The Equal Employment Opportunity Commission issued a final rule for employers to submit pay reports with extremely detailed payroll information.
The alleged reason for the change is to provide the commission with better data to use in framing policies dealing with pay discrimination against women and minorities, although it has fueled fears that the data will be used to target individual employers for aggressive enforcement actions.
The rule was proposed earlier this year by EEOC and takes effect for employers with 100 or more workers for the 2017 reporting period for the forms due in March 2018. It also applies to reports filed by federal contractors with the Office of Federal Contract Compliance Programs (AA, 2-15-16, P. 1).
Employers currently are required to file EEO-1 annual pay data reports with EEOC, but the new rules for the first time will require a breakdown of that data by gender, race and ethnicity.
EEOC said the goal is to gather information needed to identify pay disparities across industries and occupational categories.
The rule also requires employers to complete a highly detailed form that breaks down pay data into no fewer than 12 different pay scales, called “pay bands” by the commission. The dozen pay bands range from annual salaries of $19,239 and under, up to those of more than $208,000 a year.
Employers must report the total number of full and part-time employees by demographic categories in each of 12 pay bands listed for each EEO-1 job category based on W-2 wages. This includes tallying the number of hours worked that year by all the employees accounted for in each pay band.
“The broad, aggregated pay data fails to account for the myriad of factors involved in employee compensation,” notes attorney Ilyse W. Schuman of the law firm of Littler Mendelson. “Moreover, W-2 wages fail to give a complete picture of an individual’s total compensation.”
She also said EEOC’s figuring of the paperwork burden far underestimates employers’ actual costs.