HR Webinar: The New EEO-1 Component 2 Reporting Requirement: Are You Ready?

EEO-1 Component 2 Data Reporting:
Are You Ready?
August 21, 2019
Bob Greene

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Today’s Speaker
Bob Greene currently serves as Channels Manager and Sales Trainer 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
(now Deloitte Consulting.)
As vendor/partner, he has had prominent roles in sales support, marketing and
product management at several companies and currently Ascentis. Bob has been
a Contributing Editor for IHRIM's Workforce Solutions Review journal, for the past
eight years. His experience also includes two years as Adjunct Lecturer in HRIS at
Benedictine University in Lisle, Illinois. In addition to his 40 years of experience,
Bob also holds a BA in English from Rutgers University.
Bob Greene

Agenda
• Part I: “Mind the Gap!”
• Equal Pay Day - April 2, 2019
• The Most Stubborn Trend in Recent Economic History?
• The Gender Pay Equity Gap: Fact or Fiction?
• Part II: The On-Again, Off-Again, On-Again History of EEO-1/C2 Reporting
• The Original Order
• Judicial Jousting
• The New Reporting Requirement, “By the Numbers”
• Part III: The New Requirement (Deadline: September 30, 2019)
• What?
• How?
• Penalties for Non-Compliance
• Part IV: Is This The Final “ELE” (Extinction-Level Event) for Separate HR and Payroll Platforms?
• How Ascentis Can Help

Part I
“Mind the Gap!”
Remember: Ginger Rogers Did Everything Fred Astaire Did….
….But She Did It Backwards and in High Heels….
.…and for 59% of Fred’s Salary. (Astaire: $211,666; Rogers: $124,770)

Part I
“Happy Equal Pay Day!”
What is “Equal Pay Day?”
• It’s the specific day of the year
when the average man in the
United States must begin work,
to earn the same amount for the
year, as the average woman, in
the same job, who began work
on January 1.
• For 2018, it was April 10.
• For 2019, it is April 2.
• Progress?
/9

The Most Stubborn Trend in Recent Economic History
According to the Institute for
Women’s Policy Research:
• Since 1980, when weekly earnings data
were first collected, the weekly gender
earnings ratio has risen from just 64.2
percent to 81.1 percent now. (81.8
percent last year, so regression in the
last 12 months.)
• Most of the progress toward gender
equality took place in the 1980s/1990s.
• In the past ten years (2009 to 2018),
the gender wage gap narrowed by less
than one percentage point, compared
with 3.4 percentage points in the
previous ten years (1999 to 2008), and
with 6.3 percentage points in the ten
years prior to that (1989 to 1998).
Source: The Institute for Women’s Policy Research, The
Gender Wage Gap, 2018 Earnings Differences by Race and
Ethnicity; published March 7, 2019. Can be accessed here:
https://iwpr.org/publications/gender-wage-gap-2018/

The trendline for the
change in the gender pay
equity gap:
• Practically “defines” the phrase
“one step forward; two steps
back!”
• Bear in mind that a positive
number on this graph
represents progress narrowing
the wage gap, and the trend
line (orange dots) represents a
slowing of that narrowing.
-1.5
-1
-0.5
0
0.5
1
1.5
2
2.5
1986 1991 1996 2001 2006 2011 2016
Year on Year Change in Gender Pay Gap (Pct)
The Most Stubborn Trend in Recent Economic History

Part of a Much Larger Discrimination Trendline…
According to the Institute for
Women’s Policy Research:
• The larger trend on which the
gender gap aligns is the combined
race/gender pay gap in the USA.
• On this table, we see the gender-
only gap mapped against the gap
measured by each group’s earnings
compared to white males.
• While beyond the scope of this
session, the trend is nevertheless
informative.

Gender Pay Disparities…By The Numbers
According to the American
Association of University
Women:
• The top ten occupations where
women collectively lose the
most money due to the Gap are
listed on the left.
• These ten occupations alone
represent a total earnings gap of
more than $134 billion.
Source: American Association of University Women,
The Simple Truth About the Gender Pay Gap;
Can be accessed here:
https://www.aauw.org/research/the-simple-truth-about-the-gender-pay-gap/

Women:
• The ten largest occupations for
women carry some “legacy bias”
with them (nurses, “secretaries,”
elementary and middle school
teachers).
• However, at 90.4% - 92.0% pay
ratio, these three largest female-
dominated occupations are
generally LESS impacted by the
gender equity gap.

Women:
• The ten occupations with the
largest individual pay gaps are
listed to the left.
• Notice the tendency for the 3
occupations where the gap is
greater than 36% to cluster
around the discipline of financial
management.

