What Will Be Required By the New EEO-1 Pay Data Collection and Reporting Provisions?

cashBy 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:

Pay Bands

Here is a sample of what the EEOC is proposing to collect in the new EEO-1 report.

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.

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Ways to Boost Employee Morale

srpOften times the day-to-day issues that human resource professionals encounter with employees are not necessarily the legal “can we or can’t we” types of issues but, rather, are related to employees’ interactions with one another and overall employee morale. It shouldn’t come as a surprise that investing in the creation (or maintenance) of a positive and supportive company culture will yield benefits far beyond what can be measured and reported in any annual survey.

I am always encouraged when I work with companies that truly dedicate their resources to improving the community—through not only their services/products but also by working to improve the well-being of their employees and those around them.

I had the opportunity on Tuesday to speak with my fellow ATHENAs, Melissa Sanderson and Leah Fregulia, at the SRP Women in Network Luncheon at the SRP Pera Club. Melissa, Leah and I were invited to network with a packed room of superstar SRP women and were also invited to share some of our advice and experiences about the challenges and successes we have encountered in our professional lives, while mentoring others (and being mentees ourselves), and as active members of our communities.

WIN Welcomes Athena

The luncheon reminded me that such a simple thing—bringing a group together—in this case, the women of SRP, can be a great morale booster for employees and an opportunity to challenge employees to think outside the box about their own roles in the organization and what they hope to achieve. As I shared during our panel discussion, I think it is important that employees feel empowered to speak up and share what it is that they want from their careers and also to be accountable to doing the work to get there.

srp2There are many ways companies can work to build morale, create a stronger workforce, and increase employee retention—from initiating wellness programs to holding annual retreats to sponsoring community events. I think every company would benefit from taking a step back and evaluating what the company does and what more can be done. SO, while you do that, I will share my “Top 10 Words of Wisdom” that I shared at the luncheon today. When I was deciding what words of wisdom I wanted to share at the closing of the luncheon, I realized that some great words of advice that I have in the back of my mind originally came from songs. After living in Nashville for three years and experiencing the best music one could find, it only makes sense that the words stuck in my head are backed by a guitar and drums.  Here they are:

TOP 10 WORDS OF WISDOM (Nashville-style)

1. “Be a best friend, tell the truth.  And overuse ‘I love you.’  Go to work, do your best.  Don’t outsmart your common sense.”

“Love Like Crazy,” by Lee Brice

2. “Don’t sit upon the shoreline and say you’re satisfied.  Choose to chance the rapids and dare to dance the tide.”

“The River,” by Garth Brooks

3. “My next thirty years will be the best years of my life.  Raise a little family and hang out with my wife/husband.  Spend precious moments with the ones that I hold dear.  Make up for lost time here, in my next thirty years”

“My Next Thirty Years,” by Tim McGraw

4. “If you want to make the world a better place, take a look at yourself, and then make a change.”

“Man In the Mirror,” by Michael Jackson

5. “Sometimes I’m hard on me, when dreams don’t come easy.  I wanna look back and say, I did all that I could.  At the end of the day, Lord I pray, I have a life that’s good.”

“A Life That’s Good,” by Lennon & Maisy (Nashville cast)

6. “May good fortune be with you.  May your guiding light be strong.”

“Forever Young,” by Rod Stewart

7. “I hope you still feel small when you stand beside the ocean.  Whenever one door closes I hope one more opens.”  

“I Hope You Dance,” by Lee Ann Womack

8. “If you’re faced with a choice, and you have to choose.  I hope you choose the one that means the most to you.”

“My Wish,” by Rascal Flatts

9. “Maybe you’ll marry, maybe you won’t.  Maybe you’ll have children, maybe you won’t.  Maybe you’ll divorce at 40, maybe you’ll dance the ‘Funky Chicken’ on your 75th wedding anniversary.  Whatever you do, don’t congratulate yourself too much or berate yourself either.  Your choices are half chance, so are everybody else’s”

Baz Luhrmann – Everybody’s Free (to Wear Sunscreen) 

10. “What it all comes down to is that no one’s really got it all figured out just yet.”

