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The EEOC to Require Pay Data on EEO-1 Form in 2018

Posted by Cesar Juarez on Jun 30, 2017 3:53:44 PM

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The Equal Opportunity Commission (EEOC), in conjunction with the U.S. Department of Labor, enforces federal prohibitions against employment discrimination. In doing so, the EEOC collects data from private employers about their employees, which is disclosed on the "Employer Information REport." or EEO-1. Who must file EEO-1? All private employers with 100 or more employees, except state and local governements, primary and secondary school systems, institutions of higher education, Indian tribes, and tax-exempt private membership clubs in addition, certain federal contractors are required to file EEO-1.

For many years, employers have provided information regarding the race, gender, and ethnicity of employees by job category. The EEO-1 is, however, scheduled for updates.

Beginning in March of 2018, employers required to file the EEO-1 will need to privde employee pay data, in addition to the demographical information they were already providing. The change marks the EEOC's first step in refining investigations into pay discriminations based on race, ethnicity and gender. 

On September 29, 2016 the EEOC announced upcoming changes to the EEO-1, including disclosure of summary pay data. Employers will be required to report the total number of full and part-time employees they had working in each of 12 pay ranges, or bands, determined by the Bureau of Labor Statistics. Recent studies have shown that nationwide pay gaps are related to workplace discrimination. African American and Hispanic or Latina women are among those most discriminated against. The revised EEO-1 report aims to reveal this type of discrimination. For example, a report may show a law firm with four female Latina Professionals in pay band seven, which is $62,920 - $80,079, also has 25 male Caucasians who are Professionals in pay band seven. The EEOC might view this as a red flag for discrimination.

To allow employers time to learn and prepare the new report, the deadline for the 2017 report has been scheduled for March 31, 2018. Many affected employers have already come out strongly against the EEOC’s changes. While they find reducing workplace discrimination a necessary and admirable goal, many believe the data collection will not serve that purpose. A number of variables, such as the option to purchase stocks, could show pay disparity in cases of equal opportunity. Opposing employers argue  the EEOC’s changes will result in a confirmation bias compiled of false positives.

Regardless of the backlash, the changes are coming, and employers must prepare. An employer’s first step should be determining whether glaring pay disparities exist. If so, it should be justified through business factors such as education, length of employment, or detailed performance reviews. Employers should confirm with their human resources department that the payroll data is accessible and formatted according to the EEO-1 standards. If the company does not already have policies explaining overtime, bonuses, commissions, or other W-2 components, it should begin development. Human resources should meticulously document, in a retrievable way, data regarding employee choices that affected W-2 income.

While the EEOC protects employer and employee privacy in its publication of the EEO-1, employers found guilty of violating the Equal Pay Act will face consequences, which may include EEOC investigations, fines, and/or employment discrimination lawsuits. Employers should therefore use the next 10 months to conduct self-audits to not only ensure compliance, but also a healthier and happier workplace. Call a Sioux Falls lawyer, Omaha attorney or Sioux City lawyer today to learn how this may affect you!

To read more about recent EEOC's updates, check out our blog! http://blog.goosmannlaw.com/human-resources-on-your-side/eeoc-study-preventing-harrassment-in-the-workplace

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