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 (EEOC) by September 30, 2019. Since the original rule, which was implemented in 2016, authorized the EEOC to collect two years’ worth of pay data, the EEOC was given the option to choose 2017 & 2018 or 2018 & 2019 pay data. On May 1, 2019, the EEOC announced their decision to collect 2017 pay data in addition to the 2018 pay data that was previously announced.
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 during the "Workforce Snapshot Period," which is a pay period that falls between October 1 and December 31 of 2017 and 2018.
- Compensation and hours worked should only be reported for full- and part-time employees who were on the employer's payroll during the workforce snapshot period.
- Component 2 EEO-1 job categories are the same as the most recent Component 1 EEO-1 report.
Which employers will be affected?
- Private employers, including federal contractors with 100 or more employees, are required to provide Component 2 data.
- Multi-establishment companies must report compensation data for all establishments, including those with fewer than 100 employees.
- 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 very significant. Component 1 of the EEO-1 report contained 140 data fields for employers to complete. But 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 need 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. To complete Component 1, employers must provide the number of employees who work for the business by job, race, ethnicity and gender.
- 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 penalties for non compliance 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.
How Paycor can help
Paycor's HCM platform offers a unified experience, with HR, time and payroll data easily accessible in one location. Contact us and learn how we can help your organization prepare for the new regulations.
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.
This information is not intended as legal advice. Please consult your advisor or attorney with specific questions.
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