10 Tips for Complying with the New EEO-1 Pay Data Reporting Requirements
Miller & Martin PLLC Alerts | August 09, 2019
Author: Stacie Caraway
For those of you who have put off thinking about complying with the new EEO-1 pay data reporting requirements until “the end of summer,” per my 14-year-old nephew, the end of summer is here! So, it’s time to get cracking.
Tip 1: The due date for component 2 of the EEO-1 report (i.e., the new pay data) is September 30, 2019.
Tip 2: The new EEO-1 component 2 pay data requirements only apply to you if you have at least 100 employees. (If you have between 50 and 99 employees and are a federal contractor or sub-contractor such that you are required to submit component 1 data, you still are not required to submit the new component 2 pay data.)
Tip 3: The EEOC has been kind enough to issue a new Guidance and FAQ on its website to help you provide this new information at www.eeoc.gov.
Tip 4: As with the component 1 (non-pay) data employers who are covered by Tip 2 above have been required to provide on their EEO-1 reports by March 31 each year in the past, you get to choose a selected pay period between October 1 and December 31 of the reporting year (which this year is both 2017 and 2018 due to the back and forth court battles which delayed, but did not “cancel,” covered employers’ requirements to provide the component 2 pay data starting in 2017) to use in submitting the component 2 data. You are not obligated to choose a pay period during which you have at least the threshold number of employees to be a “covered employer” per Tip 2. So, if your workforce fluctuates, you may choose a pay period which covers a smaller number of employees if this helps your pay data look more equitable (or just saves you some time!).
Tip 5: The component 2 pay data also is similar to the component 1 (non-pay) race/ethnicity and sex data covered employers have been used to submitting in past years in that all employees who are employed during your selected “snapshot” pay period must be classified into the 10 EEO-1 job categories which appear on the EEO-1 form.
Covered employers do not, however, have to, and in fact should not, rely on the job categories into which you previously have placed employees when providing the component 2 data. You should use every year as an opportunity to reassess how you have previously categorized employees, as sometimes their jobs have changed or some positions that are in a “gray area” that could potentially be classified into a couple of different categories based on the range of duties performed may need to be re-classified.
One of employers’ big issues with providing this new pay data is the EEOC’s plan to use it to identify and remediate potentially unlawful pay disparity based on race/ethnicity or sex. In determining whether employees are not being paid equally, it is going to be assumed by the EEOC that the employees you classify in the same EEO-1 job category are performing substantially similar work. As with any “discussion” with the EEOC, you will be able to try to explain why this is not the case if you receive a charge notice. However, you can potentially save yourself this extra work, at least in some cases, by making sure your classifications are still accurate. And in the cases where there is a legitimate reason for the pay disparity, from going through this component 2 data submission process you should have your explanations ready.
Tip 6: In determining which compensation band each employee in each EEO-1 job category falls, you must use box 1 of their W-2.
Tip 7: In determining the aggregate number of hours worked during the reporting year by all employees who fall within the same compensation band, you must use the actual hours worked per the Fair Labor Standards Act (FLSA) for non-exempt employees, which means paid time off should be excluded. For exempt employees, you can use either actual hours worked, if this information is available, or “proxy hours.” “Proxy hours” for a full-time exempt employee are 40 hours per week and for a part-time employee are 20 hours per week.
Interestingly, you do not have to use the same method to calculate the hours worked by all exempt employees, so you could use actual hours for those for whom this information is available (or those you just want to for any other reason!) and proxy hours for others.
Tip 8: You must submit the component 2 pay data through the EEOC’s web-based portal. Once on the portal, you may submit the data through the EEOC’s online filing system or by creating a data file and inputting the appropriate data fields. Be aware that you will not be able to access your 2017 and 2018 component 1 EEO-1 data in the component 2 online filing system. In assessing these filing options:
- EEOC’s Online Filing System: The EEOC’s online filing system is now available on the agency’s web-based portal and will remain open until the September 30 filing deadline. The EEOC announced earlier this year that it would send login information for the filing system to employers, so if you have not already received it, you should expect to receive your login information soon.
- Employer-Created Data Files: Covered employers that elect to create data files must do so in accordance with the EEOC’s data file specifications (which are described on the EEOC portal). The secure file upload function and validation process is not currently open but should be any day now.
Tip 9: You have already accomplished by reading this alert!
Tip 10: Keep the ball rolling by finalizing your pay data to submit – rather than doing what you may now be tempted to do by simply re-defining “the end of summer” to be “after Labor Day.” That will only leave 20 work days until September 30. (You have 35 now – not counting today – it is Friday after all!)
As always, should you have any questions concerning this alert or submitting the new component 2 EEO-1 pay data, please feel free to contact Stacie Caraway or any other member of our Labor & Employment Law Practice Group.