One of the most important new requirements for businesses in 2017 will be meeting the updated EEO-1 reporting requirement, which will help federal regulators track and pin down hour and wage disparities based on race, gender, and ethnicity.
The EEO-1 requirement is not as well known as some other, but it's one that could result in huge fines — or even jail time — if not handled properly.
This is the first year that the report has been expanded from a two-page document to an eight-page document. Filling out the new form will entail more work and, most likely, more confusion. Along the way, employers may turn to their trusted advisors to get help with navigating these new standards.
So, what should you tell them?
Here are three things to know.
1. The Equal Employment Opportunity Commission set up the EEO-1 reporting requirement to fight inequality in the workplace.
The older, shorter version of the report was simply meant to document the extent of diversity within the workplace and root out discriminatory hiring practices. If a job at an organization was attracting only members of one specific demographic group, EEO-1 was a good way to uncover that, so an employer could fix the lack of diversity.
Now, the EEOC is hoping to collect better data on pay inequality as well. The hope is that this data collection will help both employers and the EEOC detect and eliminate gender-based and ethnicity-based pay disparities. This way, the EEOC can better enforce equality in the workplace, and employers can identify and fix patterns that may otherwise have gone unnoticed.
2. The updated version will collect information from both the employer and the employee.
Employers will provide wage information based on W-2s, which will be sorted into designated EEO-1 pay bands; the employees' titles; and the employees' hours worked.
Employees will have to self-report their gender, and ethnicity, to make that information is as accurate as possible. This will make the regulations particularly difficult for companies to handle, as there will be multiple sources of information in play.
This is a significant step up from last year, when the EEOC required employers to report only on employees' gender and ethnicity in relationship to job titles. The increase in the amount of data collected, and the logistics of collecting that extra data, will likely spur questions before the reporting deadline rolls around. The deadline has now been moved from September 30, 2017, to March 31, 2018.
In many cases, the information going into the expanded reports will be data that brokers and advisors have dealt with before—the Affordable Care Act, for example, requires many of the same data points, including the hourly tracking. Because brokers have knowledge of these data points, employers may find themselves coming to you for advice on the best way to sort, aggregate, and report this information.
3. How you can help
EEO-1 isn’t something that insurance agents and brokers are necessarily familiar with; it’s a compliance issue that’s most often handled by HR.
However, as the role of the broker changes from salesperson to trusted advisor, it’s likely that certain customers will come to you for help, particularly because there is so much data crossover with other requirements, such as the ACA, that brokers and insurance agents deal with frequently.
Additionally, benefits choices can affect W-2 income, so it’s important for advisors to understand how those benefits choices might influence the pay band in which an employee or employee group falls. Employers also have to understand the impacts of those choices, so that they can explain those effects, if the EEOC questions a particular pay practice, and so that they can avoid charges of pay discrimination. Benefits brokers can play a large role in explaining and preparing employers for such a situation.
The advice for any compliance matter is going to be similar:
Know what you’re dealing with.
Keep good track of your payroll, benefits, and other employee data.
Use the proper tools to sort and handle your information.
Often, payroll technology can help employers keep track of their data, and intelligent solutions can work to smooth the complicated process of the actual reporting process.
Familiarizing yourself with the EEO-1 report and its new requirements could help employers escape massive fines or penalties. With so much confusion bound to come out of these updates and changes, familiarizing yourself with EEO-1 can only benefit your clients in the long run.
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