EEOCís Pay Data Collection: An EEO-1 Overview

September 30, 2019 is the deadline for certain employers to submit and certify EEO-1 Component 2 compensation data to the Equal Employment Opportunity Commission (“EEOC”).  This article discusses and provides links to resources concerning:  (1) the background and basics of EEO-1 reports; (2) what information must be submitted for the new Component 2 data collection; (3) how to report Component 2 data; and (4) other considerations in submitting Component 2 data.[1]

I.  EEO-1 Background and Basics

What is the EEO-1?

Certain employers must annually submit the Employer Information Report or Standard Form 100, commonly referred to as “EEO-1,” which collects employee information relevant to the enforcement of Title VII of the Civil Rights Act.  Currently, the EEO-1 has two components:

  • Component 1: Covered employers submit the number of employees by gender and race or ethnicity for each of the 10 EEO-1 job categories.  Component 1 data was due on May 31, 2019.
  • Component 2: The EEOC is now collecting compensation data, which includes the number of employees and hours worked by job category, annual salary pay band, gender, and race or ethnicity.

History Behind Collection of Component 2 Compensation Data

Initially, the EEO-1 only collected Component 1 data.  In September 2016, after months of public comment, the EEOC announced that starting in March 2018, it would begin collecting summary employee compensation data through the annual EEO-1 to improve investigations of possible pay discrimination.  The revised EEO-1 form was approved by the Office of Management and Budget (“OMB”) under the Obama Administration.  In August 2017, however, the Trump Administration’s OMB informed the EEOC that it had initiated a review and immediate stay of the pay data collection requirements on the revised EEO-1 form.  Employers were advised to use the old EEO-1 form.

A lawsuit was filed challenging the OMB’s stay of the compensation data collection.  In an opinion filed on March 4, 2019, a D.C. federal court determined that “OMB’s stay of EEOC’s pay data collection was illegal” and ordered the reinstatement of Component 2 pay data collection in the EEO-1 survey.  National Women's Law Center, et al., v. Office of Management and Budget, et al., (March 4, 2019)

On April 25, the Court issued a written Order, which gave the EEOC a choice between requiring employers to submit Component 2 pay data for CY 2017 by September 30, 2019 or for CY 2019 by Spring 2020, in addition to the CY 2018 pay data due on September 30, 2019.  The EEOC announced that it would collect pay data for CY 2017 and CY 2018 by September 30, 2019.

On May 3, 2019, the Department of Justice filed a Notice of Appeal of the Court’s decision, but the EEOC announced that the appeal did not alter employers’ obligations to submit Component 2 data by September 30.

The EEOC contracted with NORC at the University of Chicago to collect the Component 2 data.

 Who Needs to File?

Generally, employers and covered federal contractors[2] with 100 or more employees are required to file the EEO-1 Component 2 data.[3] [4]

  • Covered federal contractors with 50-99 employees are required to submit Component 1 data, but not Component 2 data.
  • Federal contractors with 49 or less employees, and employers without federal contracts with 99 or less employees, are not required to complete the EEO-1 form.

How Do I Count Employees?

Employers should count their employees during the “workforce snapshot period,” which is an employer-selected pay period between October 1 and December 31 of the reporting year.

  • The workforce snapshot period for the 2017 EEO-1 report would be an employer-selected pay period between October 1 and December 31, 2017. Likewise, the workforce snapshot period for the 2018 EEO-1 report would be an employer-selected pay period between October 1 and December 31, 2018.
  • If employee headcount fluctuates below and above 100, employers are not obligated to choose a snapshot period reflecting 100 or more employees.
  • Employers do not need to use the same workforce snapshot period for Component 1 and Component 2, though for practical purposes, it might make it easier to do so.
  • Each employee is counted individually, regardless of full-time or part-time status.
  • “Employee” means any individual on the payroll of an employer who is an employee for purposes of the employer’s withholding of Social Security taxes except insurance sales agents who are considered to be employees for such purposes solely because of the provisions of the Internal Revenue Code. Leased employees are included in this definition.  For more information, see pages 7-8 in the Component 2 EEO-1 Instruction Book.
  • If employees are employed during the workforce snapshot period, they are included in the count even if they later resign or are terminated.