“Hand In My Pocket,” by Alanis Morissette

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A Year of Change – Increasing Penalties and More

One thing we already know about 2016– this year will bring changes in many of the “numbers” we are accustomed to in the world of employment law: the OSHA penalties are likely to significantly increase, the salary level for exempt employees and highly compensated employees will be increasing, and even the minimum wage is increasing in certain states.

construction peopleOSHA Penalties Will Increase

In early 2015, a “catch up adjustment” was authorized for OSHA penalties that are imposed against employers who receive citations for safety hazards. This adjustment will be effective no later than August 1, 2016. While the new regulations identifying the specific changes have not been published, the initial adjustment will likely be approximately 80% (based on a mathematical formula I won’t even try to explain here).

Therefore, assuming the 80% adjustment (it’s actually not exactly 80%–so there will be some rounding when the final numbers are rolled out)— an other than serious and serious violation that currently has a maximum fine of $7,000 could be up to $12,600. A repeat or willful citation could rise from $70,000 to $126,000. The amounts will then be set to increase every January 15th. Ultimately, the maximum increase can be up to 150% of the current amounts.

These changes are significant as they represent the first time OSHA penalties will increase in 25 years. You can check out the changes here – in section 701 of the Bipartisan Budget Act of 2015.

The Salary Levels in the Fair Labor Standards Act will Increase

We are still waiting for the final regulations to be published, but one thing is certain—the salary level for exempt employees will change in 2016. As I have previously discussed on this blog, the new regulations propose to increase the minimum amount of pay and set the standard salary level to the 40th percentile of weekly earnings for full-time salaried workers—which means the amount would more than double and increase to approximately $970 per week ($50,040 annually) in 2016. And this amount will automatically increase annually.

In addition, the salary level for highly compensated employees will increase. The highly compensated employee exemption currently applies only to employees who have a guaranteed total annual compensation of at least $100,000 and who “customarily and regularly” perform one or more of the exempt duties of an administrative, executive or professional employee, and are not engaged in manual work.

It is anticipated that amount will increase to approximately $122,148 total annual compensation. We are awaiting the final regulations to confirm what that amount will be and it will almost certainly cause waves in 2016.

pile of moneyMinimum Wage Increasing in 16 States

I am a fan of interactive maps – so check this one out.

(Disclaimer: It’s not mine, so I can’t guarantee its accuracy) – BUT it purports to show the 14 of the 29 states (plus D.C.) that have minimum wages higher than the federal minimum wage that are increasing in 2016.

If you like lists and not maps – check this one out.

Or maybe you prefer charts. Then, you might enjoy this.

Arizona’s minimum wage will remain the same in 2016 at $8.05 per hour, which is higher than the federal minimum wage of $7.25.

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Government Websites With Cybersecurity Tips & Information

My colleague, Pat Fowler, is one of the authors of Into the Breach… Data Privacy and Protection Blog and wrote a fantastic article about government websites with cybersecurity tips and information that I wanted to provide here. It’s the perfect one-stop-resource for those whose data and information (or third-party information under your control) is vulnerable.  Here you go – Enjoy:

As part of the government’s recent clarion call to improve our individual and collective cybersecurity posture, several federal and state agencies have released a variety of guidelines, frameworks, best practices and tips.  Some are more helpful than others.  Much of it focuses on helping those perceived to be the most vulnerable in the current cyber-threat environment – small and midsize businesses (SMBs).

Now, finding that useful information among the 925 million websites currently in use can be a real challenge, especially if you’re in a pinch.  So we have posted the links to some of the more prominent government sites that focus on basic cybersecurity, data protection and breach response topics.  By posting these links, we’re not, of course, endorsing the accuracy or applicability of the information they may contain.  And obviously, there are many other websites that may contain additional information that may be useful to you as well.  But these are a good starting point, and you can see your tax dollars at work.

The Small Business Administration

The Small Business Administration has created an on-line, self-paced training exercise that provides an introduction to securing information in a small business. It’s called “Cybersecurity for Small Businesses” and can be downloaded as a pdf as well.

The Federal Trade Commission

The Federal Trade Commission (FTC) recently issued “Start With Security: A Guide For Business”, available also as a PDF, and as an on-line tutorial as well. It’s worth noting that the FTC says it drew upon some of its recent enforcement actions involving alleged consumer privacy violations and deceptive and unfair trade practice claims, so these materials also provide some insight concerning the FTC’s analysis of data breach scenarios.

If you or someone you know experiences an identity theft, the FTC has an identity theft resource site.

The Department of Justice

In the event of a cyber-attack and data loss, the Department of Justice’s “Best Practices for Victim Response and Reporting of Cyber Incidents” is a popular reference. Despite its title, it also contains recommended practices to take before the cyber-attack and data loss occurs.

