicity.  The EEOC believes that it needs the number of hours to account for part-time and temporary employees.  The form is not requesting information about time in job, seniority, prior experience or education, etc. (which all obviously impact the amount paid).

The EEOC is not proposing to expand the EEO-1 reporting obligations beyond those employers currently required to file them.  The forms will also remain confidential (although by creating such a document, they will become discoverable in all agency investigations and civil litigation).

There are twelve identical pay bands for each job classification (of between $19,239 and $208,000+).  The information is to reflect annual “salaries” based on total W-2 wages earned during the prior twelve months from any work week between July 1 and September 30.  The pay bands are compressed at the low end (i.e., approximately $5,000) and wider at the top end (of over approximately $40,000).  Even though the forms explicitly specify “salary” to be reported, the EEOC actually wants total W-2 compensation and all earned income, including “wages, salaries, fees, commissions, tips, taxable fringe benefits, and elective deferrals” as well as “supplemental pay components such as overtime pay, shift differentials, and nonproduction bonuses (e.g., year-end bonuses, hiring and referral bonuses, and profit-sharing cash bonuses).”  It also wants this information when it wants it and not when employers would typically be generating this information for W-4 forms in January.  However, the EEOC does not expect this to be burdensome and encourages employers to use quarterly payroll reports.

The EEOC is also seeking feedback from employers about how to account for exempt employees for whom employers are not required to track working hours.  It is not proposing that employers be required to track those hours.  It is considering simply requiring employers to estimate 40 hours/week (or 2080/year) for exempt employees.

The EEOC reports that all but three employers nationwide already submit their EEO-1 reports electronically, and therefore, is making electronic submission of the new information mandatory for the new form in 2017 (unless the employer requests an exemption).

The EEOC hopes to analyze this data and to focus its investigations on those employers with statistically anomalous compensation practices:

Analysis of W-2 Pay Data

Statistical tests will be used as an initial check of the W-2 data to be collected on the EEO-1, specifically, statistical significance tests that do not rely on an assumption of a normal distribution. The Pilot Study recommended several statistical techniques to test within-job categories and then suggested further examining companies and establishments with low probabilities that the differences between examined groups, such as men and women, occurred by chance. The Pilot Study also noted that the issue of calibrating error rates (power vs. significance level) needed to be addressed to detect discrimination without suffering too many false positives. This process would include recognition of how sample sizes may influence results and also of judicial precedents regarding definitions of statistical probabilities.

 The EEOC and OFCCP plan to develop a software tool that will allow their investigators to conduct an initial analysis by looking at W-2 pay distribution within a single firm or establishment, and by comparing the firm's or establishment's data to aggregate industry or metropolitan-area data. This application would highlight statistics of interest.

Finally, the EEOC is seeking public comments from the private sector about these planned changes to the EEO-1 form:

1. Evaluate whether the proposed collection of information is necessary for the proper performance of the Commission's functions, including whether the information will have practical utility;

2. Improve the accuracy of the Commission's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;

3. Enhance the quality, utility, and clarity of the information to be collected; and

4. Minimize the burden of the collection of information on those who are required to respond, including the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submission of responses.

 

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can be changed or amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.