28 February 2017

Two Minute Legal Update: Plan Now For a New World of EEO-1 Reporting

HR Managers probably know a major overhaul is in store this year for the annual EEO-1 Report.  As part of its equal pay enforcement, EEOC proposes that all employers with at least 100 employees will have to file an EEO-1, AND begin reporting the number of employees and total hours worked in each of 12 pay bands for every demographic and occupation category.

Here are 3 critical points:
First, we don’t know what the Trump Administration will do with this program. It’s still possible it could get scaled back, postponed or even scrapped.

Second, if this program survives, EEO-1’s will be VERY complex. The formulas on-screen illustrate how detailed this task will become. In past years there were only 140 possible EEO-1 ‘cells’ in which to place an employee.  (10 occupations x 2 sexes x 7 race categories = 140 cells).  And it was easier because job titles are fixed in one of the EEO occupation categories, and most employees’ sex and race designations generally don’t change over time.

Now, with the addition of 12 pay bands in every demographic, there will be a nearly 1,700 possible ‘cells’ in which to slot each employee.  (10 occupations x 2 sexes x 7 race categories x 12 pay bands = 1,680 cells).  Plus, unlike sex and race, every employee’s W-2 earnings could shift them into a different pay band every year.   And total hours worked are of course fluid from year-to-year.

Kelley, what about the logistics of this?

Third, and this is the key issue – if the new EEO-1 program goes forward in its current form, contractors should plan ahead NOW to meet their reporting obligations.

Employees will be classified into a pay band, and an additional calculation will be required as to aggregate annual hours worked for each pay band, EEO category,  race, and gender. Employers will need to merge data from HR, payroll and timekeeping systems.

In order to avoid a major manual effort, employers should make sure their HR Information System can integrate with their payroll system, or that of their 3rd party payroll vendor, in order to generate the EEO-1.  So start talking to your IT and accounting departments, or consulting with your outside payroll vendor, to plan for the programming or logistics of capturing, formatting and reporting this data.

Stay tuned for updates on EEO-1 reporting.