EEO-1 report needs updating, new study says

Finance could be seeing some changes when filing the next EEO-1 pay data report, thanks to new recommendations from a study by the National Academies of Sciences, Engineering, and Medicine.

The academies studied the EEO-1 report to see if the info it collects was helpful for correcting pay inequities. While they did find the data was useful overall, the academies have proposed several changes designed to streamline data collection and make it more relevant to correcting pay disparities among certain groups.

Potential changes to EEO-1 report

Here are some updates you could see from the EEOC in future reports.

Different W-2 data for pay info. Instead of asking for pay data from Box 1 of Form W-2, the academies’ report recommends that the agency collect Box 5 data. That way, it’ll give a more accurate representation of the total compensation each employee receives.

Smaller pay bands. More narrow pay bands will help the EEOC specifically highlight pay disparities that need correcting at companies. The academies also suggested that the bands be expanded for top earners to further highlight pay disparities for highly compensated employees. Ideally, the pay bands would be eliminated altogether to allow for more accurate pay data collection, the academies said.

Distinguishing between exempt and nonexempt employees. Currently, the EEO-1 report doesn’t allow employers to note whether workers are exempt or nonexempt. And many companies don’t track the exact hours exempt employees work, so this data may not be as useful for comparison. The academies recommend that future EEO-1 reports allow employees to identify exempt and nonexempt workers, as well as part-time and full-time employees. They also recommend that hours worked be used as a metric for nonexempt employees only, while exempt employees’ time worked should be measured in weeks.

Additional employee data. Along with reporting info on workers’ pay, gender and ethnicity, other useful info that should be listed on the EEO-1 report includes employees’ level of education, job experience and tenure with the company. This data would provide more context to certain pay disparities.

Standard reporting period. Creating a standard reporting period would allow for easier comparability of data and would decrease the burden of reporting on employers, the academies said.

Ability to review data before submission. Allowing employers to check the data they’ve entered before submitting it to the EEOC will help with accuracy. The agency has enabled this feature for the Component 1 data report, but not the Component 2 report measuring pay info.

We’ll keep you posted on if the EEOC makes these or any other changes designed to reduce employers’ burden and make the EEO-1 report more accurate and complete.