New pay transparency rules for federal contractors went into effect last month. Specifically, the new rules prohibit federal contractors from discriminating or retaliating against employees and applicants who inquire about, discuss or disclose their own pay or the pay of another employee or applicant. Exceptions exist for employees who have access to the compensation information of other employees or applicants as part of their essential job functions. These rules, which are enforced by the Office of Federal Contract Compliance Programs (“OFCCP”), are similar to existing employee protections under the National Labor Relations Act (“NLRA”). Unlike the NLRA, which only covers private employers, OFCCP’s pay transparency protections cover both private and public employers as long as they are federal contractors. Also unlike the NLRA, OFCCP’s protections extend to supervisors and managers.
What Is Required and When?
The final rules became effective on January 11, 2016 and apply to employers that enter into new covered federal contracts or subcontracts or modify an existing contract on or after that date. In addition to ensuring no unlawful discrimination or retaliation, federal contractors are required to disseminate specific information about the new rules via policies and postings. Employers that utilize online employment application systems must post the information electronically in order to ensure all applicants can see it. OFCCP has provided the verbiage that must be used for these purposes on its website along with detailed compliance assistance on these new obligations.
What Is NOT Required?
It is important to understand that just because employees have the right to discuss their pay with others does not mean that federal contractors are required to disclose compensation information to employees or applicants. In other words, if an employee or applicant asks about the compensation of another individual, the federal contractor can withhold this information. They cannot discriminate or retaliate against the individual for asking, though.
The new pay transparency rules do not require federal contractors to conduct any additional data analysis or reporting relating to employee compensation matters.
Finally, the new rules do not require changes to the notice provisions that federal contractors must include their covered subcontracts and purchase orders as long as they are referencing the Equal Opportunity Clause by reference, which is the way most federal contractors comply with this compliance requirement. Nor is there a requirement to modify job advertisements or solicitations.
What Else Should Federal Contractors Consider Doing?
In addition to adopting the new policy as referenced above, federal contractors should review their existing policies for any language that suggests employees are prohibited from discussing their pay. Some policies may need to be revoked or revised.
Federal contractors should also determine which positions may not covered by these new protections. Although all employees must be permitted to disclose and discuss their own pay, certain types of employees may be prohibited from disclosing compensation information to which they have access as part of their essential job functions. These include employees who must have access to compensation information in order to perform routinely assigned business tasks and employees whose job responsibilities include protecting and maintaining the privacy of compensation information. Special training for these individuals is recommended.
Enforcement
Individuals who believe their rights have been violated may file a discrimination complaint with OFCCP. In addition to having jurisdiction to investigate individual complaints, OFCCP will review compliance with these new requirements when conducting audits. Federal contractors should take action now to ensure they are properly prepared for these new requirements.
If you have questions regarding this topic, please contact Jon Bumgarner at 317.977.1474 or jbumgarner@wp.hallrender.com, Nick Johnston at 317.429.3618 or njohnston@wp.hallrender.com or your regular Hall Render attorney.
