Revised EEO-1 Pay Reporting Presents HR with Dilemma: Comply Now or Wait?

Efforts are in motion to block new information-gathering rule that aims to root out pay discrimination

By Allen Smith, J.D. Aug 7, 2017
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​Employers have a difficult choice: Start preparing now for the new EEO-1 pay reporting requirement and revised form or figure out what's the latest date they can start preparing to comply with the mandate. The requirement may be withdrawn once the Equal Employment Opportunity Commission (EEOC) is led by Republicans, blocked when Congress approves a final appropriations bill, or rejected by the Office of Management and Budget (OMB), but each of these possible outcomes remains uncertain, management attorneys caution.

President Donald Trump has nominated two Republicans—Janet Dhillon, who would serve as chair, and Lt. Col. Daniel Gade—to the EEOC. Republican Victoria Lipnic, acting chair, voted against the pay reporting requirement, and some believe the EEOC will withdraw it when she is joined by Dhillon and Gade, should they be confirmed.

The House Committee on Appropriations voted on July 13 to limit the agency's ability to implement the revised EEO-1 requirement. By a 29-20 vote, the committee amended an appropriations bill, stating that the EEOC could not use any funds for the collection of pay information and data on hours worked.

For Now, Assume the New EEO-1 Form Will Be Implemented

However, Connie Bertram, an attorney with Proskauer in Washington, D.C., said, "While we await the passage of the final 2018 appropriations bill, employers should continue to operate under the assumption that the revised Form EEO-1 will be implemented as planned. This is particularly true in light of EEOC's silence on the revised Form EEO-1."

Under the EEO-1's requirement, all employers with 100 or more employees must submit the new EEO-1 report by March 31, 2018. "This includes the expanded information on total compensation and total hours worked during the reporting period by race, ethnicity, gender, EEO-1 category and salary band," noted Cara Crotty, an attorney with Constangy, Brooks, Smith & Prophete.

In addition to the challenge of setting up human resource information systems (HRISs) and payroll technology to capture the extensive data needed for the new reporting obligations, it will take some time for employers to determine how to slot their job descriptions into the 10 EEO-1 job categories, noted Lynne Anderson, an attorney with Drinker Biddle & Reath in Florham Park, N.J.

"Employers will also be required to report the aggregate hours worked in 2017 for all employees included in each pay band," she said. "If exempt employees do not record their hours, employers will need to add in 20 hours per week worked for each part-time employee and 40 hours per week for full-time employees. Also, the new EEO-1 reports must be submitted electronically, and employers will want to be sure the data is in a format that can be successfully submitted via the EEOC's online systems."

[SHRM members-only HR Q&A: Can you please explain the filing requirements for the EEO-1 form?]

Plus, the new report requires covered employers to report W-2 income provided in Box 1 of the W-2 form. The EEOC moved the deadline for the 2017 report from the end of September to March 31, 2018, to give employers time for the transition and to allow for alignment with the W-2 reporting cycle, noted Dara DeHaven, an attorney with Ogletree Deakins in Atlanta.

"While I believe that it is highly unlikely the compensation reporting portion of the revised Form EEO-1 will be implemented, it is unclear whether we will receive clarity prior to the deadline for implementation," Bertram said.

After the presidential election, employers thought there would be a reasonably good chance the Republican administration would unwind the new pay reporting requirements, which have been "subjected to substantial and fair criticism" as a time-consuming exercise that won't root out pay discrimination, according to David Goldstein, an attorney with Littler in Minneapolis. Employers were originally in wait-and-see mode but increasingly are leaning toward starting to make preparations to comply, he said.

Some clients of his are doing trial runs of filling out the new forms based on 2016 data and working out any issues in their HRIS, he noted, calling this the "most conservative approach."

Some Are Waiting

That tactic is not for everyone.

Clare Draper, an attorney with Alston & Bird in Atlanta, said, "It is likely that the OMB will reject the new EEO-1 form and, if it doesn't, that the EEOC will withdraw it but only after new EEOC commissioners are confirmed. But we cannot be certain at this point. Because suspension or withdrawal of the pay reporting requirement is uncertain, employers should determine now what would be the last date by which they could begin implementation processes necessary to comply by March 2018 and, at the very least, make preparations by that date."

"How long employers can go without making specific, concrete preparations will depend on the employer," said Bill Osterndorf, president, HR Analytical Services in Hales Corners, Wis. "Larger employers with multiple pay systems and complex workforces may need to begin developing and testing reports months before the 2018 EEO-1 report must be filed. Employers with sophisticated reporting systems and extensive IT support, as well as employers with a relatively small number of employees and relatively simple compensation structures, may be able to wait until the end of the year before preparation on filing the revised EEO-1 report."

Cheryl Behymer, an attorney with Fisher Phillips in Columbia, S.C., said, "Employers should consider how they will make a good-faith effort to collect and report the new pay data and hours worked. Although 'good faith' is not an official part of the new regulations, failure to file the EEO-1 report does not result in a financial penalty, so that if an employer can show that it is attempting to meet its requirements, the EEO-1 Joint Reporting Committee will likely be lenient in any follow-up."

 

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