Planning for EEO-1 Changes

By Rita Zeidner May 1, 2006
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HR Magazine, May 2006The first significant changes in 40 years to the EEO-1 report help employers and the EEOC spot patterns.

In the past, many of the seasonal workers hired to pick strawberries at Sunrise Growers in Placentia, Calif., were asked questions about their race and ethnic background. But as early as Oct. 1, Sunrise will start asking new questions of the thousand or so employees it typically hires during the growing season, and it will skip some questions it previously asked, as required by the reporting mandates of the Equal Employment Opportunity Commission (EEOC).

The changes stem from a recent makeover by the EEOC of its so-called EEO-1, a demographic report that private companies with 100 or more workers, and federal contractors with 50 or more workers and $50,000 or more in government contracts, are required to submit to the agency each September.

The EEOC finalized the changes earlier this year, following a lengthy review of its employer data collection requirements. In the first major revisions to the survey in 40 years, the agency rearranged its racial and ethnic groupings and developed a new category that allows the agency to compare racial and gender information for different levels of management. Officials maintain that the revisions, which apply to reports employers will file in 2007, will assist the agency in keeping closer tabs on workforce demographics and better track the career advancement of women and minorities

The revised EEO-1 requirements, according to EEOC Chairwoman Cari M. Dominguez, are intended to “recognize the shifting demographics of today’s workplace.”

Complying with the new rules will require employers to alter the types of data they collect on their workers. “We’re definitely going to have to make some adjustments,” says Sunrise HR director Tom Weber, but he doesn’t think the new rules will be a burden for employers. And some see the new rules as a benefit to employers, providing information that can help them better manage their workforces. But it’s clear the changes also will help the agency pursue discrimination claims against employers.

Whats Different?

For Sunrise and some 40,000 employers nationwide, the changes mean that HR staff will need to ask workers to specify if they are Asian, Native Hawaiian or from another Pacific island. And, for the first time, workers who don’t identify themselves as Hispanic or Latino will be asked to specify if they are biracial or multiracial.

The changes also require more precisely segmented demographic information about management-level employees. Previously, the EEO-1 compared demographic information only between management and nonmanagement workers. Now, it will segment manager-level data into two groups: those within two reporting levels of the chief executive officer, and those below this level.

The changes will provide the agency with greater detail about hiring patterns and the ascendancy of women and minorities into top-level management positions.

New Data for Spotting Trends

While the EEOC uses the information from the EEO-1 report to pursue discrimination claims, it also mines the data for trends showing which demographic groups are advancing and how far. For example, the agency uses the data to determine which industries are most and least likely to employ women and minorities as managers.

Several recent EEOC analyses of EEO-1 data have revealed demographic imbalances. A 2003 analysis found that while the number of ethnic and racial minorities in private-sector management has increased sharply over the past decade—Hispanics and Asian Americans by about 50 percent and blacks and Native Americans by about one-third—each of the groups remained underrepresented in top-level management, a finding that does not necessarily indicate illegal discrimination.

Another EEOC study in 2004 based on EEO-1 data found that women represented more than one-third of all officials and managers in the private sector—a 7 percent increase over a 12-year period.

But the study also found uneven gains. The report showed that women had the best odds of being managers in legal services, scheduled air transportation, building and housing services, and doctors’ offices. By contrast, a woman’s chances of being promoted into management were lowest in nursing care facilities, full-service restaurants, and some traditionally male-dominated fields like paper manufacturing and meat processing.

EEO officials say the new management classifications will provide additional insights into whether certain demographic groups are holding the top-paying jobs and whether other groups might be getting stalled after making it into management ranks.

Some employers believe the new EEO-1 form may be a blessing, forcing employers to take a closer, more systematic look at their demographics and promotion patterns.

“I think this new data and the tracking that’s necessary will be a great help for employers,” says Nancy Shallow, a Detroit-based attorney with Mercer Human Resource Consulting. “It’s going to give more detailed information.”

Bill Doucette, SPHR, vice president of HR at National Equipment Ren- tals in Chicago, agrees. “I think it’s a good move,” he says. “You’ll get a picture of whether you have a good penetration of diversity at your top levels. It will answer the question of whether we are getting any movement upward.”

Doucette expects to review the job descriptions of about 10 percent of the staff—about 30 managers—to determine their level of management.

Attorney Robert Sikkel, a partner at Barnes & Thornburg law firm in Grand Rapids, Mich., who researched the use of EEO-1 reports in private litigation for a paper he presented to the American Bar Association, says the new data from the reports could help employers fend off frivolous discrimination claims—if they have been conscientious about affirmative hiring. On the other hand, he says, the more-detailed information also could help legitimize a plaintiff’s claim.

The reporting changes will have the greatest impact on larger companies with multiple levels of management, although many of these businesses will benefit from their use of sophisticated data tracking systems that can ease the process of identifying top-level managers. (For information on how technology systems are being adapted to the EEO-1 changes, see “Help from Technology?".)

The Review Process

While the finalized version of the new EEO-1 rules adopted earlier this year closely follows a draft plan available to employers and other interested parties since 2003, there is one significant exception.

According to Carol Miaskoff, the EEOC’s assistant legal counsel for coordination, the agency abandoned its original plan to expand the current management classification into three, rather than two, categories in response to employer concerns about how different employers assign management positions.

Our goal is consistent, accurate data, and we realized that the use of a separate category for middle managers could be confusing,” says Miaskoff.

Although some companies urged scrapping any additional management categories, Miaskoff says the agency concluded that the detail provided by the second category was important.

The agency also set aside concerns voiced by various stakeholders, including employers, about a new policy that strongly urges employers to collect race and ethnic data by allowing employees to self-identify. Miaskoff said the agency determined it would be difficult for employers to provide accurate information based solely on an employee’s appearance about whether the employee identifies with more than one race.

In addition, the agency retained a two-question format that first asks whether employes are Hispanic or Latino and, if not, what their race is. Employers maintained that the distinction could be confusing for employees. But the commission chose the two-question format to obtain more accurate data about Hispanics and Latinos. Employers nevertheless are allowed to collect more detailed race information than needed to complete the EEO-1 report.

Future Implications

While some employers have focused on the possibility of new administrative burdens created by the new rules, at least some lawyers are questioning whether there might be more at stake.

“The reality is the EEO-1 will become more meaningful to assess the diversity at a particular workplace,” says Sikkel.

Since the new EEO-1 will break down information more precisely, Sikkel maintains, it necessarily becomes a sharper tool for the government to use in rooting out discrimination. Employers—particularly federal contractors—that aren’t vigilant in their equal employment opportunity reporting could put their business at risk.

“I think the EEO-1 was an enforcement tool a year ago,” Sikkel says, “and it will be an even more powerful enforcement tool in the future.”

Rita Zeidner is the Society for Human Resource Managements online technology editor.

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