The Obama Administration has launched a series of new initiatives to close the gender pay gap, including a new payroll reporting requirement for employers. According to the White House, “While the gender pay gap has narrowed slightly over the past two years, there is much more work to be done to ensure fair pay for all. Today, the median wage of a woman working full-time year-round in the United States is about $39,600—only 79% of a man’s median earnings of $50,400.”
Current reporting rules
Under current rules, federal contractors with 50 or more employees and other private employers must report annually the number of individuals they employ, broken down by job category and by race, ethnicity, and sex. Reports must be filed by September 30 of each year with the Equal Employment Opportunity Commission (EEOC) using Form EEO-1, Employer Information Report. The current EEO-1 requires employees to be broken down into seven race and ethnicity categories and 10 job categories, by sex. Employment data must be reported for one pay period in July, August, or September of the current survey year.
The 10 EEO-1 job categories are: Executive/Senior Level Officials and Managers; First/Mid Level Officials and Managers; Professionals; Technicians; Sales Workers; Administrative Support Workers; Craft Workers; Operatives; Laborers and Helpers; Service Workers.
The seven race and ethnicity groups are: Hispanic or Latino, White (Not Hispanic or Latino); Black or African American (Not Hispanic or Latino); Native Hawaiian or Other Pacific Islander (Not Hispanic or Latino); Asian (Not Hispanic or Latino); American Indian or Alaska Native (Not Hispanic or Latino); and Two or More Races (Not Hispanic or Latino). An employee should be given an opportunity to self-identify his or her race or ethnicity; if the employee refuses to do so, employment records or visual observations should be used.
Part-timers are included in EEO-1 reports in the same manner as full-timers. Employees who work from home are included in EEO-1 reports for the location to which they report.
The preferred method for submitting EEO-1 reports is through the EEO-1 Online Filing Application or as an electronically transmitted data file (ASCII/TEXT file). Companies may also submit EEO-1 reports as computer printouts. An instruction booklet for the current EEO-1 survey, including a sample form, can be found at http://www.eeoc.gov/employers/eeo1survey/index.cfm.
The data on the current EEO-1 reports is used by the EEOC to support civil rights enforcement and to analyze employment patterns, such as the representation of female and minority workers within companies, industries, or regions. The Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) uses EEO-1 data to determine which company establishments to select for compliance reviews. OFCCP’s system uses statistical assessment of EEO-1 data to select facilities where the likelihood of systematic discrimination is the greatest.
Proposed pay reporting
As part of the Obama Administration’s new equal pay initiatives, the EEOC has proposed revisions to the EEO-1 report to include collecting pay data from employers [EEOC Press Release, 1/29/2016; Questions and Answers, Notice of Proposed Changes to the EEO-1 to Collect Pay Data from Certain Employers; Small Business Fact Sheet, Notice of Proposed Changes to the EEO-1 to Collect Pay Data from Certain Employers].
The EEOC says that the new pay data will be used to identify possible pay discrimination and to assist employers in promoting equal pay in their workplaces. “More than 50 years after pay discrimination became illegal it remains a persistent problem for too many Americans,” said EEOC Chair Jenny R. Yang. Collecting pay data is a significant step forward in addressing discriminatory pay practices. This information will assist employers in evaluating their pay practices to prevent pay discrimination and strengthen enforcement of our federal anti-discrimination laws.” “We can’t know what we don’t know. We can’t deliver on the promise of equal pay unless we have the best, most comprehensive information about what people earn,” said Secretary of Labor Thomas E. Perez. “We expect that reporting this data will help employers to evaluate their own pay practices to prevent pay discrimination in their workplaces. The data collection also gives the Labor Department a more powerful tool to do its enforcement work, to ensure that federal contractors comply with fair pay laws and to root out discrimination where it does exist.”
The new pay reporting requirement will apply to employers, including federal contractors, with 100 or more employees. Federal contractors with 50-99, who are currently required to submit EEO-1 reports, would not be required to report pay data but would continue to report data on employees’ ethnicity, race, and sex by job category. As under current rules, federal contractors with 1-49 employees and non-contractors with 1-99 employees would not be required to submit EEO-1 reports. The EEOC anticipates that the first reports including pay data will be due by the September 30, 2017, filing deadline.
W-2 earnings: The proposal would require employers to identify employees’ total W-2 earnings for a 12-month period looking back from a pay period between July 1 and September 30 of the reporting year, as selected by the employer. For example, an employer could use W-2 data for the 12 months looking back from the second pay period in July of the reporting period. The EEOC says that W-2 earnings are useful for assessing pay discrimination because they include not only wages and salaries but also other compensation, such as commissions, tips, taxable fringe benefits, and bonuses. Moreover, the EEOC notes that most employers’ systems allow for calculation of W-2 earnings for any 12-month period and not just for the calendar year.
Pay bands: The proposed EEO-1 will have 12 pay bands for each of the EEO-1 job categories:
(1) $19,239 and under;
(11) $163,800-$207,999; and
(12) $208,000 and over.
For each pay band, an employer will tabulate and report the number of employees (broken down by sex and race/ethnicity) whose W-2 earnings fell within each pay band. For example, an employer might report that it employs 10 African American men who are Craft Workers with earnings in the second pay band ($19,240-$24,439).
Part-time and part-year employees. To account for part-time and part-year employment, employers will report hours worked as well as W-2 earnings.
For each pay band, an employer will report the total number of hours worked during the last 12 months by employees in that pay band. For example, the employer might report a total of 10,000 hours worked by the 10 African American men reported in the second pay band.
An example of the proposed EEO-1 report can be found at http://www.eeoc.gov/employers/eeo1survey/2016_new_survey.cfm.
EEOC to hold public hearing
The EEOC will hold a public hearing on March 16, 2015 to gather information and hear public comments about its proposed revision of the EEO-1 Report to include compensation data. The proposed revision would include collecting pay data from employers with more than 100 employees. The Commission said that this new data will assist the EEOC and the OFCCP in identifying possible pay discrimination and assist employers in promoting equal pay in their workplaces. Notice of the hearing was published in the Federal Register on February 16, 2016 (81 FR 7792).
The meeting, which will begin at 9:30 a.m. (EDST), will be held at 131 M Street, NE, Washington, DC, 20507, Jacqueline A. Berrien Commission Meeting Room.
Anyone who wishes to speak at the hearing should notify the Commission by February 22, 2016. Written requests to participate in the hearing should include a brief summary of the planned statement and may be submitted in hard copy to Bernadette Wilson, Acting Executive Officer, Executive Secretariat, Equal Employment Opportunity Commission, 131 M Street NE, Washington, D.C., 20507. The Office of the Executive Secretariat also will accept written requests by fax at (202) 663–4114 (receipt of fax transmittals will not be acknowledged, except that the sender may request confirmation of receipt by calling the Executive Secretariat staff at (202) 663-4070 (voice) or (202) 663-4074 (TTY)). Due to time limitations, all interested individuals may not be able to testify at the hearing, but the Commission will consider all written statements submitted.
Further information may be obtained by contacting Ronald Edwards, Director, Program Research and Surveys Division, Equal Employment Opportunity Commission, 131 M Street NE., Room 4SW30F, Washington, DC 20507; (202) 663–4949 (voice) or (202) 663–7063 (TTY).
Comments on the proposed EEO-1 revision must be submitted by April 1, 2016. The procedures for doing so are detailed in the Notice of Proposed Rulemaking published in the Federal Register on February 1, 2016 (81 FR 5113-5121).
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