The Equal Employment Opportunity Commission (EEOC) has issued revisions requiring employers with at least 100 employees to submit annual EEO-1 reports that include W-2 pay and hours worked data for their entire workforces, nationwide. Armed with the data, and intent upon identifying pay disparities causing the “wage gap” for women and minorities, the EEOC and the Office of Federal Contract Compliance Programs (OFCCP) will monitor and test employer data and investigate in detail the pay practices of those employers whose data suggests indefensible pay disparities.
When Will New EEO-1 Report Be Required?
The first modified reports will not be filed until the first quarter of 2018. Rather than file EEO-1 reports as usual in fall 2017, the revised EEO-1 pay data report will be filed by March 31, 2018. In subsequent years, March 31 will be the annual filing deadline. Thus, employers will need to pull W-2 pay data only once a year for both tax and EEO-1 reporting purposes. EEO-1 reports for 2016 will be filed as usual without pay data.
Significant Impact on Employers
For the first time, the EEOC and OFCCP would have comprehensive employee pay data, allowing the agencies to effectively target employers for systemic pay-discrimination investigations. Employers’ data collection and reporting burdens will increase exponentially and beyond the EEOC’s stated estimates. Further, while the EEOC sought to address confidentiality concerns surrounding submission of sensitive compensation data, the final revisions leave some of those concerns intact, raising new concerns over the commission’s proposal to publish employers’ aggregated pay data.
What Must Employers Do Now?
Conduct proactive EEO pay analyses to assess risk. Employers cannot afford to turn over pay data to the EEOC and OFCCP without knowing first what it says and whether and where risks may lie. Employers are well advised to begin preparations now, starting with pay analyses to identify and address pay issues that could emerge from the EEO-1 pay data and lead to systemic investigations by EEOC or OFCCP.
Protect analyses under the attorney-client privilege. Statistical analyses and legal advice based on the analyses must be protected by the attorney-client privilege because the agencies may request the analyses in an investigation. The analyses must not be done informally by the employer’s compensation department or external consultants without the direct involvement of counsel for the purpose of providing legal advice.
Speak with IT function and outside HRIS and payroll system vendors. Gathering and reconciling the data to be reported will be no simple task. Assess the company’s current situation and data systems and determine what will be necessary in terms of staffing and budget.
Organization required to report? Larger employers are well-aware of EEO-1 reporting obligations. Employers who have not previously filed, but have reached the 100-employee threshold, are required to file EEO-1 reports. The EEOC has sued employers solely for failure to file EEO-1 reports in the past. It may use the failure to file an EEO-1 report to support a substantive discrimination claim.