Our Blog: Flagel Voice

Employer Complaints Pour in as EEOC Wants More Data

A controversial proposal by the Equal Continue Reading

Back-to-School Tips for Grownups

August is back-to-school time across the Continue Reading

Compare and Contrast the Republican and Democratic Tax Platforms

With both major political party conventions Continue Reading

tristate-success-awards top-150 BDO Alliance USA AICPA ohio-cpa

Employer Complaints Pour in as EEOC Wants More Data

A controversial proposal by the Equal Employment Opportunity Commission (EEOC) has been in a holding pattern while the agency accepted input through August 15. The proposal seeks to expand the information it requires employers to provide on the EEO-1 form by adding pay data. Covered employers must submit their EEO-1 forms by September 30, for the current year.  As written, the change would apply to private employers with at least 100 employees, and employers with federal government contracts of $50,000 or more who have at least 50 employees. Employers may request a one-time 30-day extension of the filing deadline.

The EEOC, along with the Office of Federal Contract Compliance (a watchdog for employment discrimination by federal contractors) published the joint proposal last January.

Pay Disparities

“By any measure,” the EEOC stated in explaining its proposal, “there are significant pay disparities between men and women, between whites and people of color, and especially between women of color and white men.”

The EEOC acknowledges that “some of these pay disparities may be explained by differences in education, career or experience,” but even when those factors are taken into account, “EEOC’s experience enforcing pay discrimination laws reveals that discrimination is part of the problem.”

Victims of pay discrimination, when lacking knowledge of the earnings of their coworkers, can’t be aware of discrimination — and therefore don’t complain to the EEOC. But with the addition of pay data segmented by ethnic group and gender, the EEOC “will be able to focus their resources more effectively,” the Commission maintains.

Unless the rule is modified or scrapped, it would apply to EEO-1 forms filed by September 30, 2017. Currently, most employers submit EEO-1 forms electronically, but this proposal will make electronic submission a requirement, to “reduce the number of inadvertent human errors in the data,” says the EEOC.

Wage Bands

Rather than list the specific salary or wages for each employee, earnings would be reported according to 12 pay “bands” as a way to preserve confidentiality. The lowest band is for income below $12,240 and the highest is $208,000 and above. The salary range within bands gets higher as the dollars increase. For example, the second band is $19,240 – $24,439 (a $5,199 range) while the 11th band is $163,800 – $207,999 (a gap of $44,199).

The number of employees falling within each pay band would be reported by gender and ethnic group, using the same seven categories as the current EEO-1 form. In addition, they would be grouped within the current 10 job categories (for example, first/mid-level officials and managers, administrative support workers, laborers and helpers, and so forth.)

The earnings and hours worked by part-time and partial-year employees will also be included in the report.

Employer Concerns

Despite the additional data elements, the EEOC predicts employers will incur only a “minimal” one-time set-up cost and a minimal ongoing increase in its annual cost associated with filing the EEO-1. Consistent with current EEO-1 reporting rules, the earnings would have to be calculated for any 12-month period ending between July 1 and September 30 of the reporting year.

Employers have complained that it would be easier if they could report this data by calendar year, and piggyback on efforts to generate W-2s. The EEOC in the regulation proposal maintains that the non-calendar year time period “should not be burdensome given the capabilities of HRIS software,” though some commenters stated the 12-month rule makes “absolutely no sense.”

Misleading Impressions

In addition to worries about added administrative costs, employers filing comments on the proposals expressed concern that the EEOC could look at the data and wrongly conclude that discrimination is taking place. To illustrate that point, an attorney for WorldatWork, a human resource professional membership group wrote: “In 2016, rewarding employees for their time and labor is no longer solely about monetary compensation.”

He added, “Employer programs that address their employees’ health care, workplace flexibility, retirement savings, development opportunities and recognition programs are prioritized by today’s American workforce and reflected in organizations’ compensation and reward strategies.”

Employees with relatively low wages or salaries, for whom these additional forms of pay represent a large proportion of their total compensation, would appear to be earning a lot less than employees with higher wages for whom the additional compensation elements represent a proportionately smaller slice of their pay.

Also, the EEOC proposal instructs employers to impute a 40-hour workweek to salaried employees to come up with an hourly wage equivalent. Yet many salaried workers put in more than 40 hours, resulting in a misleading result.

