The U.S. Equal Employment Opportunity Commission (“EEOC”) has released a new proposal that, if adopted, would require larger employers and federal contractors to report payroll data for all workers to the federal government along with the demographic data that they now must submit.

In general, the reporting requirements apply to private employers with 100 employees or more and to most federal contractors with 50 or more employees.  Those businesses must complete and submit an annual Employer Information Report (“EEO-1”) Form with data regarding employees’ gender, race, and ethnicity, tracked by job category.

In January 2016, the EEOC released a plan to add payroll-earnings data to the list of information that employers and contractors must report on the EEO-1.  On July 14, 2016, the agency published a revised version of its proposal that delayed its implementation and narrowed the companies that will have to comply.  If the current proposal is approved:

  • Employers who file the EEO-1 Form with the EEOC and federal contractors who submit it to the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (“OFCCP”) will not have to report any new or different information for 2016 than they reported in the past.  The deadline for 2016 EEO-1 reports is September 30, 2016.
  • Beginning with the 2017 EEO-1, however, businesses that file EEO-1 forms would be required to report total W-2 earnings and hours worked alongside the previously-reported demographic data.  The deadline for 2017 EEO-1 reports is March 31, 2018.

The EEOC’s goal is to identify and address instances in which men and women and persons of different races and ethnicities earn different wages for the same work.  Under the current proposal, total W-2 earnings and hours worked would be reported across 12 pay bands for each of 10 job categories through a revised EEO-1 report form, an example of which is available here.

Employers and contractors should be concerned about the burdens and cost of complying with the plan, which – in our view – offers little benefit: Because the pay data will be aggregated and reported in wide bands, it will provide little insight into an employer’s actual pay practices while possibly providing the EEOC with a basis to launch an enforcement investigation.

The public has until August 15, 2016, to submit comments on the current proposal, which is are available here.  Given the likely burdens, employers may want to file a comment against the plan; that can be done by visiting the Federal Register website and selecting “Submit A Formal Comment.”

The original plan would have taken effect with the 2016 EEO-1 report.  The current proposal, however, would not require pay data to be included until the 2017 EEO-1 report.  For 2018 and future years, EEO-1 reports would be due by March 31 of the year following the year that the report addresses under the current proposal.

The EEOC said the March deadline was intended to lessen the burden on businesses as it would coincide with the deadline by which W-2 earnings must be calculated and reported.  Similarly, the current proposal dropped a provision from the January proposal that would have expanded reporting requirements to include federal contractors with between 50 and 99 employees.  The federal contractor threshold would be unchanged under the current proposal.