Beginning on January 11, 2016, Federal contractors and subcontractors will be bound by new pay transparency rules. Stemming from Executive Order 13665, these regulations will apply to companies that sign new or modified Federal contracts or subcontracts over $10,000 on or after January 11, 2016.

Here are the new requirements in a nutshell:

  • Policies and practices that discourage free and open discussion of pay are now prohibited
  • Applicants and employees can freely discuss pay without fear of retribution by their company
  • A new policy must be posted where all employees and applicants can see it, including employee handbooks, employment law posters, and electronic postings where applicable
  • Covered employers must adopt Pay Transparency Policy (exact wording below)
  • An updated “EEO is the Law” poster supplement must be posted with the original notice

In addition to eliminating any policies that restrict employee discussion of compensation information, covered employers will need to adopt the following policy and post it in the places noted above:

PAY TRANSPARENCY POLICY STATEMENT

The contractor will not discharge or in any other manner discriminate against employees or applicants because they have inquired about, discussed, or disclosed their own pay or the pay of another employee or applicant. However, employees who have access to the compensation information of other employees or applicants as a part of their essential job functions cannot disclose the pay of other employees or applicants to individuals who do not otherwise have access to compensation information, unless the disclosure is (a) in response to a formal complaint or charge, (b) in furtherance of an investigation, proceeding, hearing, or action, including an investigation conducted by the employer, or (c) consistent with the contractor’s legal duty to furnish information.

Not every employee may discuss compensation freely. Specifically, companies may still have policies that restrict the sharing of compensation information by employees who have information about pay and compensation as part of their essential job functions. For example, a payroll administrator or supervisor who has responsibility for pay information may not release the compensation information of others. 

Executive Order 13665, also called Non-Retaliation for Disclosure of Compensation Information, was designed to open up the lines of communication between employees and applicants about compensation and benefits with the goal of reducing the wage gap for women and minorities and supporting equal pay for equal work.  These pay transparency rules will be enforced by the OFCCP. 

For more information see: https://www.dol.gov/ofccp/PayTransparency.html