Public Hearing of October 29, 2003 on Proposed Revised Employer Information Report (EEO-1)

Madam Chair, Madam Vice-Chair, Commissioner Silverman, Commissioner Miller, and colleagues: On behalf of the Equal Employment Advisory Council (EEAC), I appreciate the opportunity to appear before the Commission today to present our views on EEOC’s proposed revisions to the Employer Information (EEO-1) Report.

Introduction and Statement of Interest

EEAC is a nationwide association of employers organized in 1976 to promote sound approaches to the elimination of employment discrimination. Its membership comprises a broad segment of the business community and includes over 330 of the nation’s largest private sector corporations collectively employing some 19 million workers in the United States alone. All of our members are firmly committed to the principles and practice of nondiscrimination and affirmative action in the workplace, and nearly all of them are subject to EEOC’s EEO-1 reporting requirement, in some cases filing hundreds or even thousands of EEO-1 Reports each year. Many of our member companies also are required to comply with a broad array of other federal EEO/AA recordkeeping and reporting requirements that involve workforce data in categories similar or identical to those used in the EEO-1 Report. The changes that EEOC is considering for the EEO-1 Report therefore will have a significant impact upon federal compliance reporting requirements far beyond the EEO-1 form itself.

For at least three reasons, then, our member companies have a significant interest and stake in the outcome of EEOC’s deliberations in this matter. First and foremost, they have a vested interest in preserving the integrity and utility of the race/ethnicity and job category data reported on the EEO-1 form — data which are collected, maintained, and analyzed to support many important nondiscrimination, affirmative action, and diversity-related initiatives beyond just the EEO-1 form itself. Second, as some of the largest employers in the country, our members will bear the lion’s share of the costs and burdens associated with implementing any changes to the EEO-1 form. Finally, because many of our members rely on a single human resources information system to collect, track, and report the workforce data which must be presented in the EEO-1 Report and all other federally mandated requirements, they have a particular interest in seeing that a consistent approach is implemented across all of these important compliance-related requirements.

Our testimony today will touch upon these three themes of utility, burden, and implementation/coordination as we now present our assessments and recommendations on the proposed changes to each of the two major classification systems used in the EEO-1 Report.

Proposed Revisions to the EEO-1 Report’s Race/Ethnicity Classification System As you know, the current version of the EEO-1 Report requires employers to collect and report employee race and ethnicity data using a five-category classification system that has remained essentially unchanged since 1977. Under this system, an individual’s race/ ethnicity is reported in one and only one of five mutually exclusive categories; ethnicity data (i.e., whether an individual is Hispanic or Latino) are tracked and reported exclusive of race, and individuals are not given the option of identifying in more than one race/ethnicity category.

The revised EEO-1 form proposed by the Commission would significantly change this classification system. As the Commission is well aware, these changes are driven by the Office of Management and Budget’s (“OMB”) 1997 Standards for Maintaining, Collecting, and Presenting Federal Data on Race and Ethnicity (“revised standards”), which essentially mandate that all federal information collections involving race/ethnicity data be consistent with one of two alternative reporting formats: a complex “two-question” format involving 62 possible race/ethnicity combinations, and a simplified “combined” format involving six.

EEAC supports EEOC’s proposal to replace the existing classification system with one that would classify individuals in one of seven mutually exclusive race/ethnicity categories. We believe that the proposed seven-category system strikes what may be the most appropriate and suitable balance between the two reporting formats explicitly authorized by the revised standards. It also is completely consistent with the revised standards’ principle aim: that individuals be given the opportunity to self-identify (or be identified) with more than one race/ethnicity category.

We commend EEOC for promulgating a proposal that, if finalized, would avoid the two most contentious aspects of alternative race/ethnicity classification models: (1) requiring employers to collect and maintain data in all 62 race/ethnicity categories possible under the revised standards’ two-question format; and (2) requiring employers to assign or allocate multiple-race individuals to a single race reporting category based on such factors as the nature of the particular racial combination observed or the relative size of each racial group’s population in a given geographic area.

In addition, were the Commission to approve the content of the attached sample self-identification form prepared by EEAC, the proposed race/ethnicity classification model also would avoid the considerable employee relations challenges that employers otherwise would face if the two-question format (or any variation thereof) were to be implemented for recordkeeping to support the EEO-1 form. These employee relations challenges stem from the fact that, for the past 25 years, individuals have been permitted to identify with only one race/ethnic category. With Hispanic ethnicity traditionally collected exclusive of race, employers have never had to explain to applicants or employees the subtle differences between the notion of race and the notion of ethnicity. EEOC’s suggested employee questionnaire, however, would for the first time invite Hispanic or Latino employees to identify both their ethnicity and their race, even though data on their race never would be reported to the federal government for civil rights monitoring and enforcement purposes.