Women:
• The ten occupations where
women collectively lose the
least money due to the Gap are
listed on the left.
• Notice the one occupation
where women, on average earn
MORE than men, is buyers and
purchasing agents.

The Gender Pay Equity Gap: Fact or Fiction?
Famous Controversies in History…

The Gender Pay Equity Gap: Public Perception
What is the Public View of the Gap?
Source: Survey Monkey survey sponsored by “Curiosity at Work:. Can be accessed here: https://www.surveymonkey.com/curiosity/equal-pay-day-2019/

The Gender Pay Equity Gap: Public Perception
What is the Public View of the Gap?
Source: Survey Monkey survey sponsored by “Curiosity at Work:. Can be accessed here: https://www.surveymonkey.com/curiosity/equal-pay-day-2019/
(This is the EEO-1 Component 2 Requirement)

Part II
The On-Again, Off-Again, On-Again
History of EEO-1/C2 Reporting
Does this judge look skeptical to you?
Courtesy: law.com and The National Law Journal. Can be accessed here:
https://www.law.com/nationallawjournal/2019/04/25/judge-chastises-eeoc-while-setting-september-deadline-for-collecting-enhanced-pay-data/?slreturn=20190718172137

In 2016, under the prior Presidential Administration, the EEOC announced
a major addition to the annual EEO-1 report which most employers have
been filing for decades.
• The revision will add annual pay data, in 12 graduated bands of total
compensation, to the report. It will also add hours worked information, broken
out by exempt and non-exempt FLSA job classifications. This is known collectively
as “Component 2” data.
• Obviously, this information would strengthen the ability to diagnose pay equity
and gap information (since gender is already collected) and, using big data
manipulation, easily pinpoint specific industries and jobs that suffer more from
gender pay inequality than others.
• In August, 2017, on the basis of new Administration mandates to reduce
paperwork and administrative burden, the EEOC announced that the new EEO-1
report and collection of pay range data would be suspended indefinitely.
• And then, on March 5, 2019, a federal district court judge changed everything.
A New EEO-1 Report?
The Long and Storied History of Component 2

• September 29, 2016: EEOC publishes revisions to the EEO-1 report to add Component 2 data
(salary bands and hours worked information). Component 2 requires reporting salaries in 12 pay
bands, distributed by the existing 10 job classifications, and broken down by race and sex.
• August 29, 2017: EEOC Acting Chair Victoria Lipnic, in consultation with Office of Management
& Budget, issues an immediate stay of Component 2 reporting requirements, calling it a violation
of the Paperwork Reduction Act (“PRA”). This stay was to be effective for the first Component 2
reporting period of 2017 (filing by March 31, 2018.)
• November 15, 2017: National Women’s Law Center sues EEOC, OIRA (Office of Information &
Regulatory Affairs) and OMB to reinstate the Component 2 reporting requirement.
• March 5, 2019: DC Federal Circuit Court Judge Tanya S Chutkan rules for plaintiffs NWLC and
against the Administration, stating that defendants failed to prove that the reporting requirement
would “meaningfully increase the burden on employers” (therefore failing to prove a PRA
violation.) The Judge gives the defendants one month (until April 3) to respond with a plan for
employers to meet the newly reinstated Component 2 reporting requirement.
EEO-1 “Component 2” Reporting: A Timeline

• …denied the Government’s motion to
dismiss and granted summary judgment to
the plaintiffs and vacating the OMB’s stay of
the order, effectively reinstating the reporting
requirements immediately.
• …held that the Government failed to follow
its own rules around Paperwork Reduction
Act actions, including its failure to publish
rule changes and stays in the Federal Register.
• …held that the Court and the plaintiffs only
agreed to continue the stay of the reporting
requirements based on “a misconception”
give the Court by the Government, finding
that the Government did not “have clean
hands” in the matter, and noting that even
the EEOC’s lawyers did not believe the EEOC
was credible in their arguments! Ouch…
On March 5, 2019, Judge Chutkan….

