Small Business Fact Sheet: Notice of Proposed Changes to the EEO-1 to Collect Pay Data from Certain Employers: Public has 30 Days to Submit Comments to the Office of Management and Budget

BACKGROUND

• The Equal Employment Opportunity Commission (EEOC) and the Office of Federal Contract Compliance Programs (OFCCP) at the Department of Labor collect the Employer Information Reports (EEO-1 reports) through their EEO-1 Joint Reporting Committee.
  • The agencies each have legal authority to collect this data, and they utilize one report to avoid duplication.
  • The EEO-1 report has existed for over 50 years. Employers are familiar with how to complete it, and the EEOC and OFCCP know how to analyze the data to support their programs.
  • The current EEO-1 requires employers to tally and report the number of workers they have by job category and then by sex, ethnicity, and race.
  • Employers file their EEO-1 reports digitally, either by entering data through the EEO-1 secure online portal, or by submitting digital files with the company's EEO-1 data.
• The next EEO-1 report is due on September 30, 2016. There are no changes on this report. Employers will not be required to provide pay data this year.
• The EEOC proposes to add pay data to the 2017 EEO-1 report, which is now due March 31, 2018. (See below for more information.)
• If your business is not required to file the EEO-1 now, it would not be required to file the EEO-1 with pay data starting in 2017. Consistent with current practice:
  • Private employers with 99 or fewer employees that are not federal contractors would not file the EEO-1.
  • Federal contractors with 49 or fewer employees would not file the EEO-1.
  • Federal contractors with 50-99 employees would not report pay data, but they would report ethnicity, race, and sex by job category.
• EEOC's updated Paperwork Reduction Act Notice (Notice), describing the details of the pay data collection proposal for 2017 and 2018, is available at https://federalregister.gov/a/2016-16692. An example of the proposed EEO-1 is available at http://eeocsurvey.com/eeo1newform/index.html (PDF version)
  
• Interested members of the public have until August 15, 2016, which is 30 days from the date of the Notice's publication to provide their comments to the Office of Management and Budget. Refer to the Notice for details.

WHY EEOC AND OFCCP ARE PROPOSING TO COLLECT PAY DATA

• While there has been progress in combatting pay discrimination, EEOC and OFCCP continue to see pay discrimination in their enforcement work.
• Recent studies show that discrimination plays a role in explaining persistent pay gaps that are correlated with sex, race, and ethnicity.
• Studies show that discrimination because of sex, ethnicity, and race, can be one cause of pay disparities, after considering factors like education and work experience.
• Pay discrimination has real consequences for working families.
• Recent studies also demonstrate that pay equity is good for business.
• The EEOC and OFCCP are legally required to enforce laws that prohibit pay discrimination, and Title VII and Executive Order 11246 provide authority to collect data through EEO-1 reporting.
• The EEO-1 pay data collection will provide a vehicle to enforce the law more effectively. The data will help the EEOC and OFCCP in investigations and compliance reviews. The agencies will consider EEO-1 data along with all other information obtained before concluding that discrimination occurred.

THE CURRENT EEO-1 FORM

• A sample of the current EEO-1 is at: 
  The referenced media source is missing and needs to be re-embedded.
  .
• The current EEO-1 form has 10 job categories and 7 race and ethnicity categories. Employers report a summary count of employees by job category, and then by sex, ethnicity, and race.
  • The 10 EEO-1 job categories are: Executive/Senior Level Officials and Managers; First/Mid-Level Officials and Managers; Professionals; Technicians; Sales Workers; Administrative Support Workers; Craft Workers; Operatives; Laborers and Helpers; and Service Workers.
  • The seven ethnicity and race categories are: Hispanic or Latino, White (Not Hispanic or Latino); Black or African American (Not Hispanic or Latino); Native Hawaiian or Other Pacific Islander (Not Hispanic or Latino); Asian (Not Hispanic or Latino); American Indian or Alaska Native (Not Hispanic or Latino); and Two or More Races (Not Hispanic or Latino).
• The next EEO-1 report - the 2016 EEO-1 report - will use the existing form. It is due on September 30, 2016.

