Well, the time has come. Not only do many employers have to file an annual EEO-1, but now those employers must submit compensation data (known as “Component 2” data). Let’s first look at the EEO-1, so we are all on the same page.
The EEO-1 (or the Standard Form 100) must be filed by any employer having 100 or more employees (excluding “state and local governments, public primary and secondary school systems, institutions of higher education, American Indian or Alaska Native tribes and tax-exempt private membership clubs other than labor organizations”) and any employer having fewer than 100 employees if it is owned or affiliated with another company, or there is centralized control, ownership or management such that the entities constitute a single enterprise having 100 or more employees. Single enterprises include those that have “a central control of personnel policies and labor relations.” In addition, many federal contractors that have 50 or more employees must file an EEO-1 annually.
The EEO-1 survey for 2018 was due by May 31. This form asks about sex and races of employees in different job categories (executive/senior managers, first/mid-level officials and manager, professionals, technicians, sales workers, administrative support, craft workers, operatives, laborers and helpers and service workers). Click here for a sample form. There are different forms for single- and multi-establishment companies.
The EEO-1 needs to be “certified” as accurate or the employer is in violation. It is interesting that if the person certifying the accuracy of the form willfully makes a false statement they can be fined and imprisoned for up to five years. However, if an employer simply fails to file the form, and gets caught, the Equal Employment Opportunity Commission’s (EEOC) remedy is to petition a federal district court for an order.
The data for the survey is gathered during the “workforce snapshot period” which is a pay period selected by the employer between Oct. 1 and Dec. 31 of the reporting year. The employer only reports data on the EEO-1 for employees who were on the payroll during that snapshot period.
Now, in addition to providing the statistical information above, these same employers need to file Component 2 data by Sept. 30. The only exception is that while most federal contractors with 50 or more employees are required to file the EEO-1, federal contractors with fewer than 100 employees will not need to file the compensation data.
Employers are permitted to choose a different “snap shot” pay period for the Component 2 data if they want. The requested compensation data is obtained from the tax form W-2, Box 1. Thus, if an employee was hired at $100,000 annually, but only earned $50,000 according to Box 1 because he only worked six months, the employer would report the data in the compensation band that corresponds with $50,000. If a corrected W-2 is issued, the employer can use the original or corrected Box 1 data. If the employee starts at one company but then transfers to a different company in the multi-establishment enterprise, the information is only reported for the company where the employee worked during the “snapshot” pay period.
There is also an “hours-worked” matrix for Component 2 data. Each cell in this matrix will correspond to a cell on the summary compensation matrix. For exempt employees, the employer should report accurate hours if time records are maintained. If not, the employer would use 40 hours a week for full time exempt employees and 20 hours for part-time exempt. If an exempt employee works 37.5 hours a week (common at many non-profits), the employer can use that number. “Hours worked” is time actually worked and does not include paid time off for vacation, holidays, etc.
On its website, the EEOC announces that the “web-based portal for the collection of pay and hours worked data for calendar years 2017 and 2018 is now OPEN. The URL for the portal is https://eeoccomp2.norc.org. EEO-1 filers should submit Component 2 data for calendar year 2017, in addition to data for calendar year 2018, by Sept. 30, 2019…” The EEOC’s website has a lot of helpful information including a Frequently Asked Questions page. There is also a link to a “suggestion box,” but please remember it’s not anonymous.
Critics are concerned about employers’ wage information being obtained by competitors or by unions through the Freedom of Information Act (FOIA). But the EEOC claims there are exemptions under FOIA that “may” apply and protect the data from disclosure, but I wouldn’t count on it remaining confidential. I guess time will tell.
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An of counsel attorney in the firm’s Detroit office, Claudia D. Orr exclusively represents and advises employers and management in employment and labor law matters.
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