• March 18, 2019: With the new reporting rules pending, EEOC opens its annual EEO-1 reporting
portal for Component 1 reporting, with a deadline for employers of May 31, 2019.
• April 3, 2019: EEOC responds to the DC Circuit Court with plan to reinstate Component 2
reporting requirement with a separate deadline of September 30, 2019.
• April 25, 2019: Judge Tanya Chutkan issues a final order in the case of NMLC, et. al. v. OMB, et.
al., Civil Action No. 17-cv-2458 (TSC), detailing a very specific timeline of actions which must be
taken by the EEOC in implementing her rulings, including updates to the Court no less frequently
than every three weeks thereafter.
• April 29, 2019: Per the April 25 order, EEOC notified all employers, via its own website and
publication in the Federal Register, of the reinstated Component 2 reporting requirement.
• July 8, 2019: EEOC establishes a dedicated site (https://eeoccomp2.norc.org/Index) for
collection of the EEO-1 Component 2 reporting data through a third party – the NORC at the
University of Chicago. They begin the process of notifying employers of login information for the
new systems.

• July 11, 2019: Upload file layout specifications and an Excel file format are made available for
the 2017 and 2018 filing periods. However, EEOC states that automated upload capability will not
be available until “mid-August.”
• July 15, 2019: For employers wishing to upload their data manually (completing the online
form, rather than via automated upload), this capability is now enabled.
• July 23, 2019: EEOC posted new FAQs on the NORC site to provide additional guidance on multi-
establishment reporting, summary compensation data, hours worked, acquisitions and mergers,
spinoffs, and PEOs.
• July 30, 2019: EEOC posted upload file validation specifications to the NORC site on the More
Info page; ability to upload still promised by “mid-August”.
• August 15, 2019: The upload function for 2017 and 2018 filing periods finally debuts!

Component 2 Reporting…By the Numbers!
~ 60,000
$ 400 Million
553
~1,615,000
Number of days from application of reporting
requirement stay until stay was lifted
US Chamber of Commerce estimate of
total cost to employers to collect this
information
Estimated total number of US
employers subject to the new reporting
requirement (>100 employees)
$ 50 million
Government estimate of total
cost to employers to collect
this information (prev. admin.)
Estimated total number of US
establishments to be reported by
those ~60,000 employers
47
Number days from opening of filing until employers
must complete all filings – for TWO years

Component 2 Data Sample Reporting: The NORC “Treasure Trove”
Component 2: The Report
Source: NORC/EEOC Component 2 Data Collection website. Can be accessed here: https://eeoccomp2.norc.org/Info

Component 2 Data Sample Form: Total Number of Employees

Component 2 Data Sample Form: Total Hours Reporting

All filers should be fully familiar with the contents of the Instruction Book
Component 2: Online Instruction Book

Most Common Questions Answered by the Instruction Book
• Is my organization required to file?
• What are the report types for which I will be responsible?
• What employees are to be reported?
• How are wages and hours to be calculated?
• What are my choices in filing method?
• Must I certify my filing, and if so, how?
• Will we be doing this every year?
Component 2: Most Common Questions

Is My Organization Required to File?
• Generally, if you are a large enough organization to have been required to
file the “traditional” (Component 1) EEO-1 report by May 31 of this year,
you are also required to file a Component 2 report.
• The specific rules:
• Private employers subject to Title VII of the Civil Rights Act of 1964, having 100 or more employees,
• …but excluding:
• State and local governments
• Public primary and secondary schools
• Institutions of higher education
• Native American or Alaskan tribes
• Tax-exempt private membership clubs, other than labor organizations
• Federal contractors, having 100 or more employees, and who are prime or first-tier subcontractors, and
whose contract, subcontract or purchase order amounts to $50,000 or more.
• For all of the above, only those located in the 50 states and DC are required to file. Puerto Rico, the
USVI and other American Protectorates are exempt.

What Are the Report Types For Which I Will Be Responsible?
• Single-establishment company:
• Type 1: Single-establishment Report
• Multi-establishment company:
• Type 2: Consolidated Report (REQUIRED)
• Type 3: Headquarters Report (REQUIRED)
• Type 4: Establishment Report (if establishment has 50 or more employees)
• Type 6: Establishment List (if establishment has less than 50 employees)  This is “Option 1” -OR-
• Type 8: Establishment Report (if establishment has less than 50 employees)  This is “Option 2”
• Alternatively, a “Special Report” – if employer applies, and is approved for, a hardship exemption under
standard reporting rules, as specified under 29 CFR 1602.10.

