On February 1, 2016, the U.S. Equal Employment Opportunity Commission’s (“EEOC’s”) proposed revisions to the Employer Information Report (“EEO-1”) were published in the Federal Register.  Our original post on the anticipated release of this publication can be found here.  With the publication, the EEOC also released a proposed revised version of the EEO-1 report, which shows what the new report would look like.

Who will the new rule impact?

Employers with more than 100 employees will be required to comply with the new EEO-1 reporting requirements.  Employers with less than 100 employees are not required to file EEO-1 reports.  Federal government contractors with less than 100 employees will be required to comply with existing EEO-1 reporting requirements.

When is the new rule supposed to go into effect?

If it becomes final, the new rule would go into effect beginning in 2017.  EEO-1 reports will remain due on September 30 of each year, making the first new EEO-1 reports due in September 2017.

Issues inherent in the collection of W-2 Data

The proposed rule would require employers to submit information pertaining to employees’ “W-2 earnings and hours worked.”  The revised EEO-1 will collect aggregate W-2 data in 12 pay bands for the 10 EEO-1 job categories” already used.  The EEOC explains that “[e]mployers will simply count and report the number of employees in each pay band.”  The EEOC claims that the submission of W-2 data will not impose a significant additional burden on employers because employers already compile this information for tax purposes.  However, W-2s reflect wages earned in a calendar year, not from October 1 through September 30 (which is the snapshot that will be required for the EEO-1 report).  Thus, to comply, employers will be required to collect and report W-2 data specifically for the revised EEO-1 report.  Particularly for employers that do not have robust HRIS and payroll systems, this may impose significant cost and burden.

Issues relating to the collection of hours worked

The EEOC has not yet determined how it will collect information related to hours worked.  The publication in the Federal Register merely states that “Component 2 of the revised EEO–1 will collect the total number of hours worked by the employees included in each EEO–1 pay band cell.”  The EEOC believes that this “data will allow analysis of pay differences while considering aggregate variations in hours.”

The EEOC summarily states that this reporting will impose a minimal burden on employers.  However, the EEOC has not yet proposed an approach to deal with the reporting of hours for salaried employees.  Moreover, it does not address how the hours of part-time employees and employees who work less than the full reporting period should be counted by employers.  It is unclear how any of the EEOC’s proposed analyses will provide an “apples to apples” comparison of compensation and hours for the various pay bands.

How does this rule impact government contractors?

In his statement on January 29, 2016, President Obama made clear that the revised EEO-1 will replace an earlier proposal that would have only applied to federal contractors.  Thus, federal contractors, as well as traditional employers, will now be required to comply with the revised EEO-1 report.  Notably, the new proposed rule will not apply to federal contractors with fewer than 100 employees.

Key Takeaways

Employers are encouraged to follow this development and consider the impact that the additional reporting may have on their current business practices.  Given the Administration’s continuing emphasis on pay equity, Employers should consider undertaking a privileged audit of their pay policies and practices.  As part of that process, employers could identify whether any “red flags” would be identified by the EEOC or the OFCCP in connection with the analyses contemplated by the new reporting requirements.  It is critical that employers address any problem areas or compliance issues before the reporting obligation becomes mandatory.

Additionally, now that the rule has been published in the Federal Registrar, employers are also encouraged to submit comments to the proposed rule once the notice and comment period has opened.  Comments may be submitted no later than April 1, 2016:

• Online: at regulations.gov;

• Via hard copy to: Bernadette Wilson, Acting Executive Officer, Executive Secretariat, Equal Employment Opportunity Commission, 131 M. Street, NE, Washington, DC 20507; or

• Via fax (6 pages or less) at: 202-663-4114.