We promise we are not going to get deep in the compliance weeds; we have a special practice for that, should you be interested. However, we do want to discuss the changes announced by the Equal Employment Opportunity Commission (EEOC), which go into effect March of 2018.
These changes will require reporting employers to disclose a substantial amount of payroll-related data they were not previously required to disclose, an obligation that may require significant adjustments to HRIS systems.
As a refresher, the EEO-1 Report is a way for the EEOC to track demographic information for organizations with 100 or more employees. To clarify, federal contractors with 50-99 employees will not submit summary pay data, but will continue reporting demographic data such as sex, race and ethnicity as they did before. For federal contractors with 49 or fewer employees or companies of 99 or fewer employees and no federal contractors, no EEO-1 report will need to be submitted.
These employees are placed in one of 10 job category buckets, such as race, ethnicity and gender. Tracking this information can be burdensome for some employers, but the EEO-1 Report is a valuable tool for the EEOC to ensure equal employment is being taken seriously and practiced.
The new change will impact a number of items, and this is where it becomes relevant to HR Tech. There is a section that will spell out the number of hours worked for each job bucket, gender, race, ethnicity and pay category. You read that right; annual employee earnings and hours worked needs to be included in the EEO-1 Report.
While this significantly increases the amount of data provided by the employer (140 elements to 3,360), EEOC Chair Jenny Yang says, “Collecting pay data is a significant step forward in addressing discriminatory pay practices. This information will assist employers in evaluating their pay practices to prevent pay discrimination and strengthen enforcement of our federal antidiscrimination laws.”
With the significant increase in data required, HR and payroll teams will need to work closely together to obtain necessary information and to create a streamline reporting process. Areas where data should be pulled include:
- W-2 earnings
- Payroll data
- Hours worked
- Demographics and more
In our experience, most payroll providers should be able to manage these new requirements; however, we recommend employers begin the evaluation and testing process early. Employers with 100 or more employees will be required to file the new EEO-1 report in March 2018 for the 2017 calendar year.
We would love to answer any questions you may have about this new regulation. Please reach out to our HR Technology & Outsourcing Practice at HRTech@lockton.com and/or Compliance Services at firstname.lastname@example.org.