June 1, 2017
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California Employers Association - The California Employer's Report. The Information Newsletter for Today's Employer
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Counsel's Corner:
Everything You Need to Know About the EEO-1

In 2016 the Equal Employment Opportunity Commission (“EEOC”) made significant changes to the Employer Information Report, also known as the EEO-1 Report. These changes alter the employee information that certain employers must collect and submit to the agency pursuant to the EEO-1 reporting process. Although the new report need not be submitted until March 2018, current data for 2017 is required to be collected and be reported. Prudent employers should begin evaluating the newly required information and prepare for expanded efforts on the part of EEOC to identify areas of potential discrimination in order to take enforcement action against employers.

Employers with 100 over more employees have been annually reporting data about employees' ethnicity, race, and sex by job category (demographic data) on the EEO-1 form to EEOC for over 50 years. As part of a movement toward addressing pay inequities in the workplace, on September 29, 2016, the EEOC announced that it had finalized changes to the EEO-1 reporting form.

1. Who is required to report information on the EEO-1?
All employers with 100 or more employees must report. Federal Contractors and subcontractors with 50-99 employees must also report. However, starting with the 2017 report (due March 31, 2018) federal contractors and subcontractors with 50-99 employees will not be required to submit summary pay data but will continue to report demographic data (sex and race or ethnicity) on the EEO-1 as they did before.

Federal contractors and subcontractors with 49 or fewer employees, and companies without federal contracts with 99 or fewer employees, are not required to complete the EEO-1 report or submit information to EEOC on this subject.

2. What is new on the revised EEO-1 report?
The revised EEO-1 report has two new elements:

    (i) Summary pay data: Employers must now report the total number of full and part-time employees they had during that year in each of 12 “pay bands” listed for each EEO-1 job category; employers do not report individual pay or salaries.
    (ii) Aggregate hours worked data: Employers must tally and report the number of hours worked that year by all the employees accounted for in each “pay band.”

This new information expands the reporting requirements significantly to obtain information about pay practices. Now, in addition to reporting the number of employees by gender, race, and ethnicity, employers are obligated to provide employee compensation information and the number of hours worked by employees across 12 “pay bands” (within each identified pay scale). The pay bands are divided by employees earning:

(1) $19,239 and under;
 (2) $19,240 - $24,439;
 (3) $24,440 - $30,679;
 (4) $30,680 - $38,999;
 (5) $39,000 - $49,919;
 (6) $49,920 - $62,919;
 (7) $62,920 - $80,079;
 (8) $80,080 - $101,919;
 (9) $101,920 - $128,959;
 (10) $128,960 - $163,799;
 (11) $163,800 - $207,999; and
 (12) $208,000 and over.

Employers must report the total number of employees (full-time and part time) in each of the above pay bands for each EEO-1 job category:  Executive/Senior Level Officials and Managers;  First/Mid-Level Officials and Managers; Professionals; Technicians; Sales Workers; Administrative Support Workers;  Craft Workers; Operatives; Laborers and Helpers; and Service Workers. Employers must use the pay reported for tax income purposes in Box 1 of the W-2 form including wages, overtime, tips, bonuses and other earnings.

3. How will hours worked be counted on the revised EEO-1 report?
Hours worked data is collected so that the EEOC can account for part-time and partial year employment when analyzing EEO-1 pay data. Hours worked will be counted as follows:

•  For non-exempt employees, employers will consult payroll and other time keeping records to identify the number of hours worked.

•  For exempt employees, employers may either: Report 20 hours per week for each part-time exempt employee and 40 hours per week for each full-time employee; or report the actual number of hours worked by exempt employees, full- or part-time, if they prefer to do so.

Hours worked data will be reported on the EEO-1 by tallying the total number of hours worked by all the employees counted in each pay band, for the W-2 reporting year.  Employers will count their employees during the "workforce snapshot period." For reporting years 2016 and before, the "workforce snapshot period" was July 1 to September 30. Starting with the EEO-1 report of 2017 data, however, the "workforce snapshot period" will be October 1 to December 31, 2017. Each employer may choose any pay period during this three-month "workforce snapshot period" to count its full and part-time employees for the EEO-1 report.

4. When is the new reporting deadline?
To give employers more time to transition, and allow for alignment with the W-2 reporting cycle, the EEOC delayed in requiring submission of the new EEO-1 report to March 31, 2018. Employers will have a total of 18 months-from September 30, 2016 (2016 report deadline) to March 31, 2018 (2017 report deadline) to make the change in collecting and reporting information. Previously, the period was July 1 through September 30 of the reporting year.  EEO-1 report information can be submitted through the EEOC’s online form here.

5. What should employers do now to prepare for the 2018 filing deadline?
Employers obligated to report pay practice information on the new form should consider evaluating the hours and pay information that will be required in the formal reporting period to address and potentially correct apparent pay equities before the data must be reported to the EEOC. Employers should consult with CEA or an attorney before any internal “audit” or review based on sex, race and ethnicity so as to determine if the audit should be protected by attorney client privilege.                    

EEOC publications tout that the agency “carefully considered what kind of data would be most important and considered its benefit relative to the potential burden on employers” in revising the EEO-1 reporting obligations. However, most employers obligated to collect and submit information will feel the additional “burden” and likely question its benefit in combating discrimination.

Terry A. Wills
Attorney, Cook Brown LLP

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