Pay Equity: A new opportunity to attract and retain talent in a competitive market.

Covered employers (companies with over 100 employees) must submit all employees’ W-2 earnings data and actual hours worked beginning on January 1, 2017 for the 2018 EEO-1 report. Employers must report W-2 earnings as the “measure of pay” for the new pay data collection report. Employers will use Box 1 of the Form W-2 to complete their EEO-1 filings.

On the new EEO-1 form, each employee will be classified into one of 12 pay bands within each job category. A separate section of the form for hours worked details the aggregate annual hours worked for each pay band/job category/race/ethnicity and gender category.

While the current report has 140 boxes for employee counts, the revised report has 1,680 boxes with employee counts by pay band/job classification, race, ethnicity, and gender. There are another 1,680 boxes for hours worked by pay band/job classification, race, ethnicity, and gender.

As to hours worked, the EEOC provides two options for employers to report hours worked for exempt employees: (1) a proxy of 40 hours a week for full-time exempt employees, or 20 hours for part-time exempt employees, or (2) or actual hours worked if the employer already maintains accurate records of this information.

Armed with the data and intent on identifying pay disparities causing the “wage gap” for women and minorities, the EEOC and the Office of Federal Contract Compliance Programs will monitor and test employer data and investigate in detail the pay practices of those employers whose data suggests indefensible pay disparities. For example, the EEOC explains the collected pay data will be used in the following ways.

1. Early assessment of charges of discrimination
2. EEOC publication of reports on pay disparities based on analysis of aggregation of collected pay data by:
   • Race
   • Sex
   • Industry
   • Occupational groupings
3. Metropolitan Statistical Area (MSA)
4. EEOC training on how pay data can “improve the agency’s enforcement work.”

The new rule goes into detail about how the EEOC will protect the confidentiality of the collected pay data, including the process for protection under Freedom of Information Act (FOIA) requests and Title VII confidentiality provisions, as well as outlining internal protocols for protection of the data.

Employers with 100 or more employees are required to file EEO-1 reports. Additionally, Federal contractors with 50 to 99 employees must still file but must not report compensation data. EEOC has sued employers solely for failure to file EEO-1 reports in the past. It may use the failure to file an EEO-1 report to support a substantive discrimination claim.

Start coordinating with human resources and payroll functions:

• The EEO-1 report has often been prepared by human resources. However, with the addition of pay and hours worked data, the new form will likely require human resources and payroll to coordinate on completing the form. Companies should start planning now about how they will coordinate their internal departments and resources to prepare the new report.
• Conduct proactive EEO pay analyses to assess risk: Employers cannot afford to turn over pay data to the EEOC and OFCCP without first knowing what it says and whether and where risks may lie.
• Employers are advised to begin preparations now, starting with pay analyses, to identify and address pay issues that could emerge from the EEO-1 pay data and arise in systemic investigations by EEOC or OFCCP.