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Compensation Highlights: New EEO-1 Report Impacts Employers with More than 100 Employees

New EEO-1 Report

As a client of Total Reward Solutions, we think it’s important that you know about the new EEO-1 report (the Employer Information Report). The EEO-1 report for 2017 includes significant changes that will particularly impact employers with more than 100 employees. And since this report is based on full-year data from 2017, if your company hasn’t already begun to adjust your employee data recording, you may be scrambling to catch up very soon. Let’s take a closer look at what the new EEO-1 report requires:

 

Background

The U.S. Equal Employment Opportunity Commission (EEOC) and the U.S. Department of Labor, Office of Federal Contract Compliance Programs (OFCCP) enforce federal prohibitions against employment discrimination. This is largely based on the “Employer Information Report” (the EEO-1), which collects data about the number of employees by job category and by sex and race or ethnicity.

On September 29, 2016, the EEOC announced approval of the new EEO-1 report which starts with calendar year 2017 data collection. This report will collect summary pay data from all employers with 100 or more employees. Summary pay data for private employers will go to the EEOC while summary pay data only for federal contractors and subcontractors will go to OFCCP.

 

A New Deadline

The new deadline for the EEO-1 report is March 31, 2018 for the 2017 calendar reporting year. This gives employers an extra 6 months from the deadline for filing the 2016 report, which was September 30, 2016. In other words, employers have a total of 18 months from the previous deadline to the new one to make the necessary changes in their reporting.

 

What’s Required in the New EEO-1 Report

The new EEO-1 report incorporates existing data collection requirements, but includes new data requirements as well. That will make the reporting process more complex and time consuming for employers. Therefore, this more detailed report could potentially put employers at greater risk for potential compensation discrimination investigations.

New Pay Bands

The 2017 EEO-1 report will continue to require existing information gathering regarding employee race/ethnicity and gender in the ten prescribed job categories (ranging from Executives & Senior-level Officials and Managers to Service Workers). But a new “Component 2” report requires disclosure of 2017 W-2 earnings and hours worked for all employees. (Federal contractors and subcontractors with between 50 and 99 employees will not be required to submit the Component 2 information.)

A Snapshot Pay Period

Information to be reported on the new EEO-1 report will be based on a “snapshot” pay period which may be any full employee pay period between October 1 and December 31. All workers actively employed during the snapshot pay period must be included in the reporting. The report would include year-end totals for earnings even if an employee in the report is no longer with the company at year’s end. Only employees who were no longer with the company during the snapshot period would be excluded from the report.

Compensation data would essentially be the information on an employees’ W-2 report in “Box 1” which includes wages, tips, overtime, bonuses and other earnings. Pre-tax retirement and benefit deductions are not included.

That might sound relatively simple since that information should already be in a company’s employee compensation reporting system. However, the new EEO-1 report requires a tally of the number of employees in the job categories AND categorized by their pay in 12 pay bands. These range from Pay Band 1, which is for annual compensation less than $19,239, to Pay Band 12, which is for annual compensation greater than $208,000.

Hours Worked

Hours worked will also be captured. For non-exempt workers, employers must report actual hours worked (including overtime). But for exempt workers, it gets more complicated. Employers can use a default 40 hours for full-time employees or 20 hours for part-time employees; or they can report actual hours work if tracked for exempt workers.

 

The Bottom Line

The new EEO-1 report for 2017 will make employee time and compensation reporting more complex for employers with more than 100 employees. It could potentially also put employers at greater risk for investigations of equal pay discrimination because the investigating agencies will have more data available from which to make those determinations.

Is your company ready for these new reporting requirements? Are you in a good position to withstand the extra scrutiny that could result? If you are not sure, Total Reward Solutions can help you understand what’s required in the new EEO-1 report so you can operate from a more confident position regarding employee compensation reporting. To learn more, contact us today at 317.589.8529.

Cassandra Faurote

 

About Total Reward Solutions:

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Call us today at 317.589.8529 to discuss how we can help your organization develop and implement competitive and effective compensation and total reward programs.