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Employers Must Report Employees’ Pay and Hours Worked in 2017’s EEO-1 Report

Labor & Employment Alert Pamela M. Ploor

Beginning in 2018, an employer of at least 100 employees must report employees' pay and hours worked, which is new, in its EEO-1 report. Pay data will be provided to the Equal Employment Opportunity Commission (EEOC) or the Office of Federal Contract Compliance Programs (OFCCP). The information will support the EEOC's discrimination investigations and the OFCCP's compliance reviews and discrimination investigations by allowing the agencies to target employers based on newly required hours and pay data. Before the next EEO-1 filing date on March 31, 2018, employers should assess employee pay in anticipation of submission of pay information to the government. Keep reading to learn more, including further recommendations for employers.

Overview of EEO-1 Requirements

The 2017 report will be due on March 31, 2018, which is a change from the current September 30 annual deadline. The required data is broken into two sets. One data set is employees' race, sex, and ethnicity, which is unchanged. The new data set is hours worked and summary pay data. An employer's number of employees, business type, and existence of federal contracts determine what data an employer must file. The chart below outlines the different reporting obligations:

Employers obligated to report race, sex, and ethnicity information in EEO-1 report

Employers obligated to report hours worked and pay information in EEO-1 report

  • Private employers of 100+ employees,
  • Private employers of fewer than 100 employees that are part of an integrated enterprise with another company through affiliation or centralized ownership, and the overall enterprise employs 100+ employees
  • Prime federal contractors or first tier subcontractors with a contract/purchase order of $50,000+ and 50-99 employees
  • Institutions with 50-99 employees that accept U.S. government deposits
  • Any issuing and paying agent of U.S. Savings Bonds and Notes with 50-99 employees 
  • Private employers of 100+ employees
  • Private employers of fewer than 100 employees that are part of an integrated enterprise with another company through affiliation or centralized ownership, and the overall enterprise employs 100+ employees
  • Prime federal contractors or first tier subcontractors with a contract/purchase order of $50,000+ and 100+ employees  
  • Institutions with 100+ employees that accept U.S. government deposits
  • Any issuing and paying agent of U.S. Savings Bonds and Notes with 100+ employees  

Employers excluded from the EEO-1 Report include:

  • State and local governments
  • Public primary and secondary school systems
  • Institutions of higher education
  • American Indian or Alaska Native tribes
  • Tax-exempt private membership clubs other than labor organizations

Employers should file no EEO-1 report for establishments in Puerto Rico, the Virgin Islands, or other American Protectorates.

Employers must report on the full-time and part-time employees who were employed during the payroll period (workforce snapshot) selected by the employer between October 1, 2017 and December 31, 2017. Employers must total the number of employees by sex, race, and ethnicity during the selected payroll period. For those employees only, employers must report the pay and hours worked in the 2017 calendar year in each of the 10 occupational categories formulated by the EEOC—called EEO-1 categories - which remain unchanged. The EEO-1 categories are Executive/Senior Level Officials and Managers, First/Mid Level Officials and Managers, Professionals, Technicians, Sales Workers, Administrative Support Workers, Craft Workers, Operatives, Laborers and Helpers, and Service Workers. The EEOC has an EEO-1 Job Classification Guide in which job titles are assigned to the EEO-1 categories.

Covered employers must report:

(1)  Total number of full time and part time employees in each of 12 pay bands listed for each EEO-1 job category in the selected payroll period. Employers do not report individual pay or salaries; and

(2)  Number of hours worked in 2017 by the employees accounted for in each pay band in the selected pay period. The definition of hours worked under the Fair Labor Standards Act (FLSA) applies. Hours worked data will be reported on the EEO-1 by tallying the total number of hours worked by all the employees counted in each pay band for 2017, not just the selected payroll period.

The EEO-1 pay bands are:

Pay Band Number

Pay Band Range

(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

(12)

$208,000 and over

Employers must count the number of employees they have in each pay band for each job category. To identify the pay band on the revised EEO-1 report in which to count an employee, employers must use pay reported for income tax purposes that year in Box 1 of the W-2 form. Employers must report total taxable wages, tips, and other compensation paid to employees excluding elective deferrals (such as employee contributions to a section 401(k) or 403(b) plan) but including section 501(c)(18) contributions. Employers are expected to use payroll reports for the previous four quarters to generate the necessary data.

An excerpt of a blank EEO-1 form with the 12 pay bands is below:

Recommendations for Employers

  • Even though the grouping of the employee data by EEO-1 category and pay band will result in flawed statistical analyses by the government from employers' perspectives, that will soon be the reality. Employers need to have an understanding of their compensation and how it looks under the government's categories and valid statistical models. 
  • Employers should prepare an equity-focused statistical compensation analysis to see whether employees' compensation reflects any statistically significant differences between women and men or among races of employees that could interest the EEOC or the OFCCP. Increasing state laws on pay equity, activist shareholder demands for pay equity, the White House pay equity pledge, and leading companies' declarations of achievement of pay equity increase pressure on employers to consider and take action on pay equity. Keep in mind that compensation analyses are shielded from discovery and production to the EEOC and the OFCCP only if legal counsel requests the analyses to provide legal advice to the company. Involving legal counsel as an afterthought or just copying an attorney on the email does not establish attorney-client privilege.
  • Employers should decide how to report hours worked for exempt employees on the EEO-1 report and whether any changes are required in time reporting practices for exempt employees. If an employer does not track hours worked for exempt employees, it may report 40 hours per week for full time employees and 20 hours per week for part time exempt employees. If hours worked is a statistically significant factor impacting pay, however, an employer may decide to start tracking hours worked for exempt employees. 
  • Companies should review and confirm the classification of job titles into EEO-1 categories in their payroll and HRIS systems. This is especially important for employers without federal contracts because they typically don't review the accuracy of the classifications unlike federal contractors, which prepare affirmative action plans that involve the EEO-1 categories. Incorrect classification could skew the results of a compensation analysis by EEOC or OFCCP.
  • Employers should evaluate the requirements of the EEO-1 report against the company's payroll and HRIS systems and take steps to ensure compatibility with the required data fields. 
  • Employers should check the definition of employee applicable to the EEO-1 report against the company's employees to ensure the company will not over report workers as employees. Some workers are the responsibility of a staffing agency or are excluded from the EEO-1 report because of the temporary nature of their employment, like construction workers. 

If you have any questions about the new EEO-1 report or a discrimination-focused compensation analysis, please contact Pamela Ploor at 414-277-5661/ pamela.ploor@quarles.com or your Quarles & Brady attorney.