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.
