The Office of Federal Contract Compliance announced a proposed rule Sept. 15 to prohibit pay secrecy policies at government contractor firms. The proposal is the result of an executive order signed by President Obama in April requiring federal contractors to abide by pay transparency rules.
“Under the terms of the proposal, federal contractors and subcontractors may not fire or otherwise discriminate against any employee or applicant for discussing, disclosing or inquiring about their compensation or that of another employee or applicant,” according to OFCCP, a sub-agency of the U.S. Department of Labor.
Executive Order 14665 was signed by the president on April 8. The E.O. amended an earlier order (E.O. 11246) that dealt with equal opportunity clauses to protect workers.
The proposed rule, written to satisfy the president’s directive in E.O. 14665, will be officially published in the Federal Register on Sept. 17, which will kick off a 90-day open comment period for interested parties.
Proposed Rule Highlights
The OFCCP rule proposes to require:
- federal contracts and subcontracts to include specific information, such as a requirement that employees or applicants who ask about compensation (either their own or other employees’) may not be discharged or discriminated against; and
- that federal contractors include the nondiscrimination requirement in their employee handbooks and manuals, and distribute the provision to employees and applicants.
The rule includes two employer defenses against discrimination allegations — one based on disclosures made based on information obtained during the essential functions of specific jobs, the other based on enforcement of rules regarding disruptive behavior.
The rule also would define key words (such as compensation, essential job function and compensation information) that will be used in implementing the executive order.
Need for Rule
According to OFCCP the pay gap that exists between male and female workers continues to indicate that there is gender-based compensation discrimination in the workplace. The agency cited research indicating that one possible contribution factor to this inequity is prohibitions in workplaces against discussing salary and compensation levels. The OFCCP rule says:
Strictures against revealing compensation can conceal compensation disparities among employees, making it impossible for an employee to know he or she is being underpaid compared to his or her peers. If compensation remains hidden, employees who are being paid less because of their gender or race will remain unaware of the problem.
In announcing his intention to have OFCCP and DOL write new rules President Obama pointed to the famous Lilly Ledbetter gender pay lawsuit, in which a female worker was tipped off anonymously to pay discrepancies dating back years, which led her to file a class action lawsuit against Goodyear.
For Additional Information
The full proposed rule is available publicly here.
Comments must be submitted within 90 days after the NPRM is published on Sept. 17 either through the federal online system, via fax or by mail. Comments should be identified by RIN number 1250-AA06.
Electronic comments may be submitted through http://www.regulations.gov (follow instructions for comment submission). Comments of six pages or less may be faxed to 202-693-1304.
Mailed comments should be addressed to Debra A. Carr, Director, Division of Policy, Planning, and Program Development; Office of Federal Contract Compliance Programs, Room C-3325, 200 Constitution Avenue, N.W., Washington, D.C. 20210.
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