New Pay Transparency Rule for Federal Contractors

5537915034_c8ec2c3f47_zDoes your company have a policy that prevents your employees from discussing or disclosing their own pay or the pay of their co-workers? If you are a federal contractor or subcontractor, you better be aware of the new pay transparency rule that takes effect on January 11, 2016.

This new rule comes from the Office of Federal Contract Compliance Programs (OFCCP) of the U.S. Department of Labor.

Prohibiting pay secrecy policies and promoting pay transparency helps address the persistent pay gap for women — which remains at 23 cents for every dollar earned by men — and provides employers access to a diverse pool of qualified talent. That is why the U.S. Department of Labor today issued a commonsense rule that finally lifts the veil on pay for employees of federal contractors and subcontractors. – Michael Trupo, US Dept. of Labor

Under this new rule, federal contractors and subcontractors are prohibited from firing or discriminating against employees for “discussing, disclosing, or inquiring about their own pay or that or their co-workers.” This rule also applies to discussions about pay with job applicants.

Job applicants and employees of federal contractors and subcontractors who believe they have been fired or subjected to discrimination for discussing, disclosing or inquiring about their own pay or the pay of others will be able to file a discrimination complaint with the OFCCP.

Pay secrecy practices will no longer facilitate the pay discrimination that is too often perpetrated against women and people of color in the workplace. Indeed, forward thinking companies that have embraced greater transparency find that it benefits them and their workforce by helping them attract and retain talented workers. And research suggests these approaches have a substantially positive impact on society, workers, the workforce, and the economy as a whole. – OFCCP Director Patricia Shiu

What Steps Should You Take?

 This new rule requires federal contractors to incorporate a nondiscrimination provision / pay transparency provision into their existing employee manuals or handbooks and provide a copy of the nondiscrimination / pay transparency provisions to employees and job applicants.

Make sure to update your employee manuals or handbooks with the information required by this new pay transparency / nondiscrimination rule and provide a copy to your employees. You should also update your job application materials. Please feel free to contact us for suggestions on how to incorporate these required updates into your manuals, handbooks and job application materials.

Employer Defenses

The new pay transparency rule provides employers with two defenses to allegations of discrimination:

  1. Enforcement of another workplace rule that does not prohibit the discussion of pay information; and
  2. An essential job functions defense

You can learn more about the new pay transparency rule here.


Share this: