Last April, President Obama issued Executive Order 13,665, prohibiting federal contractors and subcontractors from publishing or enforcing rules intended to keep employees from discussing their compensation. On September 10, the Department of Labor’s Office of Federal Contract Compliance Programs issued final regulations implementing the Order.
The Executive Order originated with concerns that lack of knowledge about co-workers’ compensation adversely affects the pay of other employees, especially women. If female or minority employees learn that they are paid less for the same work, they may be more inclined to negotiate salary increases, or to seek legal relief if these efforts are unsuccessful.
The DOL rule protects employees and applicants who discuss, disclose or inquire about compensation. This protection must be included in a written policy contained in the contractor’s employee handbook. Violation of these rules would provide contractors’ employees with the basis for a discrimination complaint with OFCCP. The new Order is largely redundant in that federal labor law applying to all employers already prevents companies from prohibiting employees from discussing their compensation. Such policy or practice would form the basis for an unfair labor practice charge with the National Labor Relations Board.
The rules provide an exception for payroll or other employees whose duties give them access to compensation information. General disclosure of compensation by such employees to third parties would remain the basis for disciplinary action. The Executive Order goes beyond these existing legal requirements by mandating the issuance or a written policy to this effect. The final rule applies to federal contracts entered into or modified after January 11, 2016.
