Pay Transparency Nondiscrimination – Executive Order 13665

Most employees and job applicants use discretion when it comes to talking about salary. It used to be considered “impolite” to talk about pay with co-workers and others, with some companies even implementing policies prohibiting these conversations.

Not anymore. Effective January 11, 2016, it is now unlawful for federal contractors to discriminate again applicants or employees who inquire about, discuss or disclose pay or compensation.

The U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) published the Executive Order 13665 Final Rule. Intended to promote pay transparency and openness, it prohibits covered federal contractors and subcontractors from discriminating against employees and job applicants who choose to inquire about, discuss or disclose their own compensation or the compensation of another employee or applicant (including wages, overtime pay, bonuses, sift differentials, etc.).  It does not require employers to provide employees or job applicants with information about the pay of other employees or applicants; it is simply a protection for employees and applicants who choose to ask about or discuss this information.

An addition to the Lilly Ledbetter Fair Pay Restoration Act, OFCCP’s pay transparency protection covers employees and job applicants of companies with over $10,000 in federal contracts or subcontracts that are entered into or modified on or after January 11, 2016. Workers protected by OFCCP can include employees at banks, meat packing plants, retail stores, information technology business, constructions companies and many others.

Employers subject to this new order are already included in Executive Order 11246, which prohibits federal contractors and subcontractors from discriminating based on race, color, religion, sex, sexual orientation, gender identity and national origin. So if your company is covered under that order, you are also subject to 13665.

What Does This Mean to You?

Every business covered by Executive Order 13665 is required to post the Pay Transparency Nondiscrimination Provision and include it in its employee manuals and handbooks. At a minimum, employers must use the language provided in the nondiscrimination provision, which reads:

PAY TRANSPARENCY NONDISCRIMINATION PROVISION 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.

This posting can be done electronically or by displaying a hard copy in conspicuous places available to employees and applicants. Employers must also incorporate this language into their existing manuals or handbooks.

The DOL provides a formatted and unformatted version of the provision on its website. Again, employers must at a minimum use the unformatted version provided to the DOL.

More information regarding compliance programs for federal contractors and subcontractors can be found on the Office of Federal Contract Compliance Programs website.

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