It is often said that the only constant is change, and that's certainly true in the business world. The recent election and a new administration are sure to bring even more corporate compliance and regulation changes. The Equal Employment Opportunity Commission (EEOC) is already proving this axiom.
The EEOC has proposed changes to their update procedure for the EEO-1 report to require the inclusion of pay data for certain companies. If your organization employs more than 100 workers, these changes will definitely create the need for additional effort to the way you track and report the EEO-1. So it's best to get in front of this update now, rather than fall behind in practice when the new tracking period begins on January 1, 2017.
Let's take a look at what the EEOC filing changes mean for your clients and the steps you can take today to help them prepare.
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This new regulation was created to improve EEOC investigations into pay discrimination based on gender, race and ethnicity. As stated, if a company has more than 100 employees and file the EEO-1 report, they are affected. This means the way companies report employee data to the EEOC will be much more detailed in scope and breadth. For one thing, the report will include not only the standard demographic data you're used to providing, but also will add W-2 pay data and total hours worked by employees. This new pay data expands into 12 subset bands for each job category, turning less than 200 possible boxes for data into more than 1,800. As fun as that significant expansion sounds, there's more. Having to provide total employee hours means more work in tracking and detailing those hours if the change becomes effective in 2017.
Your clients will need to start tracking in the updated fashion on January 1, 2017 for March 31, 2018 reports, so preparing now is essential to help ensure they're ready for the start date. HR information must be up to date so companies can immediately start tracking payrolls and total hours worked. Keep in mind that the entire organization will need an expansion of data records to include categories such as goal tracking, performance management and disciplinary actions so they can more easily evaluate pay practices, and quickly correct any discrepancies or disparities that could result in an audit.
Bottom line: Be ready. The EEO-1 changes mean more work in a much more complicated manner, and the process will need your full attention — likely along with some expert guidance. The expansion of this tracking and reporting will affect the company as a whole, and it's a report that requires coordination of time, HR and payroll systems. Because the report requires collecting and aggregating data from three separate sources, completing it by hand is going to be daunting and almost impossible.
Of course, changes like these are always subject to reexamination when transitioning from an election that transfers power from one administration to the next, so it's not out of the realm of possibility that these rules and regulations could be shelved altogether. But keep in mind, whether the new administration does away with the form or not, the news of these changes is likely sparking dialogue among employees. The more they hear about regulations like this (and the possible overtime changes that are being considered by the Department of Labor), the more questions they will have. It's best to evaluate and document all pay practices now.
If you're partnering with a service to assist with your DOL overtime updates, it might be a good idea to enlist help with this major change as well. Regardless of whether you handle the prep for the EEO-1 revision yourself or you farm it out to a trusted provider, it's best to be prepared for the change that's coming.
Bob Coughlin is founder and CEO of Human Capital Management company Paycor.
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