Since January of 2016, the EEOC has made efforts to combat pay disparities faced by minorities. As part of this effort, the EEOC, with the support of the Obama administration, proposed a rule requiring employers to provide pay data to the Commission by way of an annual EEO-1 form. On September 29, 2016, the EEOC announced that pay data submission will be required beginning in March of 2018, and provided a sample of the EEO-1 form covered employers (employers with 100+ employees or federal contractors with 50+ employees) will be required to submit.
While the form may not be submitted until March of 2018, the information submitted will include pay data dating back to January of 2017. As a result, it’s recommended employers prepare for the changes. The burden of collecting the data may be significant depending on the size of the employer, and based on what an employer finds, EEOC claims may follow. Preparing for the changes sooner than later will help employers combat any current issues, and take steps to defend EEOC issues that result. Employers should begin conducting self-audits, preferably under attorney-client privilege, to ascertain if any pay disparities appear, and, if so, how address the same. Additional steps employers should consider include:
- Assess existing HRIS and payroll systems to ensure that they can generate the necessary reports.
- Meet with outside vendors to make sure they understand the new requirements.
- Identify or develop policies that explain how employees earn overtime, bonuses, commissions and other components of W-2 box 1 wages.
- Put systems in place to readily retrieve data regarding benefits choices employees make, because these choices can significantly affect W-2 income.
- Identify job titles in each of the 10 EE0-1 job categories and analyze job descriptions to ensure they are accurate and will support pay decisions that reflect different job responsibilities.
- Identify any existing pay bands that your company uses and map them to the new pay bands on the EEO-1 form.
- Determine how to report hours worked for exempt employees.