EEOC Reporting & Compliance: What You Need to Know
As the September 30, 2019 deadline for the Equal Employment Opportunity Commission (EEOC) pay equity submissions looms, many organizations might be uncertain about how to handle the change. The information can be submitted as Component 2 of the EEO-1 form to supplement the EEOC’s long-running collection of employers’ demographic data.
The data collection was adopted by the Obama administration to help identify gender- and race-based pay gaps. However, it was rolled back by the Trump administration in 2017 based on the paperwork burden that it imposed on employers.
However, a Washington, D.C. federal judge ruled that this information should be collected to help track how much employers paid workers of different sexes, races, and ethnicity.
An Overview
The Trump administration’s decision to allow employers to stop providing the information led several worker advocacy groups to challenge the hold on the pay data collection provisions. Consequently, on March 4, 2019, a federal judge found that the federal government must collect the data.
The EEOC opened the portal for employers to submit EEO-1 reports on March 18 without the additional pay data questions. As a result, the judge gave the EEOC until April 3 to inform employers that this data will have to be reported this year.
The Ruling
The EEOC must provide information on the rules that apply to employers with periodic compliance updates being made to the court. The EEOC will have to collect a second year of pay data in 2020, with information on the collection of this data being posted May 3, 2019. The court will also expect to be informed whether the commission will also be collecting 2017 or 2019 data from employers.
Why Is the Data Collected?
Worker advocacy groups challenged the federal government’s decision to no longer collect the pay data. The rules under President Barack Obama’s administration stated that businesses with at least 100 employees or federal contractors with at least 50 employees and a contract of $50,000 or more with the federal government were required to file the EEO-1 form.
The data is needed so that the EEOC can track the number of women and minorities employed by companies and which companies support civil rights enforcement. The data is analyzed to spot employment patterns. The report is designed to ensure employers are not performing unlawful pay disparities in the workplace. The EEOC reporting shows the importance of employers conducting self-auditing practices to ensure that they are practicing pay equity in adherence to the laws.
At the time this collection was suspended by President Donald Trump’s administration in 2017, many employers felt the expanded data collection wasn’t providing adequate information about pay disparities.
What Was Due on May 31?
According to the EEOC, employers must submit their 2018 information for “Component 1” of the EEO-1 form by May 31. This form requires data on the number of employees by job category, race, sex, and ethnicity.
Component 2 data is still under legal dispute. This data includes hours worked and pay information from employees’ W-2 forms by race, ethnicity, and sex. Employers are advised to monitor the EEOC website for information regarding this update and what will be required in order to remain compliant.
Not Enough Time
The EEOC feels more time is needed to address the challenges of collecting the pay data. They also fear forcing companies to collect data too soon will result in inaccuracies. However, because the court ruling has been challenged, it is unclear if the current filing requirement of Component 1 data or filing Component 2 data will actually be due on September 30. The EEOC says it will cost them over $3 million to hire a contractor to provide the appropriate procedures and systems to collect the data by the September 30 deadline.
With so many uncertainties, employers should have a plan in place to collect the 2018 data.
How to Comply
Employers must report wage information from box 1 of the W-2 form as well as total hours worked for all employees by race, ethnicity, and sex within 12 proposed pay bands. You will have to determine how you can split the W-2 pay data into these 12 pay bands.
You should show actual hours worked by nonexempt employees, an estimated 20 hours per week for part-time, exempt employees, and an estimated 40 hours per week for full-time, exempt employees until the EEOC provides an updated form.
Once the new form is in place, you’ll need to familiarize yourself with it to ensure you are meeting the requirements.
To make things easier, software is your best bet to avoid human error. This will allow you to handle the data accurately and remain compliant. Software will provide proof that you are not only providing correct data but also that you are committed to pay equity.
About The Author
Kayla is the Marketing Manager at Paypro Corporation overseeing all inbound and outbound marketing and sales efforts. She has 7+ years of experience working within the B2B and SaaS based solutions space and thrives on creating messaging and campaigns that introduce products and services to those who need them most.