Pay Equity: Revised EEO-1 Report to Include Pay Data and Hours
September 30, 2016
On September 29, 2016, the Equal Employment Opportunity Commission (EEOC) issued a press release and related materials to make final the revised proposal to modify the annual EEO-1 report to include W-2 earnings and hours worked, by race, ethnicity, and gender. These new categories increased the number of entries significantly, from 140 potential data elements to 3,360. Employers with 100 or more employees will be required to file the new EEO-1 report in March 2018 for the 2017 calendar year.
The EEOC is a federal agency created by the Civil Rights Act of 1964. The EEOC is responsible for enforcing many laws, including the Equal Pay Act; the Age Discrimination in Employment Act; the Americans with Disabilities Act; and the Civil Rights Act. Form EEO-1 was initially required in 1966, and was revised in 1997 to modify racial and ethnic definitions.
In yesterday's EEOC press release, EEOC Chair Jenny Yang explained that "collecting pay data is a significant step forward in addressing discriminatory pay practices. This information will assist employers in evaluating their pay practices to prevent pay discrimination and strengthen enforcement of our federal antidiscrimination laws."
Current EEO-1 Report
Currently, employers with 100 or more employees submit the EEO-1 annually to report the number of persons employed in a payroll period selected by the employer within the calendar quarter ending September 30. Employee counts are summarized within ten job categories (e.g., executive, professionals, technicians, etc.) and by race, ethnicity, and gender. The 2016 EEO-1 report is due today, September 30, 2016, and is unaffected by the changes announced.
EEO-1 Report Changes for 2017
Under the revised form, the same employers will continue to submit the EEO-1 report annually to report the number of full-time and part-time employees employed in a payroll period selected by the employer, but within the calendar quarter ending December 31. For employees in the selected pay period, employers will need to track annual employee earnings (from IRS Form W-2, Box 1) and hours worked for the full calendar year.
Each employee would be classified into one of 12 "pay bands" within each job category. Employee counts would then be summarized by the 12 pay bands within the ten job categories and by race, ethnicity, and gender. A separate "Section D Hours Worked Report" details the aggregate annual hours worked for each pay band/job category/race/ethnicity and gender category.
With the addition of pay bands and hours worked, the number of potential entries expanded significantly. The current report has 140 boxes for employee counts, whereas the revised report has 1,680 boxes with employee counts by pay band/job classification, race, ethnicity, and gender; and another 1,680 boxes for hours worked by pay band/job classification, race, ethnicity, and gender.
The EEOC adopted Fair Labor Standards Act (FLSA) definitions of hours worked, which generally includes "all time an employee must be on duty, or on the employer's premises or at any other prescribed place of work, from the beginning of the first principal activity of the workday to the end of the last principal activity of the workday." For FLSA-exempt employees, employers may report 40 hours per week for full-time employees, and 20 hours per week for part-time employees, multiplied by the number of weeks employed that year. Alternatively, employers may report actual hours worked for FLSA-exempt employees.
The EEOC notes an exception for hours worked in pay periods that span calendar years: “If wages are actually paid in the next calendar year for work done in the last days of the past calendar year, these hours are counted in the next year, because that is when the pay is reported on the W-2.”
The EEOC “requires that EEO-1 reports be submitted via the EEO-1 Online Filing System, or as an electronically transmitted data file.”  The agency offers a simple interface to manually enter all the data in to an Internet site, noting that “Employers enter data only in those cells of the report where they have employees.”
However, the addition of pay bands and hours worked increased the number of potential entries to 3,360. Consequently, employers with many job classes and subsidiary organizations may find it impractical to enter the information into the online system manually. Even employers that have historically provided the report through the online system may find it necessary to format data files for electronic submission.
Best Practices and Implications for Employers
In order to collect the additional data required for the updated EEO-1 report, it may be necessary to coordinate between Human Resources and Payroll functions. The EEO-1 report has often been administered by Human Resources within large employer organizations, but with the addition of annual W-2 earnings and hours worked, it will be necessary to include data from payroll as well as timekeeping and other systems to prepare the report.
The EEOC has explained that earnings and hours worked data will inform EEOC's enforcement efforts by helping to "identify trends, inform investigations, and focus resources." The new data will also help address gender pay gaps, as well as pay disparities by race and ethnicity.
Earlier this year, EEOC Commissioner Lipnic noted that, beyond informing the EEOC’s enforcement efforts, the EEOC expects that the new reporting requirements will help employers to conduct their own pay equity analyses and consider whether any pay equity issues may be present.
The new EEO-1 report may not directly identify inappropriate pay disparities, because among other things, it does not take into consideration years of experience, education and vocational background, or other factors that may account for pay differences as defined by applicable federal and state laws. While employers can choose to only report the required information, many are expected to conduct more thorough pay equity analyses; for example, by analyzing comparable job families and taking into consideration other relevant background and qualifications. Since a more detailed analysis may be necessary in the event that an EEOC pay equity inquiry is ever received, employers should consider whether to conduct a proactive analysis before the updated EEO-1 report is due. Before undertaking any such self-audit, employers should review their plans with legal counsel and discuss the appropriate scope and methodology. In addition, legal counsel may provide advice on privilege protocols that should be established.
Next Steps and Additional Resources
The EEOC will send a letter to employers that have historically filed EEO-1 reports to announce the new EEO-1 filing requirements and deadlines.
EEOC has announced two webinars intended to explain the new reporting requirements to employers, on October 20 and October 26, 2016. Check www.eeoc.gov for details.
For the EEOC announcement, Federal Register notice, Revised EEO-1 Instruction book, data file specifications, sample 2017 EEO-1 report, fact sheets, FAQs and additional materials, see https://www.eeoc.gov/employers/eeo1survey/2017survey.cfm.
Register for either the 11 a.m. or 3 p.m. ET October 13 session of the webinar Don’t Fear! Tips to Survive Year-End Reporting for insights on additional emerging year-end trends and requirements in the area of the Affordable Care (ACA), unemployment insurance tax, W2 reporting, payroll and more.
 Standard Form 100, Rev. March 2016, Employer Information Report EEO-1 Instruction Booklet.
 EEOC website, What You Should Know about EEOCs Proposal to Collect Pay Data, last visited September 21, 2016.
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Updated on September 30, 2016