It is in the context of responding to this invitation that employers will be placed in the uncomfortable position of having to respond to employee questions about the differences between race and ethnicity, and explaining why information regarding race is being solicited in situations where it will not be reported. EEAC’s proposed self-identification form avoids these problems by not asking Hispanic or Latino employees to provide race information that will not be reported. Instead, the questionnaire simply asks individuals to identify in which one of the seven reporting categories they wish to be included.

In addition to the efforts undertaken by EEOC thus far to propose and implement the modified combined format, EEAC urges the Commission to take the following specific steps relative to the collection, storage, reporting, and analysis of data on race and ethnicity:

• State clearly in the EEO-1 Instruction Booklet, the EEO-1 form itself, and all other appropriate venues the Commission’s position that employers would be permitted to collect and store race/ethnicity data in the same seven categories, and only the same seven categories, as would be used for reporting those data on the proposed EEO-1 form.
• Publish an alternative “suggested employee questionnaire” such as the sample prepared by EEAC and included as part of our testimony.
• Work closely with OMB to ensure that all other federal recordkeeping or reporting requirements involving employment-related race and ethnicity data conform to, or permit employers to use, the same race/ethnicity classification system as is used in the EEO-1 Report.
• Make clear that employers will be permitted to continue determining race/ethnicity by visual observation, either where an individual has declined to self-identify or where extending an invitation to self-identify is unduly burdensome or otherwise not practical or feasible.
• Make available to employers and other stakeholders guidance, sample forms, and other practical resources that will help make the transition to the new EEO-1 form more efficient.

Proposed Revisions to the EEO-1 Report’s Job Category Classification System EEOC is proposing three significant changes to the job category classification system used in the EEO-1 Report:

• Stratification of the current Officials and Managers category into three distinct hierarchical categories, a change that would yield a total of 11 job categories versus the current nine;
• A “hard link” between these 11 job categories and the Occupational Classification Code (OCC) system used in the 2000 census; and
• A reordering and renumbering of current EEO-1 job categories six through nine.

While each of these proposed changes appears to be relatively minor, we respectfully submit that they, both individually and collectively, would in fact have an enormous impact on the ways in which companies manage their workforce demographic data.

Proposed Stratification of the Officials and Managers Job Category The proposed revisions would stratify the current Officials and Managers EEO-1 job category into three separate categories: one for senior-level executives, one for mid-level managers, and one for lower-level managers. Employers, of course, would be required to reengineer their job category classification systems to accommodate this change and reassign all employees previously classified as Officials and Managers into the most appropriate of the three new management-level categories based on their new definitions.

Importantly, the Commission also is proposing to include in these three categories “most business and financial operations occupations,” without regard to whether the incumbents performing these occupations actually would otherwise qualify as a “management-level” employee. The Commission believes that the inclusion of most business and financial operations occupations in the management-level categories would “allow[ ] for more detailed assessment of the utilization of minorities and women in these activities.”

We believe, however, that for many if not most industries and establishments, the proposed stratification would fail to improve employers’ and the Commission’s ability to monitor and assess the utilization of minorities and women in these activities. This is so because, as the Commission is well aware, the EEO-1 Report is an establishment-based instrument, requiring all covered employers to file a separate EEO-1 Report for each establishment employing 50 or more employees. When viewed from this perspective, it becomes clear that dividing the Officials and Managers category into three levels as EEOC proposes would result in thousands of establishments — perhaps even a majority of all reported establishments — having no data reported in the proposed Executive/Senior-Level Officials and Managers category, and analytically insignificant data reported in the proposed Mid-Level Officials and Managers category. The Commission’s proposed stratification thus would yield little if any meaningful occupational data in the two most highly visible proposed categories, a result which will not advance anyone’s ability to meaningfully monitor or analyze “the utilization of minorities and women” in these categories.

While it may not provide the most precise occupational data for purposes of monitoring and enforcing EEO/AA compliance requirements at the management level, the current nine-category system with its single Officials and Managers category has effectively served the general comparisons and analyses for which EEO-1 job categories most often are used. Where more precise comparisons and analyses are called for, most companies, and nearly all federal contractors, further refine their management-level units of analysis to flexibly group those positions that truly are similar in terms of content, responsibility, and compensation within each company’s organizational structure and operating model.

