A Brief Summary of the EEOC’s Pay Equity Addition to the EEO-1 Report

DCI reported on Friday the release of the EEOC’s revision to the Employer Information Report (EEO-1), which was officially published in the Federal Register today, February 1, 2016.  The EEO-1 report will continue to collect the race/ethnicity and sex data by EEO-1 category, but will now add total “W-2” earnings and hours worked by salary range within an EEO-1 category. Here is a quick summary of what we know about the EEOC’s Notice:

Who Must Submit?

  • All employers with 100 or more employees must submit the new data.
  • Employers with 50-99 employees would only need to file the current EEO-1 data (race/ethnicity and gender reported by EEO-1 category).  This includes federal contractors.

When Does this Start?

  • Starting in 2017.
  • Must be filed by September 30 each year, which is the current deadline for the EEO-1 filings prior to this addition.  This date coincides with the last day of the government fiscal year.

What is Being Collected?

  • Race/ethnicity and gender of employees by EEO-1 job category (current requirement).
  • This data by 12 salary ranges (e.g. under $19,240; $19,240-$24,439).  These salary ranges are currently used by the BLS in the Occupational Employment Statistics (OES) survey. The new bands are different than the EEO-4 report salary bands.
  • The salary data is described as “W-2” data, although “actual earnings” may be a more appropriate semantic. As a note, the W-2 is a report generated for the IRS and is based on an employee’s actual earnings in a calendar year, including such pay factors as overtime, base salary, any bonuses, or could even include some types of cash benefits such as tuition reimbursement. A W-2 is produced at the end of the calendar year, and does not coincide with the September 30 filing cycle deadline of the EEO-1 reports.  Thus a contractor’s payroll department will need to exert the same effort to generate the EEO-1 report as it does to calculate W-2 earnings for the annual income tax cycle.
  • DCI notes that for gender alone, there would be 240 cells (2 genders * 12 ranges * 10 EEO-1 categories) for an employer to complete on the report. Such a large number of cells will affect the types of analyses that can be used to analyze the data.

What is the Burden Estimate?

  • This is represented just for the companies with more than 100 employees that are required to file the additional salary information.
  • The estimate is that there will be 60,886 respondents with 401,848 reporting hours, equally a total cost of $9,736,767.
  • If we break that down by company, EEOC’s estimated burden is $159.92 per company and 6.6 hours per year.

What is Still Outstanding?

  • EEOC has not yet decided how it will collect the number of hours worked.  Take for example, the Craft Workers category (EEO Category 6) in pay band $19,240-$24,439.
    • Company 1:  10 African American craft workers, 10,000 total hours
    • Company 2:  10 African American craft workers, 20,000 total hours
  • The question becomes: How do you control for hours worked? Because the data are reported in a range and distribution format, this becomes challenging, and the user cannot simply annualize the data.
  • Public comments and a public hearing are required as a part of this process.  Written comments on this notice must be submitted on or before April 1, 2016.

What is the Purpose of the Revised Reporting Data?

  • EEOC and OFCCP will use the data to, “assess complaints of discrimination, focus investigations, and identify employers with existing pay disparities that might warrant further examination.”
  • 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 compare the firm’s data to the aggregate industry or metropolitan-area data.  As stated in the Federal Register, “This application would highlight statistics of interest.”
  • OFCCP will use the new EEO-1 data, rather than issue a new data collection tool.  OFCCP notes the following on the DOL blog:

This new pay data will allow the EEOC to compile and publish aggregated figures that will help employers in conducting their own analysis of their pay practices to assist in their compliance efforts. The Labor Department’s Office of Federal Compliance Contract Programs, using other data sources, will also make pay data available to the public. These data will also provide job seekers and workers with information on the aggregate pay for job groups across industries, and by gender, race and ethnicity.

Stay tuned on additional information regarding the public hearing and public comments.

By Mike Aamodt, Principal Consultant, and Joanna Colosimo, Senior Consultant, DCI Consulting Group 

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