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Review Your Compensation Practices for EEO-1 Pay Equity Reporting

Posted on February 1, 2016
Madelyne D'AngeloWritten by Madelyne D'Angelo | Email author

On January 29, 2016, President Obama announced the EEOC’s proposal to enhance the existing EEO-1 report with additional data intended to address pay equity.  Under the new proposed requirements, beginning in September of 2017, employers with more than 100 employees (both private industry and Federal contractor) would be now required to report salaries by gender, race and ethnicity.  By contrast, contractors that are subject to the EEO-1 reporting requirement and that have between 50 and 99 employees, will continue to submit the same information that is collected by the current EEO-1 report.

5 Tips to Best Prepare for the Proposed EEO-1 Pay Equity Reporting RequirementsShould the proposal be passed, employers would report across 10 job categories and by 12 pay bands, however it would not require the reporting of specific salaries of each individual employee. An example of the proposed survey can be viewed here.  According to the EEOC Federal Register, as to data utility, pay bands will allow the EEOC to compute within-job-category variation, across-job-category variation, and overall variation, which would support their ability to discern potential discrimination while preserving confidentiality.

Despite the uncertainty, there are several best practices any organization, regardless of its size, can implement to position themselves for equity reporting and any questions or problems that may result.

How to Prepare for the Proposed EEO-1 Pay Equity Report: A 5-Step Review of Your Compensation Practices

  1. Develop and Maintain Job Descriptions. Capture the major roles, responsibilities and requirements for each of your positions.  Having an accurate and current statement of each of your jobs is the first piece your organization will need to build solid and defensible compensation practices.
  2. Develop a Job Leveling Structure. Leveling your jobs will require you to group and organize your roles into a structure that captures the relative importance of each job in terms of  responsibility, scope of work and overall value of work.  Where this can be particularly difficult is when a particular job title such as “manager” or even “director” can vary depending on where that employee may work in the organization, or when titles don’t match responsibilities. It is imperative that senior management establish consistent responsibilities and minimum requirements for each level of the organization regardless of functional area.
  3. Develop and Maintain a Salary Structure. Once you have developed job descriptions and level roles for each unique job within the organization, create a salary structure based on reliable market data for each job and/or level in your structure.  If you have employees in multiple geographic areas, be sure to consider how that might impact your structure and be open to building out the current structure to include geographical differentials for locations that have a cost of labor that either falls above or below the current salary scale.  Regularly review your structure and how your employees fit within the same; when you identify inequities takes steps to correct the situation.
  4. Implement Administrative Processes and Policies. Once you have all these elements in place decide how you will administer salary changes and reviews moving forward.  Communicate the process, capture your decisions in an objective manner so it is clear how things are done, determine who is responsible for what actions or approvals, and ensure that you award performance at all levels of the organization in a consistent and fair manner
  5. Most Importantly…(once you have these things in place) Maintain Them. After you design your structure and set processes in place, follow and maintain them on a routine basis.  When situations arise (and they always will arise) and you vary from these guidelines, capture and retain the justification for the deviation.

We recommend utilizing an HRIS platform to reduce the administrative burden of the data collection. If you don’t already have one in place, now may be the time to begin considering your options. (Here’s an article my colleague wrote on selecting the right HRIS technology for your business that may be helpful.) Regardless of what comes in terms of reporting requirements, if your organization has a solid foundation for its compensation practices and are regularly reviewing the same to ensure pay equity, you will always be in a position to defend your program and decisions.

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