On September 17, 2014, the U.S. Department of Labor's Office of Federal Contract Compliance Programs (OFFCP) issued a proposed rule in response to Executive Order 13665, which was signed by President Obama on April 8, 2014, and directed the DOL to issue a proposed rule requiring pay transparency among federal contractors. More specifically, EO 13665 prohibits federal contractors and subcontractors from discharging or otherwise discriminating against employees or applicants for discussing, disclosing or inquiring about compensation.
In the proposed rule, the OFCCP noted the following:
- The changes made by the proposed rule are intended to eliminate the secrecy and fear surrounding a discussion or disclosure of compensation information by/among employees
- Studies have shown that pay secrecy policies are common among federal contractors and foster negative consequences for some employees and applicants.
- The proposed rule is needed to enhance the ability of federal contractors and their employees to detect and remediate unlawful discriminatory practices.
Highlights of the proposed rule are as follows:
The proposed rule is open for public comment until December 16, 2014.
- The proposed rule adds to the existing Equal Opportunity Clause applicable to federal contractors the following language: "[t]he contractor will not discharge or in any other manner discriminate against any employee or applicant for employment because such employee or applicant has inquired about, discussed, or disclosed the compensation of the employee or applicant or another employee or applicant."
- The proposed rule provides two main defenses to a claim of discrimination under EO 13665: (1) where the alleged adverse action was based on a legitimate workplace rule unrelated to pay disclosure and would have occurred regardless of the employee's protected activity; and (2) where an employee who has access to compensation information as part of that employee's essential job functions discusses/discloses compensation information to an employee(s) that does not otherwise have access to such information and the disclosure was not made in response to a formal complaint/investigation.
- Federal contractors will be required to: (1) incorporate the revised nondiscrimination provision into existing handbooks/manuals; and (2) disseminate the nondiscrimination provision to employees and applicants.
The proposed rule is open for public comment until December 16, 2014.
