As reported in an online article for the Society for Human Resource Management by Lisa Nagele-Piazza, the Equal Employment Opportunity Commission (EEOC) released an updated EEO-1 reporting form. The article, titled “New EEO-1 Form Requires Companies to Report Data,” published on September 30, explains how the new form intends to improve how investigations for pay discrimination based on race, gender, and ethnicity are conducted. These additions require most private employers with 100 or more employees to provide employee pay data beginning in March 2018.
This is the first time pay information will be reported on EEO-1 filing, an important development per Dara DeHaven, an attorney with Ogletree Deakins in Atlanta. DeHaven is quoted in the article that “with access to this new data, the EEOC is sending a strong signal that it will increase its enforcement efforts.”
EEOC Chair Jenny Yang echoed the sentiment that collecting pay data significantly advances the ways discriminatory pay practices are addressed. Yang said in a press statement, “this information will assist employers in evaluating their pay practices to prevent pay discrimination and strengthen enforcement of our federal anti-discrimination laws.”
The revised form now also asks for data about employees’ pay as reflected in Box 1 of their 2017 W-2 forms. Since this new information must be provided in the 2017 form, the deadline for 2017 will be extended to March 31, 2018, the deadline for 2017 will be extended to March 31, 2018 to allow employers time for data collection
Despite best intentions, management attorneys and employers have opposed these changes positing the collected data won’t serve the agency’s stated goal. Expressing a position on behalf of the SHRM at a March 16 agency hearing, Janese Murray, Vice President of Diversity and Inclusion at Exelon Corp., argued collecting pay data as proposed won’t identify unlawful pay discrimination in the long run.
Murray said, “”Over time, pay is increasingly influenced by an employee’s chosen career path—previous jobs, experience, education, performance and geographic locations, along with level of responsibility.”
Mickey Silberman, an attorney with Jackson Lewis in Denver, is quoted in Davis’s article that “comparing people with respect to their pay is complicated” and that “relying on W-2 earnings may show a pay disparity when in fact none exists.”
Silberman also said human resource information systems (HRIS) containing demographic data on employees’ race and gender don’t usually communicate with payroll or time-keeping systems. Silberman suggested collecting and compiling additional demographic data may incur a hefty and unnecessary expense for employers.
Cheryl Behymer, an attorney with Fisher Phillips in Columbia, S.C., suggests that employers think about conducting self-audits, ideally under attorney-client privilege. As quoted in Davis article, Behymer noted “these self-audits allow the employer to consider in advance how to address any pay disparities if it believes the disparities should be addressed through an equity adjustment,”
In preparing for filing the new reports and defending pay decisions, DeHaven recommended in an email to SHRM Online employers determine several strategies, including: assessing existing HRIS and payroll systems to confirm the necessary reports can be generated; clearly identify policies explaining how employees earn overtime, bonuses, commissions and other components of W-2 box 1 wages; and determine how exempt employees report hours worked.