The Equal Employment Opportunity Commission (EEOC) has finalized its plans to incorporate pay data into the annual EEO-1 form. This is the demographics-based employee census report that employers have been filing since 1966. In a process that has been in the works since 2010, the EEOC agreed to change the originally proposed reporting cycle so that it will coincide with the calendar year, simplifying the data collection process.
Employers have a fair amount of time to pull their reports together in the first reporting cycle. Specifically, reports covering their 2017 employee data won’t be due until March 31, 2018 (however, 2016 EEO-1 reports were still due on September 30 of this year). Federal contractors with 50-99 employees will continue to be required to provide employee census data, but won’t have to supply the pay data. Larger ones, like the rest of the private sector, will.”The new data will improve investigations of possible pay discrimination which remains a contributing factor to persistent pay gaps,” the EEOC stated upon announcing the final rules. Technically the EEOC has been authorized to use the new form for only two years; extension of its use will require approval from the federal Office of Management and Budget.
The flexible three-month “snapshot period” during 2017, when data must be collected, can be any pay cycle between October 31 and December 31, 2017.
The job category divisions for employees on the new EEO-1 form remain the same:
- Executive/senior level officials and managers,
- First/mid-level officials and managers,
- Sales workers,
- Administrative support workers,
- Craft workers,
- Laborers and helpers, and
- Service workers.
Using the new EEO-1 form, the numbers of employees within each of the current demographic categories will be reported within 12 “pay bands.” That is, individual salaries and wages won’t be disclosed. Incomes for determining pay brackets are to be taken from Box 1 of the W-2 form. (This is expected to simplify the integration of payroll and human resource data systems for purposes of generating these reports.)
The demographic groups, divided by gender, are Caucasian, African American, native Hawaiian or Pacific Islander, Asian, Native American, and “two-or-more races.”
Here are the 12 pay bands, the same brackets used by the federal Bureau of Labor Statistics for its Occupational Employment Statistics survey:
- $19,239 and under;
- $19,240 – $24,439;
- $24,440 – $30,679;
- $30,680 – $38,999;
- $39,000 – $49,919;
- $49,920 – $62,919;
- $62,920 – $80,079;
- $80,080 – $101,919;
- $101,920 – $128,959;
- $128,960 – $163,799;
- $163,800 – $207,999; and
- $208,000 and over.
The resulting picture will give the EEOC a window into how employees of varying ethnic groups and genders are paid within each job category. For example, if Asian male technicians as a group appear to be paid more than female African Americans, that could set off alarm bells at the EEOC.
Similarly, with aggregate hours-worked data (covering the entire year, not just the “workforce snapshot” period) segmented by gender, ethnic group and pay band, the EEOC will be able to make certain inferences. As examples, the data might appear to indicate one group is given more opportunities to work overtime than others, or that part-time work might be more prevalent in one group. More broadly, the data can show whether employees of one gender are, on average, paid more than members of the opposite sex.
Previously, in searching for evidence of illegal discrimination, the EEOC had to make inferences from the kinds of jobs each demographic group tended to be grouped into.
Useful for Employers?
The EEOC believes this additional data will be useful to employers as well, helping them to recognize any pay and work patterns that might suggest a possible discriminatory pattern. If data indicate a possible problem, employers might have an opportunity to address it preemptively.
However, what’s really going on within any workplace can be more complicated than these numbers might suggest. For example, because pay data is based only on Box 1 of the W-2, that could present a misleading picture.
Suppose stock options are awarded to senior employees in perfect proportion to the company’s gender and ethnic make-up. (No income is recognized and reflected on the W-2 until the options are exercised.) Suppose further that a handful of men exercise those options in a year when none of the female option holders with the same job classification do. That could result in an EEO-1 report that improperly suggests that men are paid more than women in the same job category.
Also, the EEO-1 form data doesn’t reveal other relevant factors that could skew compensation in one direction or another, such as education level, seniority and performance ratings.
Still, an EEO-1 report with demographically associated statistical aberrations wouldn’t by itself prove employment discrimination, but only whet the EEOC’s appetite for an investigation.
A sample of the new EEO-1 form is available on the EEOC’s website. It’s advisable to check it out now and make plans for the data collection process that will be required to complete the form. You may be able to gauge whether the data you will ultimately input would put you in the EEOC’s crosshairs.
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