On February 1, 2016, the Equal Employment Opportunity Commission (EEOC) published a notice of its intent to modify the annual EEO-1 report to include compensation data. The proposed collection of compensation data by EEOC has some similarities to a proposal released by the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) in 2015. That proposal by OFCCP would have affected only federal contractors and subcontractors, while EEOC’s proposal would affect most companies required to prepare the EEO-1 report.
Below, we have provided some answers to questions that employers may have regarding EEOC’s proposal. Please note that these questions and answers were developed by HR Analytical Services. EEOC has its own questions and answers that are available on its website at the address found at the conclusion of this article.
- Question: Does EEOC expect that employers will begin to provide compensation data with the submission of their 2016 EEO-1 reports?
Answer: NO. EEOC is NOT proposing to have compensation data submitted in 2016.
- Question: What is the earliest date that employers will be expected to provide compensation data as part of the EEO-1 report?
Answer: EEOC has indicated that it expects employers will include compensation data with their EEO-1 reports in 2017.
- Question: Is it certain that EEOC’s proposal to add compensation data to the EEO-1 report will go into effect in 2017?
Answer: NO. There is no guarantee that EEOC’s proposal will be finalized in time for implementation of the compensation data collection in 2017.
- Question: What are the next steps in regard to this proposal?
Answer: EEOC is taking comments on its proposal to add compensation data to the EEO-1 report until April 1, 2016. After this comment period closes, EEOC will be required to review these comments and to address any concerns raised in these comments. EEOC may elect to move forward with the proposal in its current form, make significant changes to the proposal based on comments received, or abandon the proposal altogether. EEOC must then get approval from the Office of Management and Budget (OMB) before any changes to the EEO-1 report can be released for implementation. OMB will evaluate EEOC’s submission for its benefits to the public and for the burdens on employers that may be associated with the collection of additional data. OMB will then accept EEOC’s revised EEO-1 report as submitted, request changes to EEOC’s submission, or take no action on the proposal. If OMB approves some version of the revised EEO-1 report, EEOC would then publish a notice about the revised EEO-1 report in the Federal Register. Any notice in the Federal Register regarding a final version of the revised EEO-1 report would include a date for implementation of the revised report.
- Question: How long will it take for EEOC to get approval from OMB for the revised EEO-1 report?
Answer: It is difficult to tell. If EEOC’s proposal generates significant concerns from the public and/or if OMB has significant concerns about the proposal, it could take many months for EEOC to arrive at an acceptable version of the revised EEO-1 report. It is possible that EEOC will be unable to meet all of the concerns raised by the public and/or OMB, and that this proposal will never go forward.
- Question: What organizations are covered by EEOC’s proposal to gather compensation data?
Answer: Organizations with 100 or more employees would be required to provide compensation data under this proposal. Currently, organizations with 100 or more employees must submit race, ethnicity, and gender data on an annual basis to EEOC. Federal contractors and first tier subcontractors with at least 50 employees must also submit race, ethnicity, and gender data to EEOC. Under EEOC’s proposed revision to the EEO-1 report, organizations with fewer than 100 employees would be exempt from providing compensation data. Organizations such as universities that are currently exempt from completing the EEO-1 report would continue to be exempt from completing any portion of the EEO-1 report.
- Question: How would compensation data be provided to EEOC?
Answer: Employers would continue to report data using the 10 EEO-1 categories and EEOC’s race, ethnicity, and gender classifications. Compensation data would be reported by 12 pay bands within each EEO-1 category. The 12 pay bands would be uniform for each EEO-1 category, so that each EEO-1 category would have a pay band for salaries ranging from $19,240 to $24,439, from $24,440 to $30,679 and so on.
- Question: Would additional data beyond demographic data and compensation data be provided to EEOC in the revised EEO-1 report?
Answer: YES. Employers would be required to report total number of hours worked for each employee using the same structure in which compensation data will be reported (i.e. for each race, ethnicity, and gender classification by the 12 pay bands within each EEO-1 category). EEOC is seeking input on how hours worked should be reported for exempt employees.
- Question: Would employers be required to change their compensation systems to match EEOC’s pay bands?
Answer: NO. The 12 pay bands would be used for EEOC reporting only. Employers would not be required to use them for other purposes.
- Question: What kind of pay would be included in the data to be provided to EEOC?
Answer: EEOC has proposed that employers use the pay that is reported on an employee’s W-2 form. This would include base salary or wages, commissions, tips, taxable fringe benefits, bonuses, overtime pay, and so on.
- Question: Have any concerns been raised over EEOC’s proposal?
Answer: The number and types of concerns that have been raised are too numerous to catalog here. There are analytical concerns about the nature of the data that EEOC is proposing to collect, practical concerns about whether and how employers would be able to provide this data, and confidentiality concerns about what would happen to this data if it were provided to EEOC.
- Question: What happened to OFCCP’s proposal to collect compensation data on an annual basis?
Answer: OFCCP has effectively abandoned its initiative to annually collect compensation data from federal contractors and subcontractors. EEOC’s proposal would substitute for OFCCP’s proposal. The formal notice from EEOC that was published in the Federal Register indicates in footnote 63 that OFCCP intends to use the data collected by EEOC for various purposes rather than implementing a separate compensation data collection tool.
- Question: Will OFCCP continue to collect compensation information in other ways?
Answer: YES. The letter that OFCCP sends to federal contractors and subcontractors at the start of an affirmative action compliance review has an itemized listing that requires the submission of individualized compensation data on every employee who is part of the workforce analysis in the affirmative action plan under review. OFCCP may also ask for additional compensation data during the course of a compliance review.
- Question: What should people do if they have concerns about EEOC’s proposal?
Answer: Employers should submit comments to EEOC no later than April 1, 2016. The formal notice announcing EEOC’s proposed revisions to the EEO-1 report as found in the Federal Register provides instructions on how to submit comments.
- Question: Should our organization start getting our systems ready now so that we can submit compensation data when this proposal goes into effect?
Answer: At this time, we are not encouraging employers to prepare for changes to the EEO-1 report. It is possible that EEOC may dramatically change its proposed compensation data collection before anything is published in final form for implementation by employers. It is also possible that EEOC will be unable to get approval from OMB for any kind of annual collection of compensation data.
There are two things that employers may want to consider in regard to this proposal. First, employers should seriously consider providing comments to EEOC on any concerns they have with EEOC’s proposal. Second, employers may want to talk to legal counsel and/or get other professional advice before making changes to systems and processes in order to prepare for implementation of EEOC’s proposal.
Employers may want to provide comments on any number of issues associated with EEOC’s proposal to add the collection of compensation data to the EEO-1 report. Some of these issues would include the following:
- The difficulties that employers would face in providing the type of compensation data requested by EEOC.
- The difficulties that employers would face in providing information on hours worked.
- The problems associated with the use of the pay bands devised by EEOC.
- The problems associated with the use of W-2 earnings as a basis for providing compensation data.
- The lack of useful conclusions that EEOC (and OFCCP) may be able to discern from the type of data being requested in EEOC’s proposal.
- The possibility of data breaches and other security issues associated with the collection of compensation data.
EEOC’s announcement regarding the proposed revisions to the EEO-1 report can be found at http://www.eeoc.gov/eeoc/newsroom/release/1-29-16.cfm. The announcement includes a link to the formal Federal Register notice regarding these revisions. The proposed new EEO-1 survey form can be found at http://www.eeoc.gov/employers/eeo1survey/2016_new_survey.cfm.
Please note: Nothing in this article is intended as legal advice or as a substitute for any professional advice about your organization’s particular circumstances. All original materials copyright © HR Analytical Services Inc. 2016