Employers Should Start Preparing Their EEO-1 Reports Now

After a long delay due to the COVID-19 pandemic, the Equal Employment Opportunity Commission (EEOC) has opened the EEO-1 portal for employers to submit demographic data about their workforces.

Businesses with 100 or more employees and some federal contractors with at least 50 employees must submit an annual EEO-1 form, which asks for information from the previous year about the number of employees who worked for the business, sorted by job category, race, ethnicity and gender.

The EEOC did not collect such data in 2020 due to the coronavirus crisis. The agency said it chose to wait until filers were “better positioned to provide accurate, valid and reliable data in a timely manner.” Covered employers now have until July 19 to submit both their 2019 and 2020 data.

Experts are advising employers not to wait until the last minute, even though we are waiting for additional resources from EEOC. But employers should have their 2019 and 2020 data ready to the extent possible.

Gather Information

To determine whether their headcount triggers the reporting mandate, employers can look to one pay period—known as the workforce snapshot period—from October through December of the relevant year. Covered employers will gather data for the EEO-1 report from the selected pay period and report the number of employees in 10 job categories by gender and seven race/ethnicity groups.

As always, employers should ensure that workers are categorized appropriately in terms of job bands, particularly for 2020 since people worked under very different conditions as a result of the pandemic, so employers will want to take extra care to ensure their classifications are current and accurate.

The EEO-1 filing is very detailed, and employers need to figure out how to capture the data correctly. Be sure you are giving yourself adequate time so that if you are working with a third-party vendor to receive your data, you have a good opportunity to review it prior to filing.

Employers that begin their data review early will have the opportunity to revise the job categories for some positions that may no longer be appropriately classified. You should also take this opportunity to correct and harmonize your job titles, if necessary.

Employers that experienced any acquisitions, mergers or spinoffs since the 2018 filing should reach out to the EEOC as soon as possible through the agency’s online support center. Intervention from the EEOC will be required for certain updates, and employers won’t be able to move forward without agency support. It will take time to hear back, so the earlier an employer can reach out, the better.

We are recommending to our clients to be diligent, but not to overdo it. We tell them to remember that perfection is not required. There are only federal penalties for making willfully false statements.

Review Filing Options

Employers can file their reports through an online form or a data file upload. The online filing system is new this year and will require some minor setup steps. So even if employers are not ready to file, we are recommending that covered employers set up their account in case they have questions that would require support from the EEOC.

The online form was made available on April 26, but employers won’t be able to access the data file upload option until May 26. So employers need to decide if they want to wait to file until the traditional upload option is available.

The online form is essentially a manual input option. If employers use this option, they will have to manually enter the employee counts. The form is broken out by EEO-1 category, race, ethnicity and sex, so it can be a tedious process to complete manually. Most employers already have software, or [a Human Resource Information System] feature, that prepares the import file required for the data upload option.

Watch for Pay Data Mandates

In addition to the information that employers must file this year—which is known as Component 1—certain employers also had to report pay data for 2017 and 2018 as part of the EEO-1 form’s Component 2. Employers were required to report employees’ hours worked and pay information from their W-2 forms, broken down into the same categories as the data in Component 1.

Under the prior administration, the EEOC concluded that the burden imposed on employers to gather Component 2 information outweighed the usefulness of the data for the agency. The current administration, however, may reinstate the mandate.

We are advising employers to anticipate that some form of pay data and hours worked will be required in the future. This will likely be a focus for President Joe Biden’s administration, since the new director of the Office of Federal Contract Compliance Programs (OFCCP), Jenny Yang, was formerly an EEOC commissioner and an advocate for the EEO-1 Component 2 reports. The OFCCP also uses EEO-1 reports in its audit process.

If the EEOC ultimately does collect compensation data again, it remains to be seen whether the EEOC will gather the data as it did for Component 2 or if the agency will establish a different process.

In the meantime, states are beginning to fill the void. California was the first state to enact its own pay data reporting law, which took effect this year. Illinois will begin collecting pay data in 2023, and New York and Rhode Island lawmakers have proposed similar legislation.

There will likely be many more to follow.