What Employees Are to Be Reported?
• For each of reporting year 2017 and 2018:
• Select one pay period (“the workforce snapshot period”) between October 1
and December 31 of that year,
• The employees who were actively employed during that pay period are the
workforce subject to reporting for that calendar year.
• Full-time AND part-time employees are to be included
• Leased employees are to be included
• Certain insurance sales agents who are employees only by virtue of language contained
in 26 USC 3121(d)(3)(B) may be excluded. See the EEO-1/C2 Instruction Booklet at page 7
for additional information.
Source: NORC/EEOC Component 2 Instructions. Can be accessed here: https://eeoccomp2.norc.org/assets/documents/Comp2EEO1InstructionBook.pdf

How Are Wages and Hours to be Calculated?
• Select one pay period (“the workforce snapshot period”) between October 1
and December 31 of that year,
• The employees who were actively employed during that pay period are the
workforce subject to reporting for that calendar year.
• Full-time AND part-time employees are to be included
• Leased employees are to be included
• Certain insurance sales agents who are employees only by virtue of language contained
in 26 USC 3121(d)(3)(B) may be excluded. See the EEO-1/C2 Instruction Booklet at page 7
for additional information.
• For wages, the value in the applicable year’s W-2 Box 1 (“Wages, Tips and
Other Compensation”) is to be reported.

How Are Wages and Hours to be Calculated?
• For hours, use the total hours worked which corresponds to the annual period
captured in that year’s W-2. (In other words, the IRS rule of constructive
receipt applies, and for a weekly or bi-weekly pay period that crosses calendar
years, the hours applicable to that period are applied to the year when the
wages are paid.)
• For hourly workers, where the hours are already being captured for FLSA compliance
purposes, report actual hours recorded.
• For salaried workers, if the hours are already being captured for other (non-docking, non-
overtime) purposes, report actual hours recorded.
• For salaried workers, if the hours are not already being captured for any other reason,
the EEOC offers a “safe harbor” proxy: calculate 40 hours per week for a full-timer for
any period in which they are being paid, and 20 hours per week for a part-timer for any
period in which they are being paid.

What are My Choices in Filing Method?
• There are two, and for some employers, they couldn’t be more different
in administrative burden of fulfilling the filing requirement:
• The “manual” method involves filling out the online form offered on the
NORC/EEOC filing portal.
• This approach will require manual update on an online form of up to (a whopping) 1,680 cells
per report. [2 genders times 7 racial designators times 10 job classifications times 12 specified
pay ranges equals 1,680 possible cells.] And you’ll be doing that TWICE (once for earnings and
separately for hours), for each establishment requiring a separate report!
• Note that for some employers – particularly those with separate payroll and HRIS
platforms/services not currently capable of producing a single report of this data, the online
update approach may be the only one available.
• Obviously, single establishment reporters, particularly those with smaller populations, will find
this method more manageable.
• The “automated upload” method involves pulling this information, perhaps from
your HCM technology, either already in NORC-required format, or massaged into
that format after extraction, and uploading the resulting CSV file on the portal.

What are My Choices in Filing Method?
Source: NORC/EEOC Component 2 Instructions. Can be accessed here: https://eeoccomp2.norc.org/assets/documents/Comp2EEO1UploadFileSpecification.pdf

Must I Certify my Filing, and if So, How?
• Yes.
• Online certification of your reporting is built into the portal
reporting process (whether online fill-in or upload method is used).
• Once the certification is completed for a year, no changes may be made to the
data on the submitted report.
• You should print and/or save a pdf copy of the report at the point of
certification.
• Verbatim from the EEO-1 Component 2 Users Guide:
“Certification of the Component 2 EEO-1 report is mandatory.
Without certifying your report, your company will receive a
notification of failure to file letter.”

Will We Be Doing This Every Year?
• As of now, while the Administration has filed an appeal, the 41-page
decision by Judge Chutkan in NWLC v. OMB appears rather
“bulletproof.”
• In particular, the current expectation is that the next Component 2
report filing (for calendar year 2019) will be consolidated with
traditional EEO-1 reporting, and aligning with the May 31, 2020 deadline
for that report – just eight short months after this year’s deadline.
• After that, much may depend upon the political winds of the 2020
election cycle, but it is worthy of note that on March 27th, 2019, the
current (Democrat-controlled) House passed a bill (H.R.7, the “Paycheck
Fairness Act”) which includes a provision to make this wage and hour
reporting by race and gender permanent.

