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The White House Office of Management and Budget should reject a U.S. Equal Employment Opportunity Commission (EEOC) proposal that would compel many employers to submit summary pay data and hours worked categorized by employees' sex, race and ethnicity, three Republican senators said.
The revised proposal to add the compensation data to the EEO-1 form annually submitted by employers and federal contractors would place new burdens on businesses that cannot be justified under the Paperwork Reduction Act, Sens. Lamar Alexander (Tenn.), Pat Roberts (Kan.) and Johnny Isakson (Ga.) said in a letter to the OMB. The letter was dated Aug. 15 and released Aug. 16.
The senators sent their letter as the OMB Aug. 15 completed a 30-day comment period on the EEOC's revised proposal to require employers and contractors with at least 100 employees to add the compensation data to the annual EEO-1 forms.
Under the EEOC's revised proposal, covered employers would report aggregate wage data based on W-2 forms along with actual hours worked across 12 pay bands in 10 job categories based on a snapshot in the final quarter of 2017. The first EEO-1 reports with the compensation data would be due to the EEOC March 31, 2018, giving employers subject to the changes “six more months to prepare their recordkeeping systems for the 2017 report, and it will give them 1.5 years without filing an EEO-1 report.” For 2016, the EEO-1 is due Sept. 30.
The EEOC's revised proposal minimizes employers' burdens by letting them use the same W-2 wage information they already compile for federal tax purposes and to report the aggregate data on the familiar EEO-1 form, said Lisa Maatz, vice president of government relations with the American Association for University Women in Washington.
Data system programmers can devise ways to elicit and analyze information from employers' different employment data systems, Maatz told Bloomberg BNA Aug. 16.
Employer programming of human resources and payroll systems to provide the EEOC-requested data may mean additional startup costs, but “these aren't mom and pop operations” as the pay data collection only applies to employers with 100 or more employees, she said.
According to the agency, “employers could calculate the 12-month W-2 wages without significant difficulty” and include the information in the report.
In addressing application issues, the American Payroll Association in April comments on the original proposal said it “disagrees with the EEOC that the process to collect EEO-1 pay data will not be complicated.”
The National Payroll Reporting Consortium, made up of payroll service providers, also addressing application issues, said in Aug. 14 comments on the revised proposal that there would be a disconnect between the already established hours-worked data submitted with the EEO-1 form and the W-2 data requested because the W-2 data is paid wages and may not include hours worked the last few days of the year. Reconciling these amounts would be burdensome, and a special rule for payroll periods that span calendar years should be developed, the group said.
If implemented, the proposal to use W-2 wage data, rather than base pay or annualized compensation, would require employers to retrieve and reconcile data from separate human resources information systems and payroll systems that do not “talk with each other,” said David Fortney, a management lawyer with Fortney & Scott in Washington.
The EEOC underestimates the time and money employers would have to spend to develop and implement software that would allow collection and analysis of data from completely different systems, Fortney told Bloomberg BNA Aug. 16.
A more fundamental issue with using W-2 wage data is that the information does not align with how employers set up compensation systems, said Fortney, who submitted comments on behalf of the OFCCP Institute in Washington, which serves federal contractors.
Using base pay rather than W-2 wages, which include compensation resulting from employee choices as well as pay rates, would cover about 88 percent of employee pay, said Fortney, who suggested that the EEOC start with base pay, and examine other forms of compensation if a particular industry or employer relies heavily on alternative methods such as bonuses, stock options or the like.
Employers also remain concerned about the EEOC's ability to maintain the confidentiality of the employer pay data the agency proposes to collect and to publicize the information in aggregate form, said Mickey Silberman, a partner with Jackson Lewis in Denver.
The EEOC is aiming to have a revised EEO-1 form completed by Sept. 30, an agency spokeswoman told Bloomberg BNA Aug. 16. Those contacted by Bloomberg BNA agreed it is likely the EEOC will produce a revised EEO-1 form with a pay data collection component by the November elections at the latest.
The OMB will review the latest comments and decide whether the EEOC proposal needs more changes.To contact the reporter on this story: Christine Pulfrey in Washington at firstname.lastname@example.org To contact the editor responsible for this story: Michael Trimarchi at email@example.com
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
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