II.  Component 2 – What Information Do I Need to Report?

Employers must report the compensation and hours-worked data for all full-time and part-time employees who were on the employer’s payroll during the “workforce snapshot period” for 2017 and 2018.

Reporting Compensation Data

Employers must report the total number of employees in each of the 12 compensation bands within each of the 10 job categories according to their gender and race/ethnicity.

  • Compensation bands: Employers do not need to report individual pay information.  Rather, employers must list the number of employees in each pay range.
    • When selecting a compensation band for each employee, employers should refer to the annual earnings reported on Form W-2, Box 1.
    • Do not use gross annual earnings or recalculate annualized earnings for someone who worked less than 12 months.
  • Job Categories: The 10 job categories are the same for Components 1 and 2.[5]  For more information on the job categories or assistance in determining where to place jobs within these categories, consult:
  • Race/Ethnicity Groups:
    • Employee self-identification is the preferred method of identification for the race/ethnicity categorization of employment data. Employers must attempt to allow employees to use self-identification to complete the EEO-1.  If an employee declines to self-identify, employers may consult with employee-provided information when on-boarded or the employer may use visual observation.
    • For more information on Race and Ethnic identification and sample language requesting self-identification, see pages 9-11 in the Component 2 EEO-1 Instruction Book.
  • Gender: According to the EEOC’s FAQs, if your company collects gender data beyond the male/female binary, report it in the comment box on the Certification Page.  For example:  “Additional Employee Data:  1 non-binary gender employee working 2,040 hours in Job Category 4, Salary Pay Band 5, Race/ethnicity non-Hispanic White.  3 non-binary gender employees; combined work hours 5,775; in Job Category 5, Salary Pay Band 8; Race/ethnicity: Employee 1 – Non-Hispanic Black, Employee 2 – Hispanic, Employee 3 – Two or more races.”  For more information, see this News Digest Article, and be on the lookout for a new HEC TV episode coming out soon.

The below example is an excerpt from EEOC’s User’s Guide (version 3).  You can also view a blank sample form here.

Reporting Hours Worked

Employers must also report the total number of “hours worked” from January 1 through December 31 for each employee counted during the workforce snapshot period.

  • For non-exempt employees, report the actual hours worked during the reporting year as recorded for purposes of the Fair Labor Standards Act (“FLSA”). Thus, paid vacations, paid holidays, paid sick leaves, etc. are not included.  For information on “hours worked” under FLSA, see Fact Sheet #22: Hours Worked Under the Fair Labor Standards Act.
  • For exempt employees, you may use actual hours worked if your company tracks such information. If you do not track “hours worked” for an employee, you are not obligated to start tracking it.  Instead, you can use a proxy for these individuals:  use 40 hours per week for full-time employees and 20 hours per week for part-time employees, multiplied by the number of weeks employed during the EEO-1 reporting year.
  • If work is done in the last few days of the year, but not paid until the next year, such hours are counted in the next year because that is when the pay is reported on the W-2.

The below example is an excerpt from the EEOC’s User’s Guide (version 3).

III.  How to File Component 2

The EEOC requires that Component 2 data be submitted via the Component 2 EEO-1 Online Filing System.  EEOC has prepared a detailed User’s Guide to assist employers utilize the system.  The basic steps are as follows:

  1. Register: In July, the EEOC sent employers a letter through the United States Postal Service as well as an email notification, which included an 8-digit User ID.  A sample of the letter is available here.  You will need the User ID, FEIN, and the registered EEO-1 email address on record to register and create a password so you can login.
  2. Select your filing method:
    1. Online Form: Filers can submit their data by manually entering the data into an online form (see images in the above section for examples); OR
    2. Upload CSV File: As of August 15, filers can upload their data to the online filing system.  Note that only CSV files are accepted.  Employers should be sure to create and upload the data as specified in the following documents:
      1. The Upload File Specifications (revised 8/25/19) contains detailed specifications for developing CSV files for the Component 2 EEO-1 upload system.
      2. The Upload File Layout Specifications contains file layout information in Excel format.
      3. The Upload File Validation Process (revised 8/25/19) explains the validation process, rules, and possible error messages filers may encounter during the filing process.
  3. Certify: You must certify the Component 2 EEO-1 report.
  4. Save a Copy: When you submit and certify 2017 and 2018 Component 2 data, be sure to save a copy for your company’s records.

