September 17, 2019 | HR Compliance | Posted by Bob Greene, Senior HR Industry Analyst at Ascentis
Q&A Follow Up Part 1: EEO-1 Component 2 Data Reporting
With the reporting deadline for the newly reinstated EEO-1 Component 2 data just around the corner (September 30, 2019), we’ve recapped the questions submitted during our webinar, The EEO-1 Component 2 Data Reporting Requirement: Are You Ready? in a two-part blog series.
Before We Jump In, a Timely Update:
On September 11, 2019, under new Chair Janet Dhillon, the EEOC posted a notice in the Federal Register signaling their intent to seek withdrawal of the Component 2 Reporting Requirement for CY2019/RY2020. This posting does not impact, in any way, the collection and reporting effort currently under way. The September 30, 2019 deadline for submitting these reports remains intact.
The EEOC posting describes the agency’s intention to roll back the reporting requirement for impacted employers for the 2020 reporting year. The National Women’s Law Center, who successfully challenged the EEOC’s attempted rollback of the 2017/2018 requirement, has already reacted to the new EEOC filing, implying an intention to sue, once again, to stop the action.
Although 2020 could provide a one-year hiatus to the reporting requirement, bear in mind that H.R. 7, the Paycheck Fairness Act of the 116th Congress, was passed by the House on March 27, 2019, and provides for this same pay equity reporting as a matter of law. The bill is currently stalled in the Senate.
Additionally, a change in the party of the Presidency in 2020 could cause these requirements to be reinstated, by much the same mechanisms as were used to try to roll them back.
Now, On to Our Q&A from the Webinar
We’ve identified seven themes across the questions and have split the responses into two posts. Part One features questions on the Reporting Period, Determining Ethnicity and Gender and Reporting Wages and Hours. Leverage this as a reference tool as you finalize your own EEO-1 Component 2 Data Reports for the approaching deadline.
Measuring Period vs. Reporting PeriodQ: Our numbers fluctuate slightly above and well below 100 employees throughout the year. Is the reporting requirement 100 employees, or 100 employees during the reporting period?
The measuring period, to determine whether an employer needs to file, and which employees to include for Component 2 reporting, is October 1 to December 31, 2017 for 2017 reporting, and October 1 to December 31, 2018 for 2018 reporting. Employers are free to choose any pay period within those time frames, no justification is required, and it need not be the same as the pay period previously chosen for Component 1 (traditional) reporting.
If an employer has some pay periods where the reporting shows fewer than 100 active employees and some pay periods reflecting more than 100 employees, not only is it permitted for the employer to choose one of the pay periods with less than 100 employees and decline to report Component 2 for that year, it is actually pointed out in the EEOC FAQs that this is permitted.
Q: Our company was sold in 2018. For the EEO1 reporting in May, we inactivated the old company and reported under the new company. Do we need to go back to the old "inactivated" company and report the 2017 numbers in terms of EEO 2?
The employer will report the post-transaction headcount and details for 2018, since the sell-off took place in May of that year and the measuring period must be chosen from dates after that. For 2017, yes, the rules would require that whatever employees were included in the chosen measuring period in 2017 (single pay period between 10/1 and 12/31), including employees divested in 2018, must be included in that retroactive report.
Determining Ethnicity and GenderQ: What is our responsibility for reporting employees who worked but chose not to disclose their race or gender? The regulations recommend allowing employees to self-identify, but how do you categorize those employees that identify as non-binary?
The rules for race and gender identification for Component 2 reporting are no different from those for EEO-1 Component 1 (traditional) reporting:
(a.) Request the employee self-identify
(b.) If they decline to do so, report it for them based on your best assessment through observation
Because the issue of transgender employees and non-binary gender identification is being discussed much more frequently and openly now, the NORC team published a FAQ on their website about it specific to Component 2 reporting, which states that the gender reported should be based on visual identification and/or the various legal documents supplied by the employee (perhaps in the I-9 process, like Driver’s License or US Passport). The employer may then submit a note on the reporting site in the comments field about the gender “exceptions.”
Reporting Wages and HoursQ: The hours worked requested, does that [include] regular, and overtime hours worked?
The hours and wages reported for Component 2 are ANNUAL hours and wages. Since Box 1 of the W-2 already contains “wages, tips and other compensation” (basically all taxable compensation), it includes regular, overtime, PTO, bonuses, and other taxable pay. The “stated annual salary as of a given date” is NOT a valid proxy for this reporting; Box 1 must be reported.
Hours to be reported are actual hours worked, so for this reporting, PTO can be excluded. Where actual hours worked are simply not available or not retained (as in the case of salaried exempt employees), the EEOC offers the safe harbor of using 40 hours for any full-time employee for any week in which they were paid, and 20 hours for any part-time employee for any week in which they were paid.
Q: Can you reiterate again what you mean about [how] the hours worked in a December payroll that was paid in January should be applied? Even if those hours weren't paid in 2017 and would not show up in the W2?
For weekly and biweekly pay frequencies, the usual question will come up: for a pay period which extends across a year-end boundary, in which year do we report the hours? The EEOC has made this answer simple and consistent with previous IRS policy: the hours worked are reported for the entire period in the year in which the related wages are paid. For example, a bi weekly period from Dember 26, 2017 through January 8, 2018 would presumably have a pay date in 2018 later than January 8, and therefore all hours worked for this period are included for Component 2 reporting in 2018.
Q: If they are paid a salary rate but we capture hours due to billable time to clients, do we report the hours, or can we still use the safe harbor rule?
For many employers, billable hours do not constitute all hours worked in a week. (Example: I am billing 28 hours this week, but I am salaried and paid for 40 hours.) If billable hours are your only hours recordkeeping for some group of employees, and they do not accurately represent all hours worked, then we’d advise using the IRS safe harbor method.
Ascentis Clients: Support for EEO-1 Component 2 ReportingQ: Do I understand that this reporting will be available if we have Ascentis HR and Payroll?
Ascentis released our full support for an EEO-1 Component 2 CSV file download over the Labor Day weekend. Clients active on Ascentis HRIS and Payroll for the entirety of the reporting year will find full support for creating this file for you to upload on the NORC site.
Q: Ascentis has a template for the EEOC-1. Does/will Ascentis be creating a template to run a report for EEOC-2 in time for this year’s deadline?
Ascentis held a one-hour clients-only webinar on August 23, 2019 during which we reviewed everything you need to know to generate this new report. The August 23 webinar was recorded and is now available for on-demand review through the Ascentis Communities portal.
In case you missed the live webinar, check out the on demand recording for more help with your EEO-1 Component 2 Data Reporting.
Bob Greene currently serves as Senior HR Industry Analyst at Ascentis. Bob’s 40 years in the human capital management industry have been spent in practitioner, consultant and vendor/partner roles. As practitioner, he managed payroll for a 5,000-person bank in New Jersey. As consultant, he spent 8 years advising customers in HRMS, and payroll and benefits system design as well as acquisition strategies. Bob also built a strategic HCM advisory practice for Xcelicor (later acquired by Deloitte Consulting.)