As previously reported in our Alert published on March 7, 2019, a federal judge has ordered the EEOC to provide guidance regarding the collection of wage and hour data (“Component 2 data”). On April 4, the EEOC submitted a filing to the court saying it would have to engage a third-party contractor, at a cost of over $3 million, in order to process the Component 2 data.
Even though the judge has not yet issued a response to the EEOC’s filing, it is possible that employers will need to file Component 2 pay data by September 30, 2019, which is the expiration date for the Office of Management and Budget’s (“OMB’s”) original approval on the collection of Component 2 data. The OMB may not renew its approval if the September 30th deadline cannot be met.
The deadline for gender, race, and ethnicity data (“Component 1 data”) which has traditionally been collected by EEOC, has not been extended and is still May 31, 2019.
If approved, the revised EEO-1 form for Component 2 data will require employers to report wage information (as is reported on the W-2 Form in Box 1) and total hours worked by all employees within 12 proposed pay bands and categorized by gender, race, and ethnicity. For nonexempt employees, the reported hours worked should show FLSA recorded hours. For part-time exempt employees, employers should report an estimated 20 hours per week, and for full-time, exempt employees, employers should report 40 hours per week. Pay data must be reported for any one payroll period that occurred between October 1, 2018 and December 31, 2018.
Collecting the wage and hour data and ensuring its accuracy could be burdensome for many employers, especially if the window of time to submit the EEO-1 Form is small. Therefore, despite the uncertainty regarding the EEO-1 filing for Component 2 data, employers should be prepared to file wage and hour data by September 30, 2019. The implementation of processes needed to capture wage and hour data will require careful coordination between HR departments, HRIS, and payroll departments (or payroll vendors). Tests conducted in advance of the implementation date may be necessary to ensure that the information is captured correctly.
It is important to note that pay equity is the law. At the federal level, it is mandated by the Equal Pay Act of 1963 and Title VII of the Civil Rights Act of 1964. Also, while most states already have their own laws mandating pay equity, there is a trend at the state level to strengthen pay equity laws. Therefore, despite the uncertainty regarding the Component 2 data, employers should develop processes to capture all wage and hour data and should consider conducting self-audits to determine if any impermissible pay discrepancies exist. The resulting data should provide employers with a meaningful opportunity to analyze data, identify pay disparities, investigate the causes, and take any needed corrective action. In addition, self-audits may identify instances that may appear to be discriminatory if reported to the EEOC, but are, in fact, not discriminatory. Employers should carefully document these cases in case the information needs to be reported to the EEOC or in the event of an audit.
NOTE: The Wagner Law Group has the tools and resources needed to assist employers who need to have their wage and hour data reviewed and analyzed to demonstrate pay equity. Our reports provide a detailed analysis, and outline any corrective actions that may need to be taken.
For assistance regarding pay equity at the federal or state level, the new EEO-1 reporting requirements or corrections due to pay discrepancies, please contact David Gabor, head employment law attorney at The Wagner Law Group.