In light of the limited utility and added burdens that EEOC’s proposed stratification of the Officials and Managers category would yield, EEAC recommends that EEOC preserve the existing Officials and Managers job category without change. Proposed Correlation Between the 2000 Census Occupation Classification System and the EEO-1 Job Category Classification System.

The proposed EEO-1 revisions also would require employers to assign their company-specific positions to EEO-1 job categories based on the single 2000 Census Occupational Classification Code (OCC) that most closely relates to the position. The new EEO-1 job categories thus would be a high-level aggregation of the 2000 OCC structure — a classification system that many federal contractors rely on to map their specific jobs to common occupations for the purpose of calculating external availability as part of their affirmative action planning process. With respect to the proposed stratification of the Officials and Managers category, in our view, this proposed forced correlation between an occupationally-based classification system (OCC) and a level-based classification system (the three new management-level categories), makes little sense and would, if implemented, distort the demographic data annually reported to the Commission for management-level employees.

For example, under EEOC’s proposal, all company positions that most closely align with 2000 OCCs 001 through 010 would be classified for EEO-1 reporting purposes as “Executive/Senior-Level Officials and Managers,” and all company positions that most closely align with 2000 OCCs 011 through 016 would be classified for EEO-1 reporting purposes as “Mid-Level Officials and Managers,” regardless of the actual level that the incumbents occupied in the organizational structure.

Under the 2000 OCC structure, OCCs 001 through 010 include not only Chief Executives (001) — who unquestionably properly would be included in an “executive” job category, but also General and Operations Managers (002), Advertising and Promotions Managers (004), Marketing and Sales Managers (005), Public Relations Managers (006), and Administrative Services Managers (010).

Similarly, OCCs 011 through 016 include functional management roles in information technology (011), finance (012), human resources (013), industrial production (014), purchasing (015), and transportation, storage and distribution (016). Thus, for example, any marketing management job that an employer mapped to OCC 005 (Marketing and Sales Managers) would always be reported on the EEO-1 as an “Executive/Senior-Level Official and Manager,” and any human resources management job that an employer mapped to OCC 013 (Human Resources Managers) would always be reported as a “Mid-Level Official and Manager,” regardless of the true level that each incumbent in these positions occupied in the organizational structure. Continuing with the example, an entry-level marketing manager would appear in an EEO-1 job category above the job category in which the organization’s human resources directors were reported.

This proposed correlation also presents another problem for those federal contractors who, for purposes of determining affirmative action program external “availability” rates of women and minorities, link each of their positions to an OCC based not on what the position does, but rather on what general experience they look for when trying to fill it. For example, a federal contractor that has an entry-level management position responsible for overseeing a highly technical function may look for experienced technical professionals, such as an engineer, when trying to fill that position. For purposes of its AAP analyses, the company may assign an engineering-related OCC to this management position, so that its availability calculations incorporate the demographics of engineers — the occupation the company is recruiting from — and not for managers. In all such situations, if the company then uses that code to determine how the position would be reported on the EEO-1 form, then the manager would be reported in the Professionals category, not any of the Officials and Managers categories.

Given the fact that most companies which are not federal contractors do not link their positions to corresponding OCCs (they are not required to annually calculate availability estimates), and because both federal contractors and non-contractors annually file EEO-1s, this proposal could result in major inconsistencies within EEO-1 data, with federal contractors reporting their EEO-1 data using one methodology, and non-contractors using another. In the example above, a non-contractor that does not link its positions to OCCs likely would report the same technical management position in one of the three proposed management categories (where it probably belongs and where EEOC likely would expect it to be reported), not the Professionals category. Such inconsistency in classification could greatly undermine the integrity and comparability of thousands of records of EEO-1 data.

We therefore recommend that EEOC not move forward with its proposed correlations between OCCs and EEO-1 job categories. Instead, EEOC should continue permitting employers to flexibly assign, within EEOC’s general descriptive guidelines, company-specific positions to the most appropriate EEO-1 job category based on how the company is structured and how each position fits within that organizational structure. Proposed Reordering and Renumbering of Current Job Categories Six Through Nine.