THE PROPOSED EEO-1 PAY DATA COLLECTION FOR THE 2017 and 2018 REPORTS

• Starting with the 2017 EEO-1 report, the EEOC proposes to add pay data.
• "Pay data" includes both W-2 income data and hours-worked data.
• Summary income data would be reported.
  • Employers will report on the number of employees within pay bands, using W-2, Box 1, income data. W-2 income includes not only wages and salaries, but also commissions, tips, bonuses, overtime, and other supplemental pay.
  • The 2017 EEO-1 report will be due on March 31, 2018. This will give employers time to transition to reporting the pay data.
  • Employers can use the same W-2, Box 1, number they calculate for tax purposes, because the EEO-1 will be due after annual tax forms are completed. No special W-2 calculations would be required for the EEO-1.
• W-2 pay would be reported in "pay bands." 
  • Employers will tally the number of employees in 12 pay bands for each EEO-1 job category.
  • For each pay band, employers would enter the number of employees whose W-2 pay for the calendar year falls in that band.
  • Employers would report summary pay data. Employers would not report individual pay or salaries.
  • The pay bands track the 12 pay bands used by the Bureau of Labor Statistics in the Occupation Employment Statistics survey:

    (1) $19,239 and under;
    (2) $19,240 - $24,439;
    (3) $24,440 - $30,679;
    (4) $30,680 - $38,999;
    (5) $39,000 - $49,919;
    (6) $49,920 - $62,919;
    (7) $62,920 - $80,079;
    (8) $80,080 - $101,919;
    (9) $101,920 - $128,959;
    (10) $128,960 - $163,799;
    (11) $163,800 - $207,999; and
    (12) $208,000 and over.

• Hours worked data also would be reported.
  • For non-exempt employees who are covered by the minimum wage and overtime pay protections of the Fair Labor Standards Act (FLSA), employers will report their hours worked as recorded for the FLSA.
  • For employees who are exempt from the minimum wage and overtime pay protections of the FLSA, employers have a choice: they may either:
  • • (1) report 40 hours per week for full-time exempt employees, and 20 hours per week for part-time exempt employees, multiplied by the number of weeks these individuals were employed during the EEO-1 reporting year; or
    • (2) provide actual hours worked by exempt employees during the EEO-1 reporting year, if the employer already maintains accurate records of these hours.
  • For example, if 5 African American women are counted in pay band 6 of the Professionals job category, and those women are full-time, exempt employees who worked 52 weeks for the year, the employer could report 10,400 total hours worked in this EEO-1 pay band cell (i.e., 5 employees x 40 hours x 52 weeks).
  • Hours worked data is useful for the EEOC and OFCCP. It may help explain lower reported pay, for example, if the hours linked to this pay are less than full time.

CONFIDENTIALITY

EEOC and OFCCP will protect and maintain the confidentiality of the pay data to the maximum extent possible.

• Title VII forbids EEOC or any EEOC officer or employee from making public any information, including EEO-1 data, before a Title VII proceeding is started that involves the information. Any violations of this statute by EEOC staff are subject to criminal penalties including imprisonment. The EEOC imposes these conditions on all of its contractors, as well as on other federal agencies that request the data for legitimate law enforcement purposes.
• OFCCP holds contractor data confidential to the maximum extent permitted by law, as required by the Freedom of Information Act Exemption 4 and the Trade Secrets Act.

BURDEN FOR EMPLOYERS

• The Notice estimates the burden on employers in connection with one-time implementation and annual reporting costs. These cost estimates are required by the Paperwork Reduction Act, and must be calculated in a specific way.
• EEOC estimates the costs to employers based on several factors that include:
• • the labor costs to enter EEO-1 data onto the EEO-1 online portal, when the employer does not centralize EEO-1 reporting at headquarters;
  • the labor costs to review the EEO-1 instructions and to collect, verify, and enter data on the EEO-1 online portal; and
  • the labor costs for the different types of staff that may prepare the EEO-1 report, such as senior and junior human resources staff, administrative staff, software programmers, legal counsel, and even the Chief Executive Officer who may certify the report. At many companies, fewer staff may be involved, but the EEOC sought to account for varied labor costs.
• The EEOC estimates that the one-time implementation costs for employers to update their EEO-1 reporting systems to include pay data will be about $446 per employer.
• The EEOC also estimates that the addition of pay data will add about $417 every year to the 2016 cost of completing the EEO-1.

PROCESS FOR FINAL DECISION ON PROPOSAL TO REVISE THE EEO-1

EEOC published an updated proposal for a 30-day public comment period on July 14. Comments must be submitted by August 15, 2016, to the Office of Management and Budget (OMB). Please refer to the July 14 Federal Register Notice for further details.

OMB is responsible for reviewing and approving the revised EEO-1 report. Upon OMB approval of the revised EEO-1, EEOC will post a notice of its approval on its website, www.eeoc.gov and also will notify EEO-1 filers of the approval and reporting requirements and deadlines.