Prepared Expressly for OutSolve, LLC By Andrews Kurth Kenyon LLP
The Equal Employment Opportunity Commission (EEOC) on September 29, 2016, announced that beginning March 2018, federal contractors and subcontractors with 100 or more employees must report aggregate wage data based on W-2 forms along with actual hours worked. While many employers were pleased that the September 30, 2017, original deadline was extended by six months, they remain concerned about complying with the new requirements.
In conjunction with the extension, the Employer Information Report (“EEO-1 report”) new filing schedule also shifts the time period during which employers must survey their employees (“workforce snapshot”) from the third quarter to the final quarter of the calendar year.
According to the EEOC in its September 29, 2016, press release, the collection of summary pay data is a “critical step in delivering on the promise of equal pay.”1 The stated goals of the initiative are to “improve investigations of possible pay discrimination” and to “help employers prevent pay discrimination in [the] workplace.”2 However, the new reporting requirements will place a significant new burden on federal contractors and subcontractors and appear to ignore their articulated concerns -- that the additional required pay data is burdensome to collect and will provide limited value or insight into accurately identifying pay discrimination.
For example, employers are required to annually file an EEO-1 report to report workforce demographic information. Beginning March 31, 2018, covered employers must now also report employees' W-2 earnings and hours-worked data, categorized by gender, race, ethnicity, and by 12 pay bands for each of the EEO-1 job categories. Although employers may use the same W-2 wage information they already compile for federal tax purposes, this does not always accurately represent an employees’ total compensation. Therefore, many employers remained concerned that the additional data will not yield any meaningful analysis of pay discrimination.
While compiling wage data has its own administrative issues, the requirement of tallying hours could also create issues. For example, employers are without the data needed to accurately report hours for exempt employees because many do not currently maintain this information (which is not required to be kept under the Fair Labor Standards Act). Notably, however, employers are provided an alternative choice of reporting 20 hours per week for each part-time employee and 40 hours per week for each full-time employee, rather than reporting the actual hours worked. However, this alternative could also diminish the value of the statistical analysis used to evaluate pay discrimination.
While larger employers are subject to the new requirements, current reporting requirements for federal contractors/subcontractors with less than 100 employees will remain unchanged. Specifically, federal contractors/subcontractors with 50–99 employees will not report summary pay data, but they will continue to report employees by job category as well as by gender, ethnicity, and race. Federal contractors/subcontractors with 49 or fewer employees will not be required to complete the EEO-1 report. The new reporting requirements did not affect employers' 2016 EEO-1 report that was due on September 30, 2016.
The EEOC offered webinars in October which are currently available to employers to assist them with the new requirements. OutSolve has similarly offered a webinar which can be accessed through the following link http://outsolve.com/webinars/guestaccess/ e5c94866b29e08424f08abc8c75d6835cf27a156.
Employers should not underestimate the time and resources it will likely require to comply with the new EEO-1 reporting requirements. Failure to comply could have costly consequences. Such consequences might include, for example, disqualification from participating in or benefiting from Covered Government Contracts for an indefinite or fixed-term period, or even debarment from future federal contracts.
Accordingly, it is essential that covered employers evaluate their company’s current reporting capabilities, undertake necessary steps in preparation for the March 2018 EEO-1 reporting effective date, and consider assessing their own pay analysis in advance of the submission of pay data to the EEOC.
1 A copy of the EEOC’s press release can be found at https://www.eeoc.gov/eeoc/newsroom/release/9-29-16.cfm. 2 Id. DAL:948052.3
This article was prepared expressly for OutSolve, LLC by Jason Regas and Jayde Ashford Brown, Associates at Andrews Kurth Kenyon.
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