By now, we have all read about the Executive Action and related regulations proposed by the EEOC that will require companies with 100 or more employees (not just federal contractors) to report to the government how much they pay their employees and corresponding information regarding each employee’s race, gender, and ethnicity.
“[T]oday, the median wage of a woman working full-time year-round in the United States is about $39,600—only 79% of a man’s median earnings of $50.400.”
Under the proposed regulations, which are currently in the notice and comment phase, employers will be required to first submit pay data as of the September 30, 2017 EEO-1 filing deadline.
The top question that comes to mind is: What might companies do now to prepare?
First of all, understand that the regulations are not final and, technically, anything could change. Even still, now is the optimal time to get an understanding of what likely will be required since these proposed regulations are sweeping rules that will impact over 60,000 companies and over 63 million employees throughout the United States.
The EEOC is currently proposing that, rather than providing specific information about the employees and their pay (e.g., names and compensation), companies will be required to report information across 10 job categories and using 12 pay bands. Therefore, the specific salary or compensation of an individual employee will not be required and, arguably, their confidentiality should not be affected.
The job 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.
The pay bands are as follows:
As you can see, the new forms break down each job category by pay band – and then require the specific identification of race/ethnicity, broken down by gender when reporting the salary. The next section requires the breakdown of “total number of hours worked in last year.” The EEOC is seeking input as to how to report hours worked for salaried employees. One approach considered is assuming the estimate of 40 hours per week for full-time salaried employers—which obviously does not account for the fact that many employees work well above that. The EEOC has stated it is not proposing that employers must begin collecting additional data on actual hours worked for salaried workers, to the extent that the employer does not currently maintain such information. Companies will need to determine how, if at all, they already collect this data that must be submitted as part of these new forms.
For the 2016 reporting cycle, EEO-1 filers will only submit the Component 1 data. Beginning with the 2017 reporting cycle, the EEOC proposes filers with 100 or more employees to submit the new Component 2 data, discussed above, by September 30, 2017. All filers should be able to submit the report electronically.
These reporting obligations will be mandatory and the data will be used in connection with the enforcement of Equal Pay objectives. However, it remains to be seen how this information will be used as the data itself may not account for the many reasons that one employee may make more than another—such as more job experience, the employee’s educational background, different job responsibilities, and so on.