On September 11, 2015, the Office of Federal Contract Compliance Programs (OFCCP) published the Government Contractors, Prohibitions Against Pay Secrecy Policies and Actions final rule. This rule is one of the many the agency is slated to finalize in the remaining years of the Obama Administration. The OFCCP will soon issue regulations regarding sex discrimination and the proposed Equal Pay Report, which would require federal contractors to submit summary compensation data to the agency on an annual basis.
This most recent final rule, which will take effect January 11, 2016, prohibits contractors from “discriminating against, in any manner, employees and job applicants who inquire about, discuss, or disclose their own compensation or the compensation of other employees or applicants.” The OFCCP asserted that a contributing factor to the persistent wage gap between men and women is “the prevalence of workplace prohibitions on discussing compensation.” Some of the benefits of making it easier for employees to discuss compensation outlined in the final rule include: helping the agency uncover compensation discrimination by means other than statistical analysis; alleviating the risk of “disruption, delay and expense associated with contract performances” for federal contractors who have pay secrecy practices and are subject to enforcement actions; and improving worker productivity. None of these benefits were quantified.
Under the rule, federal contractors would have to take multiple steps to ensure that employees are notified of the nondiscrimination provisions for discussing compensation (in certain instances). Contractors have to incorporate this new provision into their Equal Opportunity Clause for federal contracts and contract modifications, employee manuals or handbooks, and notifications to job applicants. The agency assumes that most Federal contractors can easily make these modifications to electronic documents and disseminate them widely to sub-contractors, employees, and prospective employees for very little cost.
Federal contractors are already required to auspiciously post the Equal Employment Opportunity Commission's EEO is the Law poster to inform employees of their nondiscrimination rights. The OFCCP stated that the poster will be updated to include the nondiscrimination provisions for discussing compensation; however, posting the EEO is the Law poster is not sufficient for meeting the other disclosure requirements in the rule. The fact that the EEOC has yet to update the electronic poster to include the new prohibition on discrimination based on sexual orientation and gender identity that took effect April 8, 2015 (the final rule was published on December 9, 2014) may suggest that revising an electronic document and posting it for public use may be more timely and costly than the OFCCP assumes.
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For more on OFCCP regulations, please see Lynn White's Engage article on the OFCCP's new sex discrimination guidelines.