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Revised form will increase data collection ‘20-fold’
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Some senators and business groups say the Equal Employment Opportunity Commission's (EEOC's) EEO-1 form pay reporting requirement is burdensome, not useful, and will result in invasions of privacy. They are calling on the Office of Management and Budget (OMB) to rescind its approval of the mandate.
Under the EEOC's requirement, every worksite with 100 employees or more must submit each year not just demographic information but also the W-2 wages and hours worked for all of their employees, grouped in broad EEO-1 job categories and subdivided into 12 pay bands.
Sen. Lamar Alexander, R-Tenn., chairman of the Senate Committee on Health, Education, Labor and Pensions, and Sen. Pat Roberts, R-Kan., submitted a letter to the OMB asking it to rescind its approval of the measure.
If the new reporting mandate isn't scrapped or delayed, employers will have to comply with it by March 31, 2018, noted Michael Eastman, vice president of public policy for the Equal Employment Advisory Council, which submitted a letter to the OMB on March 20 opposing the pay requirement. Based in Washington, D.C., the council provides guidance to major corporations on equal employment opportunity and affirmative action obligations.
[SHRM members-only toolkit: Managing Equal Employment Opportunity]
The old EEO-1 form required data about the workforce categorized by race/ethnicity, gender and job category–a total of 180 pieces of information gathered about those employees each year, Alexander and Roberts noted. "The revised form increases this data collection 20-fold from 180 to 3,660 for each report, even though the revision was submitted for review under the Paperwork Reduction Act," they stated. "In total, EEOC will be collecting up to nearly 3 billion data fields."
The pay data requirement is burdensome on employers, Eastman said. He noted that instead of just conducting a head count by establishment, employers would need to link up their payroll and HR systems. Such a change "takes a lot of money and a lot of time to get it right," he said.
"While the EEOC projected compliance to cost $53.5 million and 1,892,980 hours, the [U.S. Chamber of Commerce] survey revealed that American employers and federal contractors would spend $400.8 million and expend 8,056,045 hours," Alexander and Roberts said in their letter. "The chamber's $400.8 million compliance price tag is limited to direct labor costs. By factoring in indirect overhead costs, the revised EEO-1 form may result in costing American employers and federal contractors $1.3 billion annually."
The EEOC says employers don't have to track the time of exempt employees under the pay mandate but can just enter 40 hours per week for full-time employees and 20 hours per week for part-time workers, said James Plunkett, senior government relations counsel for Ogletree Deakins in Washington, D.C., and former director of labor law policy with the U.S. Chamber of Commerce. This further undermines the value of the data to the EEOC, he said.
"The benefit to the agency is almost nonexistent," stated Plunkett, who wrote a separate March 20 letter on behalf of associations, including the Society for Human Resource Management, that oppose the pay reporting mandate. The EEOC has said that once there is a charge against a company, it will be able to pull its EEO-1 data and see if there is a bigger problem. But Plunkett called this a "specious argument," saying that once there is a charge, the agency can get the information by subpoena.
The EEOC "probably would not look at the [updated] EEO-1," as it would not tell the agency anything relevant to the charge, said Plunkett. For example, the data doesn't reflect differences in employees' experience, education or working hours that might account for differences in pay.
Invasions of privacy are another concern. The EEOC aggregates data at the organization level. In some worksites, it will be obvious how much particular employees make if the aggregate data is obtained. Suppose there is only one Native-American U.S. engineer at a worksite. By obtaining the aggregate data for that worksite, it would be possible for anyone, including competitors who might want to poach an employee, to tell what that engineer's salary is, Eastman said. The data might be obtained by a Freedom of Information Act request to the Office of Federal Contract Compliance Programs (OFCCP), which also gets the EEO-1 data, or through hacking or through the OFCCP's inadvertent disclosure of the information, Plunkett said.
"Employers are already making the necessary investments in software upgrades, internal reporting processes and staffing needs in order to comply" with the EEO-1 form pay mandate, the chamber noted in a Feb. 27 letter to the OMB. It requested that the OMB review and suspend the effective date of or rescind the reporting requirement "as quickly as possible, as businesses are already incurring unnecessary expenses to compile 2017 data solely as a result of the requirements of the revised EEO-1."
Because Congress and business groups are uncertain when and if the EEOC will act, they are pressuring the OMB to revoke its approval of the pay reporting mandate, Eastman explained.
The EEOC's acting chair, Victoria Lipnic, is a Republican and voted against the pay reporting mandate. But three of the commission's current four members are Democrats and support it, so any action from the agency to delay or scrap the requirement will likely have to wait until the terms of Democrat members expire and Republicans have a majority of seats on a full five-member commission. (One seat is currently vacant.) Commissioner Jenny Yang's term expires in 2017, Commissioner Chai Feldblum's term expires in 2018, Commissioner Charlotte Burrows' term expires in 2019, and Lipnic serves until 2020.
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