IV.  Other Considerations

Single- or Multi-Establishment

Reports must be filed for each “establishment.”  An “establishment” is “generally a single physical location where business is conducted or where services or industrial operations are performed (e.g., factory, mill, store, hotel, movie theater, mine, farm, airline terminal, sales office, warehouse, or central administrative office).”

  • Single-establishment employers will file one Type 1 report for each year.
  • Multi-establishment employers must file:
    • Consolidated Report (Type 2) (generated after you enter information for all establishments);
    • Headquarters Report (Type 3);
    • Establishment Report (Type 4) for each establishment with 50 or more employees, which categorizes employees by race/ethnicity, gender, job category, hours worked, and pay band; and
    • For establishments with less than 50 employees, either:
      • Type 6 Establishment List, which is a list of the names, addresses, and total employee headcounts of each establishment with less than 50 employees; OR
      • Type 8 Establishment Report, which is a separate report for each establishment with less than 50 employees.
      • Note: Companies using Type 6 Establishment List reports, must manually enter all employment data into the overall Consolidated Report (Type 2).  All data from the Type 8 Reports will automatically transfer to populate the Consolidated Report.
    • Note: The number of employees indicated on the Headquarters Report plus the establishment reports plus the establishment list must equal the total number of employees shown on the Consolidated Report.

For more information, see pages 22-27 of the User’s Guide.

Mergers, Acquisitions, and Spinoffs

The EEOC recently updated its FAQs relating to reporting obligations for companies that have experienced mergers, acquisitions, and spinoffs during 2017 or 2018.

  • Generally, a company that has merged with or acquired another company must submit Component 2 data if it has it. The data should be filed under the company’s current FEIN, not under the acquired or former company’s FEIN.
  • If a company does not have access to the Component 2 data from an acquired or former company, it should be noted in the comments box on the certification page in the Component 2 EEO-1 Online System.
  • If a company spins off from another in 2018, it is responsible for filing Component 2 data for 2018, but the former parent company must file Component 2 data for 2017.
  • If a parent company sells off a portion of its business in 2018, the purchasing company is responsible for filing 2017 and 2018 Component 2 data for those employees.

Professional Employer Organization (“PEO”)

  • A PEO is not responsible for filing Component 2 data of entities that are former clients at the time of filing.
  • When a PEO and a client company’s contracting agreement does not include 100% of the covered client company’s employees, the covered client company—not the PEO—is responsible for filing Component 2 data.

V.  Additional Resources

 

________________________________
[1] The links and documents referenced in this article are current as of the writing of this article.  However, the website and materials are constantly being updated, so please be sure you are using the most current versions by checking the Online Filing System landing page or More Info tab for updates.

[2] “Covered” federal contractors include:

  1. Prime contractors or first-tier subcontractors who have a contract, subcontract, or purchase order amounting to $50,000 or more;
  2. Employers who serve as a depository of Government funds in any amount; or
  3. Financial institutions that are issuing and paying agents for U.S. Savings Bonds and Savings Notes.

“Covered” federal contractors do not include employers who are exempt under 41 CFR § 60-1.5.

[3] This excludes 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.

[4] The 100 employee threshold is met if a company is owned or affiliated with another company, or there is centralized ownership, control, or management (such as central control of personnel policies and labor relations) so that the group legally constitutes a single enterprise, and the entire enterprise employs a total of 100 or more employees.

[5] The 10 Job Categories are:  (1) Executive/Senior Level Officials and Managers, (2) First/Mid-Level Officials and Managers; (3) Professionals; (4) Technicians; (5) Sales Workers; (6) Administrative Support Workers; (7) Craft Workers; (8) Operatives; (9) Laborers and Helpers; and (10) Service Workers.

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