The nine-category job classification system used in the EEO-1 Report has remained unchanged for many years and, like the EEO-1 Report’s race/ethnicity classification system, has long been used by employers to meet their federal EEO/AA compliance requirements and to support their diversity and human resources initiatives. For federal contractors, this classification system also provides the fundamental basis for classifying their positions into affirmative action job groups, which are the key units of analyses for affirmative action planning. As the Commission may be aware, each affirmative action job group almost always is a subgroup of a single EEO-1 job category. Many federal contractors therefore have developed job group numbering conventions using the current EEO-1 job category system, with each EEO-1 job category’s number serving as the first digit of that category’s composite job groups. For example, all management-level job groups generally begin with a “1,” such as 10, 100, or 1A, and all professional-level job groups with a “2” (e.g., 20, 200, 2A, etc.). Even a “simple” reordering and renumbering of a few of the current EEO-1 job categories would have major ripple effects throughout a contractor’s data collection, reporting, and analysis systems, a fact confirmed by the results of a membership survey we conducted, which indicate that companies overwhelming believe that doing so would simply add to the cost of implementation with no foreseeable utility.

Moreover, as previously stated, the EEO-1 Report is not the only federal recordkeeping and reporting requirement that uses the current nine-category job classification system. The DOL’s Office of Federal Contract Compliance Programs’ Equal Opportunity Survey, the DOL Veterans’ Employment and Training Service’s VETS-100 Report, and several reporting requirements imposed by the FCC all use the exact same classification system. If the job category classification system used in the EEO-1 Report were to change, and if these changes were not precisely synchronized with the job category classification system used in these other federal compliance requirements, then all employers and establishments subject to any of these other requirements would have to develop, implement, and maintain separate and duplicative systems to track their employees in whatever job category classification system(s) they have to report those individuals in to satisfy their federal compliance requirements. Accordingly, any changes to this job category classification system — whether driven by EEOC’s proposed stratification of the Officials and Managers category and/or by its proposed reordering of the Service Workers, Craft Workers, Operatives, and Laborers job categories — would have implications, perhaps unintended by the Commission, well beyond the EEO-1 form. Given the limited value of this reordering and renumbering proposal, we respectfully urge EEOC to preserve the current job category hierarchy and structure without change.

Additional Recommendations for Ensuring a Smooth Transition to the New EEO-1 Report Based upon feedback that we have received from our member companies, EEAC offers the following recommendations that we believe will help make the transition to the new EEO-1 Report more efficient for both employers and EEOC.

• EEOC should develop and publish practically-oriented resources, such as guides, fact sheets, talking points, etc., which explain how and why the federal government requires the collection and reporting of race and ethnicity data and which could be given or read by employers to their employees who inquire about such matters. At minimum, these resources should explain in simple terms the concepts of race and ethnicity, and why the federal government draws a distinction between the two.
• EEOC should update the Instruction Booklet’s definition of “employee” to more clearly define the categories of employees which an employer is not required to report on the EEO-1 form.
• EEOC should update the Instruction Booklet’s definition of “establishment” to address: (1) how employees who work from home should be reported; (2) whether an employer may report one location as multiple EEO-1 establishments; and (3) whether an employer may report multiple locations as one EEO-1 establishment.
• For two reasons, EEOC should delay implementation of a new EEO-1 form until the 2005 reporting cycle at the earliest. First, we believe the delay is necessary to give EEOC the additional time it needs to coordinate with its sister agencies and to ensure a single, uniform approach to collecting and reporting race/ethnicity and job category data to the federal government in all federal employment-related recordkeeping and reporting requirements. Second, and equally as important, we believe that employers, too, will need the additional time to plan for, budget, and execute all of the systems, paperwork, and process changes necessary to comply with the new requirements. As we previously have noted, some of our larger members have reported to us that they will need at least one full year to completely implement even the simplified race/ethnicity reporting model under consideration, and much more time than that if a more complicated race/ethnicity classification system is required.
• EEOC should establish as an “effective date” for the revisions the date on which an employer’s 2005 EEO-1 Report is submitted to EEOC, or the deadline for filing the 2005 EEO-1 Report, whichever is earlier. By setting such an effective date, employers will then know with certainty the date on or after which EEOC (and, for that matter, any other affected federal agency) will expect them to begin collecting and storing race/ethnicity and job category data for EEO-1 reporting purposes and for all other federal recordkeeping and reporting requirements affected by the proposed EEO-1 revisions.

EEAC commends the commission for its efforts thus far to ensure the practical utility of a revised EEO-1 form and its underlying data while at the same time minimizing the burdens to employers associated with the proposed changes. We appreciate this opportunity to present our assessments and recommendations, and we hope that EEOC will give them due consideration as it works to finalize the new EEO-1 Report. Thank you.

This page was last modified on October 29, 2003.