3 things you need to know about new EEOC pay reporting rule

It’s official: Finance staffers will have more reporting duties moving forward. Here’s everything you need to know about the EEOC’s new final rule.  

As expected, the agency just released its final rule updating the EEO-1 reporting requirements employers have to abide by.

For the most part, the final rule mirrors the proposed rule we got our hands on earlier this summer.

The rule requires certain employers to submit a summary of employees’ pay to the EEOC in addition to the gender, race and ethnicity reporting many employers are already accustomed to.

Beginning in 2018, employers will be required to report aggregate W-2 wages and hours worked in 12 pay bands for each of the 10 EEO-1 job categories and 14 gender, race and ethnicity categories. The EEOC issued a new sample EEO-1 form to help employers prepare for the new rule.

Three key components of the rule employers need to know:

Who will (and won’t) report pay data?

• Private employers and federal contractors with 100 or more employees will have to report the summary pay data on the new EEO-1 form.
• Federal contractors and subcontractors with between 50 and 99 employees will not report summary pay data, but they will tally employees by job category and then by sex and ethnicity or race, as they did before and report that information.
• Federal contractors and subcontractors with fewer than 50 employees will not file EEO-1 reports.
• Private employers with 99 or fewer employees will not file EEO-1 reports.

When is the first pay data due?

• The new EEO-1 report will be due for the first time on March 31, 2018, and it’ll be due every March 31 thereafter.
• This year’s reporting requirements have not changed, however. Those required to submit an EEO-1 report must still submit their 2016 reports by Sept. 30, 2016.
• Employers will then have 18 months between the 2016 and 2017 EEO-1 deadlines — from September 30, 2016 until March 31, 2018 — to comply with the new reporting requirements.

How will the new pay data be reported?

• Employers with 100 or more employees must first categorize employees by EEO-1 job category. The 10 categories are:
  • (1) Executive/Senior Level Officials and Managers;
    (2) First/Mid Level Officials and Managers;
    (3) Professionals;
    (4) Technicians;
    (5) Sales Workers;
    (6) Administrative Support Workers;
    (7) Craft Workers;
    (8) Operatives;
    (9) Laborers and Helpers; and
    (10) Service Workers.
• Then, they will categorize employees by sex, and ethnicity or race. These first two steps mirror the current EEO-1 reporting procedures.
• Next, employers will categorize employees by pay bands. The 12 pay bands added to the EEO-1 form are:
  • (1) $19,239 and under;
    (2) $19,240 – $24,439;
    (3) $24,440 – $30,679;
    (4) $30,680 – $38,999;
    (5) $39,000 – $49,919;
    (6) $49,920 – $62,919;
    (7) $62,920 – $80,079;
    (8) $80,080 – $101,919;
    (9) $101,920 – $128,959;
    (10) $128,960 – $163,799;
    (11) $163,800 – $207,999; and
    (12) $208,000 and over.
• Employers will tally the number of employees in each pay band by sex, and ethnicity or race. For example, an employer might report 23 Sales Workers who are non-Hispanic, white women in pay band (4) $30,680 – $38,999.
• The rule changes the “workforce snapshot” to a pay period between Oct. 1 and Dec. 31. The current snapshot period is July 1 through Sept. 30. The EEO-1 report due March 31, 2018 will be the first to use the Oct. 1 through Dec. 31 snapshot period.
• Report income provided in Box 1 of Form W-2.
• Employers will report the total number of hours worked that year by the employees in each pay band. For example, an employer reports the total number of hours worked by 23 Sales Workers who are non-Hispanic white women in pay band (4). (Note: The new EEO-1 gives employers a choice for how to count hours worked for employees who are exempt employees under the FLSA. An employer may either use 40 hours per week for full-time employees and 20 hours per week for part-time employees or, if it chooses, report the number of hours the employees actually worked.)
• Under no circumstances should employers report individual pay or salaries or any personally identifiable information.

The EEOC says the new data will help it improve investigations into pay discrimination. The goal is to close the wage gap and better equalize pay among different age, gender and ethnic/racial groups.

Info: In addition to the new EEO-1 sample form, the EEOC has provided a Small Business Fact Sheet on the rule, as well as a Q&A document. In addition, the agency will host free webinars on Oct. 20, 2016 and Oct. 26, 2016 to help employers understand and comply with the regulations. Visit www.eeoc.gov for more details.