Last-Minute Tips for Complying with EEO-1 Pay-Data Reporting

 

Lisa Nagele-Piazza, J.D., SHRM-SCP By Lisa Nagele-Piazza, J.D., SHRM-SCP September 19, 2019
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Employers have less than two weeks to file their EEO-1 Component 2 data—pay information broken down by job category, race, sex and ethnicity—to the Equal Employment Opportunity Commission (EEOC). To avoid technical issues and delays, employers shouldn't wait until the Sept. 30 deadline.

Employers that have not yet submitted EEO-1 Component 2 data for 2017 and 2018 should be in the final stages of preparing their data, said Cara Yates Crotty, an attorney with Constangy Brooks, Smith & Prophete in Columbia, S.C.

Cheryl Behymer, an attorney with Fisher Phillips in Columbia, S.C., explained, "If the reporting system suffers from the slowdowns that we have seen in the past, it may take a long time to file if you wait until the deadline."

The Component 2 data collection has been outsourced to NORC at the University of Chicago, which is an independent research institution.

"Looking at your data now allows you the luxury of time to contact NORC via its hotline or e-mail to try to address any unusual data questions," Behymer said.

Employers should note, however, that the EEOC's website was recently updated to announce that the help desk is "receiving a very high volume of daily calls and e-mails, and there may be delays in response." So employers should give themselves enough time to address any challenges.

Submitting the Data

For EEO-1 Component 2, employers will need to report wage information from Box 1 of the W-2 form and total hours worked for all employees by race, ethnicity and sex within 12 proposed pay bands.

Employers should select a pay period between Oct. 1 and Dec. 31 of the reporting year as the "workforce snapshot period," the agency's guidance said. Employers, including federal contractors, are required to submit Component 2 pay data if they had 100 or more employees during the workforce snapshot period.

[SHRM members-only HR Q&A: What are the filing requirements for the EEO-1 form?]

Remember that although the payroll period is a narrow time frame that establishes the employee head count, the W-2 Box 1 pay data and the hours worked are for the year, not just the payroll period, Behymer said. Also note that the EEOC has adopted the Fair Labor Standards Act practices for calculating compensable hours so that paid holidays, vacation and leave are not included. For exempt employees, businesses may report actual hours worked or designate 40 hours a week.

NORC and the EEOC have published very detailed specifications on how the data must be presented and how to verify the filings. Employers should visit the EEOC's website for a sample form, an instruction booklet and FAQs for covered employers.

Crotty recommended that employers periodically review the FAQs because additional clarifications have been added since their initial release. For example, the agency recently said employers may report gender for nonbinary employees—who do not identify as exclusively male or female—in a comments section of the form.

After reviewing the online information, employers will need to decide whether they are going to use the online filing system or the data upload option, which is especially useful for large, multi-establishment employers, Behymer noted. "We recommend the HR or compliance person responsible work closely with the employer's IT [information technology] team if they choose to file via the data upload method."

The time involved in preparing and submitting the data depends on the size of the employer and the number of establishments, Crotty explained. "However, both the manual entry and upload processes can be extremely time-consuming, and employers may encounter technical difficulties." So employers should allow sufficient time to resolve any problems well before the Sept. 30 deadline.

Controversial Reporting Requirement

Earlier this year, employers were required to submit EEO-1 Component 1 data that lists employees by job category, race, ethnicity and sex. Component 2 asks for employees' hours worked and pay information from their W‑2 forms, broken down into the same categories.

In 2017, the federal government decided not to gather Component 2 data, and worker advocates sued to force the EEOC to collect it. The worker advocacy groups that filed the lawsuit said the information would help them evaluate pay disparities and better serve their clients. Furthermore, requiring equal-pay data collection would "encourage companies to identify and correct pay disparities and allow the EEOC to more effectively and efficiently root out and address pay discrimination," they argued.

Business groups, however, have opposed the requirement. "The EEOC's pay-data collection rule creates another administrative burden for companies while raising questions about how the data will be used and analyzed," said Brett Coburn, an attorney with Alston & Bird in Atlanta.

After a heated legal battle, the EEOC announced that employers must report Component 2 data from 2017 and 2018 payrolls by Sept. 30. The federal government appealed the judge's decision, but that doesn't change covered employers' obligation to submit Component 2 data this year.

Future Reporting Years

Although Component 2 data for 2017 and 2018 still must be submitted by Sept. 30 this year, the EEOC recently announced that it will not collect the pay data in the future. The agency concluded that the burden imposed on employers to gather the information outweighs the usefulness of the data for the agency.

The EEOC still plans to follow its longtime practice of collecting Component 1 data.

"Hopefully, we can revert to the normal EEO-1 filing process in 2020 and beyond," Crotty said.

However, it is still possible that courts might intervene to compel the EEOC to gather the pay data in the future despite the agency's announcement.

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