The Federal Communications Commission

While you may not think of the Federal Communications Commission (FCC) in the cybersecurity and data privacy space, it has published several pertinent documents of note. These include “Cybersecurity for Small Businesses” and a “Cybersecurity Planning Guide

The Department of Homeland Security

The Department of Homeland Security (DHS) has been particularly active in pushing out guidelines and tips in the cybersecurity and data privacy space. Among other things, it maintains the “Stop.Think.Connect: Cybersecurity Resources for Small Business” website. DHS also published “Cybersecurity Questions for CEOs”, “Cybersecurity 101” and “Cybersecurity Tips”

An agency within DHS, the United States Computer Emergency Readiness Team (US-CERT), maintains a website with useful cybersecurity resources: “Getting Started for Small and Midsized Businesses (SMB)

The Securities and Exchange Commission

Earlier this year, the Securities and Exchange Commission, Division of Investment Management issued “Cybersecurity Guidance” to investment advisors and brokers. This follows the Division of Corporation Finance’s 2011 Guidance related to disclosure of cybersecurity risks and cyber incidents.

The Department of Commerce, National Institute for Standards and Technology

Last year, the Department of Commerce, National Institute for Standards and Technology (NIST) issued the Framework for Improving Critical Infrastructure Cybersecurity, which is a useful reference for companies to review when evaluating or implementing their cybersecurity programs. NIST maintains a website that contains version 1.0 of the Framework document as well as related resources and information.

The National Security Agency

The National Security Agency (NSA) has published a tip sheet “Best Practices for Keeping Your Home Network Secure”.

The State of California Attorney General’s Office

The California Attorney General’s Office, in collaboration with others, recently published, “Cybersecurity in the Golden State”. It contains information and tips that business owners can use to “protect against and respond to malware, data breaches and other cyberincidents.”

The Maricopa County, Arizona Office of Enterprise Technology

The Maricopa County, Arizona Office of Enterprise Technology maintains a website that contains links to a number of useful cybersecurity resources, including links to law enforcement agencies and other entities that focus on cybersecurity and data protection

If we learn of other website with useful information in the cybersecurity and data privacy space, we’ll update this in the future. Stay tuned.

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The Lessons of EEOC v. Freeman – “Know when to hold ’em. Know when to fold ’em.”

3d person with casino chipsI was going to skip past this opinion from the District of Maryland until I realized that it started with a reference to a classic country song and, therefore, it immediately moved up my list and became worthy of a closer read.

World-renowned poker expert Kenny Rogers once sagely advised, “You’ve got to know when to hold ’em. Know when to fold ’em. Know when to walk away.”

In the EEOC v. Freeman opinion published in September, the court explained the company, Freeman, held the royal flush and the EEOC held nothing. Continuing the analogy throughout the introduction, the court found that, “Like the unwise gambler, it did so at its peril. Because the EEOC insisted on playing a hand it could not win, it is liable for Freeman’s reasonable attorneys’ fees.”

This case is based on Freeman’s practice of running background checks on applicants after conditional offers were made and credit checks on applicants in financially-sensitive positions with conditional offers.  The EEOC alleged that Freeman’s use of background checks had a disparate impact on African-American, Hispanic, and male job applicants.

“The EEOC is certainly entitled to attempt to police the use of background checks through litigation, and to attempt to use litigation to challenge whether an employer’s use of background checks is ‘job-related for the position in question and consistent with business necessity.’”  However, the United States District Court for the District of Maryland made clear that the analysis does not get to the “job-related” inquiry unless there is first reliable evidence of a disparate impact.

Here, the court found it was unreasonable for the EEOC to continue its investigation with the lack of proper analysis demonstrating disparate analysis and, instead, choosing to rely on flawed investigative reports. Ultimately, the court awarded over $938,000 in attorneys’ fees to Freeman.

Disparate impact cases (where an otherwise neutral policy have a disproportionate effect on a certain group) certainly remain a hot topic and were, in fact, one of the topics of presentations at the 2015 Annual Employment & Labor Law Fall Seminar sponsored by the State Bar of Arizona in Sedona last weekend. While this case is an example of one that turned out in favor of the company, it underscores the importance for both parties in litigation to get an early grasp of the statistics in the case and the determination of whether there is or is not a disparate impact.

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