EEO-1 Report Filers Required to Disclose Payroll and Hours Worked Data by September 30th
For the first time ever, employers that file EEO-1 reports will be required to provide “component 2 data” for calendar years 2017 and 2018. Component 2 data, which includes information regarding employee compensation and hours worked, must be filed by September 30, 2019. The EEOC recently added forms and other documentation to its website that will allow employers to file component 2 data. This e-alert discusses the requirements relating to component 2 data.
Who is required to report?
Employers, including federal contractors, who have 100 or more employees during the employer-selected workforce snapshot pay period (described below) must report compensation data and hours-worked information (i.e., component 2 data). The 100-employee benchmark is not based on a particular establishment, but on the employer’s workforce as a whole. All full-time and part-time employees must be counted for purposes of determining whether the employer meets the 100 employee threshold. Employers that are required to file an EEO-1 report should have already received a USPS letter, dated July 1, 2019, and an email notification with their User ID to access the system. Employers that have not received this information can contact the EEOC’s HelpDesk by sending an e-mail to EEOCcompdata@norc.org, or calling 877-324-6214.
The workforce snapshot period is one pay period falling between October 1 and December 31 of the reporting year. Provided that the snapshot period falls within this date range, the employer has the right to select which pay period it uses for reporting purposes. The years are looked at individually, so if the employer had 100 or more employees during 2017, but not 2018, the employer would only provide component 2 data for 2017. Employers are not required to use the same workforce snapshot date for 2017 and 2018. Also, if the number of employees between October and December fluctuates, employers are not required to use a snapshot pay period during which the employer has 100 or more employees.
Component 2 Compensation Data
Component 2 data compensation data must be provided for all full-time and part-time employees who were employed during the employer’s selected workforce snapshot pay period. This includes employees who resigned or were terminated prior to December 31 in the reporting year, but were employed during the workforce snapshot pay period.
Component 2 compensation information must be submitted using the EEO-1 Component 2 Report. While the Report utilizes the same EEO job categories that have been used in the past, the Report also contains twelve compensation bands for each job category. Within those job categories, employers are required to tally the total number of employees, by gender and race/ethnicity, in each compensation band and enter the data in the appropriate columns of the Report. To determine the appropriate compensation band for each employee, employers must use the wages reported in “Box 1- Wages, tips, other compensation” of the employee’s IRS Form W-2. This is true even for employees who did not work the full calendar year, as employers are not permitted to “annualize” compensation for employees who only worked for a portion of the year.
Component 2 Hours Worked Data
The Report for component 2 data contains a line item for hours worked. Employers are required to report the total number of hours worked by employees in each EEO category. For example, employers must tally the total number of hours worked for all males employed during the workforce snapshot pay period and record that number in the appropriate cell in the Report. The same would be true for females, Asian males, African-American females, etc.
Employers must report hours worked for all employees employed during the workforce snapshot pay period, including part-time employees and employees who only worked for a portion of the year. Hours worked by employees who were terminated before or hired after the snapshot pay period are not to be included in the Report. Hours worked does not include paid time off, such as sick leave, vacation, or paid holidays.
For hourly non-exempt employees, the employer must report the employee’s actual hours worked. For salaried exempt employees, employers may choose to (i) report the actual hours worked, or (ii) use a proxy of 40 hours per week for full-time employees or 20 hours per week for part-time employees. If an exempt employee works an alternative schedule, i.e., 35 hours per week, the employer can use that number as the proxy. The employer may use a combination of these approaches if it tracks actual hours worked for some, but not all, exempt employees. When using a proxy, the employer should multiply either 40, 20 or an alternative number of hours by the number of weeks the employee was employed during the reporting year.
While the Department of Justice is appealing a lower court decision holding that employers must report component 2 data, the appeal has not resulted in a stay of the reporting requirements. Therefore, the EEOC mandates that unless the court of appeals overturns the lower court’s decision, employers must report component 2 data by September 30, 2019.
How to file:
The EEOC has contracted with the NORC at the University of Chicago to collect component 2 data. The survey for submission is currently open and the data may be entered through the Component 2 EEO-1 Online Filing system or by creating a data file. The online form is completely web-based and does not require any installation of software. The data is also secured through encryption. If a data file is used instead of the on-line filing system, the data file layout must match the data file specifications exactly.
Note that while some submitted information may be accessed through a FOIA request, exemptions for information prohibited from disclosure by federal law and privileged and confidential trade secrets, commercial, or financial information may be protected from disclosure.
If you require additional information, you should contact your attorney or a Clark Hill attorney. Dave Cessante can be reached at email@example.com or 313-965-8574.