The clock is ticking: What employers need to know about the latest EEO-1 reporting requirements
Earlier this year, a federal judge in Washington D.C. ruled that employers must collect 2018 pay data (also known as Component 2 data) for employees and submit it to the Equal Employment Opportunity Commission as part of its 2018 EEO-1 reporting, due by September 30, 2019.
This Component 2 data was originally set to begin in 2017 but was stayed by the Office of Management and Budget (OMB) before the data was collected that year. Since the judge’s decision effectively voided the stay since 2017, the Court gave the EEOC the option to choose to collect 2017 and 2018 or 2018 and 2019 pay data. On May 1, 2019, the EEOC announced their decision to collect 2017 and 2018 pay data.
The clock is ticking. With less than two months to submit Component 2 of the EEO-1 report, employers should be actively collecting the required pay data. Whether you’re well on your way to meeting the deadline or getting a late start, here’s a list of things you need to know to prepare and file on time.
What are the new EEO-1 reporting requirements?
- Component 2 of the updated EEO-1 form requires employers to report wage information from Box 1 of the W-2 form and total hours worked for all employees by race, gender and ethnicity within 12 proposed pay bands.
- Employers should report pay data for all employees being paid during the “workforce snapshot period,” which is a pay period that falls between October 1 and December 31 of 2017 and 2018.
- Component 2 of the EEO-1 report provides the same race, gender, and job categories as Component 1, with the additional pay data and hours worked fields added.
Which employers will be affected?
- Private employers, including federal contractors with 100 or more employees, will be required to report aggregate W-2 income and hours worked by gender, race, ethnicity and job category.
- Multi-establishment companies must report compensation data for all establishments, including those with fewer than 100 employees, with the possible need to report separately for each establishment of the company.
- Federal contractors with fewer than 100 employees are not required to file Component 2 data.
What does this mean for your organization?
The amount of additional data employers will be required to provide is significant. Component 1 of the EEO-1 report contained 140 data fields for employers to complete. Now, with two years’ worth of pay data required, employers must complete 6,720 data fields.
If employers are unable to generate compensation, hours worked and pay bands into one report, it will create additional administrative work and could result in costly reporting errors. With these challenging new requirements, employers could benefit from one database for HR, payroll and time tracking to efficiently and accurately generate the necessary data to file the new report.
When are organizations required to comply?
- Employers were required to file Component 1 of the EEO-1 form without including pay data information by May 31, 2019.
- Employers are required to file Component 2 (pay data) by September 30, 2019. Component 2 data now requires employers to include the hours employees work and pay information from their W-2 forms by race, ethnicity and gender within 12 proposed pay bands.
What are the possible penalties for failure to comply with EEOC regulations?
If an employer is found to have engaged in pay discrimination, it could face litigation from the EEOC and liability for back wages and other damages.
On July 15, 2019, the EEOC opened the portal to submit Component 2 data and provided employers with log-in information. Though an appeal was filed on May 3 by the Justice Department, employers should submit data through the online portal by September 30, 2019. A list of FAQs for Component 2 filers is available here.
To eliminate stress and help your organization prepare, we’ve created an expert EEO-1 checklist and guide so you don’t have to worry about missing critical information when filing. Click here to download the checklist and here to access the guide.
More than 30,000 medium and small businesses nationwide trust Paycor to help them engage, manage and develop their people. Our unique combination of technology and expertise helps clients streamline every aspect of people management so that they can rise above status quo HR and grow their business.
Steve Sauer, Paycor Manager of Product Compliance.
This information is not intended as legal advice. Please consult your advisor or attorney with specific questions.
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