Perhaps surprisingly, for non-federal contractors, there are no explicit
civil penalties for failure to file the EEO-1 Component 2 report.
• However, the EEOC can seek a court order compelling the filing of a
missing EEO-1 report, and the costs of that litigation can be significant.
• For federal contractors and sub-contractors, the OFCCP may cancel,
terminate or suspend all or any portions of a federal contract, or may
subject the employer to temporary or permanent debarment.
• The penalties for filing a willfully false EEO-1 report are much more
stringent, and include fines or even, conceivably, imprisonment for the
officer certifying the report.
Component 2: Penalties for Non-Compliance

Part IV
Is This the Final “ELE” for Separate
Payroll and HRIS Platforms?
HRIS
Payroll
Talent

Consolidated Payroll/HRIS Platform
What to Expect From Your HCM System
Ability to select reporting
year and maintain historical
results
Ability to designate EEO-1
establishment structure
Ability to map locations to
establishments, with 1:1 or
many:1 capabilities (e.g.,
remote workers map to HQ)
Ability to include/exclude
certain person statuses (e.g.,
contractor)
Ability to designate workforce
snapshot period (e.g., third
pay week of October, 2018)

Disparate Payroll/HRIS Platforms
What to Expect From Your HCM System
• While some “standalone” payroll systems have, over the years, produced the EEO-1
(Component 1) report, using various field extensions or user fields for race and job category,
they may or may not be ready to produce a suitable CSV file extract of the Component 2
report.
• On the other hand, standalone HRISs may not be able to capture the Box 1 W-2 values or
annual hours calculations needed to complete the report.
• This leaves some employers in the position of having to pull extracts of two separate
systems and manipulate the data, formatting it into the CSV upload format required by
NORC.
• Some vendors are specializing in producing these reports as a “specialty” product, but the
key to both the success of these point solutions, and their cost, may be the level of difficulty
in extracting the data from source systems.
• And with only 40 days to go until the final reporting deadline for 2017 and 2018, extensive
programming efforts may be impractical, although they might be more feasible for the 2020
reporting deadline.

“The ‘Hits’ Just Keep on Comin’!”
Consolidating HCM Platforms: Is It Time?
• Remember the introduction of ACA annual compliance reporting
(1095/1094-c) back in 2013-14?
• It introduced multiple requirements that were optimized only by consolidated
HCM platforms:
• Affordability safe harbor monitoring based on information gleaned from HRIS (salary as of first
of the plan year) and Payroll (W-2 Box 1, month-by-month values)
• Lookback period monitoring to ensure that offers of coverage are made timely for variable
hour or certain part-time employees (usually from Payroll).
• History of eligibility, enrollment and waivers (usually from HRIS/Benefits.)
• Some employers developed workarounds, chose their options carefully to avoid
system roadblocks, or acquired specialty software just to administer ACA
compliance.
• Now we are faced with EEO-1 Component 2 reporting requiring “crossover
functionality” as well.

“The ‘Hits’ Just Keep on Comin’!”
Consolidating HCM Platforms: Is It Time?
• And bear in mind that ACA and EEO-1/C2 reporting are both
compliance-focused requirement sets.
• This doesn’t even begin to consider the talent management and HR
decision support requirements that are facilitated by a consolidated
HCM platform:
• Talent management requirements like measuring organizational effectiveness
through Performance, Learning, Career Development, Variable Compensation, etc.
• Talent acquisition requirements like integrated Onboarding combining HRIS,
Recruiting, Learning Management and Payroll, among other applications.
• Dashboards and reporting which leverage Payroll, Time Management, HR, and
Benefits information.
• Isn’t it time to seriously re-consider an integrated HCM platform?

How Ascentis Can Help
The Ascentis HCM Suite Has Many Capabilities to Address This Challenge
• Human Resource Information System
• Configurable Interview Guides in Recruiting (to facilitate compliance with “Ban The Question” laws)
• EEO-1 Component 2 Reporting Delivered Capability for our HRIS and Payroll Clients
• Documentation Fields to Record Pay Differential Explanations
• Policy Acknowledgements and Historical Tracking
• Compensation Planning
• Merit and Bonus Planning Matrices (Think Automation of Those Excel Spreadsheets You’ve Been
Using, and the Data on Them Won’t Get Stale Anymore!)
• Interactively updated Pay-for-Performance Dashboard
• Realtime Analytics Including Gender Pay Equity Progress
• Learning Management System
• SCORM and AICC compliant and fully integrated with the HRIS.
• “SCORM-Lite” upload capability can be used to shortcut the process of moving content from the
printed page (.pdf, .doc, .ppts) into the LMS
• Optional Pre-fabricated Compliance content on subjects like Equal Pay Act and Diversity

Learn more
Request an assessment of your organization’s HCM compliance profile today!
ASCENTIS CLIENTS: Please be sure to register for, and attend, our customer
training webinar on Producing the New EEO-1 Component 2 Extract File for
upload to the NORC/EEOC portal. Friday, August 23.
Please see the Ascentis Community Portal for full details and to register!

Contact Us
webinars@ascentis.com
info@ascentis.com
www.ascentis.com
800.229.2713

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