On January 29, 2016, the EEOC publicly announced proposed revisions to the EEO-1 form that would require collecting pay data from employers required to file the EEO-1 (private employers with more than 100 employees and federal contractors with more than 50 employees). The current EEO-1 requires employers to provide information on race, ethnicity, sex, and job category. This proposal would add aggregate data on pay ranges and hours worked to the information collected, beginning with the September 2017 report. The proposed changes are available for inspection on the Federal Register website.
Employers should be very concerned about the proposed report, but not necessarily for the reasons one might think. While advocates of pay reporting believe it will ferret out pay discrimination, this is unlikely to be the case. The revised EEO-1 form will simply not provide sufficient information to identify discrimination among similarly-situated individuals (although it could certainly be used to target employers, who will then need to expend significant time and money to defend themselves). More generally, however, every employer covered by the report will need to spend time and money figuring what and how to report. For example, the EEO-1 will require W-2 data, which is calendar year data, even though the reporting period for the EEO-1 is October 1 through September 30. There is also no guidance to address how to count hours for salaried workers or employees that do not work the full reporting period. Employers should also be very concerned about the ability of the EEOC to keep the information confidential. Just last year, hackers targeting OPM compromised the information of more than 22 million people. There is simply no way EEOC can guarantee the data it receives will be secure.
The proposed changes were published in the Federal Register on February 1, 2016. Employers who are concerned about the proposed rule and what it might mean for their business should not sit idly by, but should submit comments for consideration on or before April 1, 2016. Employers may also want to consider a privileged review of their compensation in anticipation of the revisions, to determine whether there are red flags in their compensation array.
Opinions and conclusions in this post are solely those of the author unless otherwise indicated. The information contained in this blog is general in nature and is not offered and cannot be considered as legal advice for any particular situation. The author has provided the links referenced above for information purposes only and by doing so, does not adopt or incorporate the contents. Any federal tax advice provided in this communication is not intended or written by the author to be used, and cannot be used by the recipient, for the purpose of avoiding penalties which may be imposed on the recipient by the IRS. Please contact the author if you would like to receive written advice in a format which complies with IRS rules and may be relied upon to avoid penalties.
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