One employer with 700 employees in the hospitality industry pointed out that clustering different management jobs together within a pay band can be problematic. That method of grouping doesn’t consider the various wage demands of the positions. For example, he noted that even though both jobs fall within the same job classification, an executive chef in his company typically earns more than a front desk manager, due to labor market dynamics. Yet the disparity is not discriminatory, he added.

He summed up his comment by saying that while the EEOC’s intentions may have been good, the “methods are complexly unsound.”

Heads Up

While the EEOC weighs the comments and considers tweaks to the proposal, employers would be wise to prepare to comply with the expanded EEO-1 next year. At the same time, keep an eye out for modifications that may be made due to employer concerns.

The Equal Employment Opportunity Commission (EEOC) has completed its mailing of the 2016 EEO-1 Survey notification letters. Employers who meet the criteria listed above, or employers that filed the EEO-1 report in 2015 and have not received the 2016 EEO-1 notification letter by Aug. 15, 2016, should immediately contact the EEO-1 Joint Reporting Committee at (877) 392-4647 (toll-free), or they can e-mail the EEOC at e1.techassistance@eeoc.gov.

 

Back-to-School Tips for Grownups

August is back-to-school time across the country. Whether the school buses are already disrupting your commute to work — or will be soon — the start of the school year brings opportunities for savvy business owners. ABCs of Education-Related Tax Breaks On a personal level, there are numerous education-related federal tax deductions and credits to […]

Continue reading...

Compare and Contrast the Republican and Democratic Tax Platforms

With both major political party conventions finally behind us, it’s time to focus on the upcoming national election. Among their many differences, the Republicans and Democrats have widely divergent tax platforms. While platforms are always relatively nonspecific and not necessarily synced with what the presidential candidates have in mind, it’s still good to know what […]

Continue reading...

EEOC Penalties Rise Effective July 2016

When it comes to violations of the labor law posting requirements, it’s not that these mandatory notices aren’t displayed prominently. It’s that they are not displayed at all, says the Equal Employment Opportunity Commission (EEOC). And that’s a problem. Typically the EEOC is alerted to the issue by employees who are aware of the requirements and […]

Continue reading...

3 strategies for tax-smart giving

fhf_02_featured

Giving away assets during your life will help reduce the size of your taxable estate, which is beneficial if you have a large estate that could be subject to estate taxes. For 2016, the lifetime gift and estate tax exemption is $5.45 million (twice that for married couples with proper estate planning strategies in place). […]

Continue reading...

7 Tax-Savvy Ways to Give to Charity

Charitable giving is on the rise. And the momentum is expected to continue, given the natural disasters and human tragedies that have happened in recent months. Highlights of the Giving USA Report A recent report, Giving USA 2016: The Annual Report on Philanthropy for the Year 2015, shows charitable-giving trends based on contributions made by […]

Continue reading...

FAQs about Social Security Retirement Benefits

For years, people have questioned the long-term viability of the Social Security system. In June, the Social Security Board of Trustees released its annual report on the long-term financial status of the Social Security Trust Funds. It projects that the combined asset reserves of the Old-Age and Survivors Insurance and Disability Insurance (OASDI) Trust Funds […]

Continue reading...

Don’t roll the dice with your taxes if you gamble this year

fhf_02_featured

For anyone who takes a spin at roulette, cries out “Bingo!” or engages in other wagering activities, it’s important to be familiar with the applicable tax rules. Otherwise, you could be putting yourself at risk for interest or penalties — or missing out on tax-saving opportunities. Wins You must report 100% of your wagering winnings […]

Continue reading...

Should you make a “charitable IRA rollover” in 2016?

fhf_02_featured

Last year a break valued by many charitably inclined retirees was made permanent: the charitable IRA rollover. If you’re age 70½ or older, you can make direct contributions — up to $100,000 annually — from your IRA to qualified charitable organizations without owing any income tax on the distributions. Satisfy your RMD A charitable IRA rollover […]

Continue reading...

What to Do If You Haven’t Filed Last Year’s Tax Return or Can’t Pay the Bill

Unless you’ve extended the due date for filing last year’s individual federal income tax return to October 17, the filing deadline passed you by in April. What if you didn’t extend and you haven’t yet filed your Form 1040? And what if you can’t pay your tax bill? This article explains how to handle these […]

Continue reading...