Paying the Difference: Salary Data Now Required on EEO-1 Form

In an effort to provide more insight for discriminatory pay practice investigations, the Equal Employment Opportunity Commission (EEOC) has announced that EEO-1 reporting form will collect pay data beginning with the 2017 form.

The EEO-1 form already collects information on employees’ gender, race and ethnic background and classifies it by job category. Pay information will now be added based on entries on employees’ W-2 forms. By adding pay data into the mix, proponents say, it will aid EEOC investigations into differences in pay that are suspected to be based on these factors.

Not everyone agrees with this reasoning, however. Those opposed are concerned that the data won’t paint the entire picture because pay is influenced by a number of factors, such as education, previous employment and job performance at the current company. These variables apply to new employees as well as those who have been with their respective companies for some time. And because the income data is coming from W-2 forms – in which earnings also reflect factors like taxes on exercised stock options – the incomes of two people can look different even when they are not.

Regardless of opposition, the EEOC will require salary information on the 2017 version of the form. Due to the time needed to adjust to this requirement, the commission will extend the deadline for the form by six months to March 21, 2018 (it would normally have been Sept. 30, 2017) so employers can make the necessary changes to collect the data.

According to the commission’s website, an EEO-1 must be filed by employers in the 50 states and the District of Columbia that fall under the following descriptions:

All private employers who are:

• Subject to Title Vii of the Civil Rights Act of 1964 (as amended by the Equal Employment Opportunity Act of 1972) with 100 or more employees EXCLUDING state and local governments, primary and secondary school systems, institutions of higher education, Indian tribes and tax-exempt private membership clubs other than labor organizations:

OR

• Subject to Title VII who have fewer than 100 employees if the company is owned or affiliated with another company, or if there is centralized ownership, control or management (such as central control of personnel policies and labor relations) so that the group legally constitutes a single enterprise, and the entire enterprise employs a total of 100 or more employees.

All federal contractors (private employers) who:

• Are not exempt as provided for by 41 CFR 60-1.5,
• Have 50 or more employees, and are prime contractors or first-tier subcontractors, and have a contract, subcontract, or purchase order amounting to $50,000 or more; or serve as a depository of Government funds in any amount; or is a financial institution which is an issuing and paying agent for U.S. Savings Bonds and Notes

Attorneys and human resources professionals strongly suggest that companies act now to prepare for this new requirement. There are many steps companies can take:

• Perform self-audits to proactively find any possible pay disparities
• Implement systems to more easily retrieve the salary information needed for the EEO-1 form
• Develop or clarify policies on overtime, bonuses and anything else that contributes to employee income as stated on the W-2 form
• Review job titles and descriptions to make sure they accurately represent the responsibilities they entail
• Evaluate how the hours for exempt employees are reported

If you’re in doubt about what you need to do to prepare for the new EEO-1 form, it’s a good idea to contact a human resources consultant. He or she can review your current procedures and advise you on the steps to make this transition as simply and easily as possible.

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