OFCCP Releases Final Rule on Federal Contractor Pay Transparency

On September 11, the Office of Federal Contract Compliance Programs (OFCCP) issued a final rule regarding Executive Order 13665. The Executive Order was signed by President Obama on April 8, 2014, and was designed to increase pay transparency among federal contractor employees and job applicants. The final rule applies to all contractors that are already covered by Executive Order 11246 (the 1965 order by President Lyndon Baines Johnson that established anti-discrimination rules for federal contactors), and will be effective for contracts entered into or modified after January 11, 2016.

The Final Rule specifically states that employees or applicants cannot be discriminated against for discussing, disclosing, or asking about compensation. Information about salary or wage levels, overtime, bonuses, commissions, paid time off, and insurance benefits would all fall under the category of “compensation.”

Coming at the heels of the Lilly Ledbetter Fair Pay Act, the Executive Order was explicitly designed to try to close pay gaps due to gender and race. Employees or applicants who believe they have been discriminated against will be able to file a discrimination complaint with OFCCP.

Notably, the final rule doesn’t apply to employees who have access to compensation information about other employees or applicants in order to perform essential job functions. In other words, a Human Resources employee might still be fired for disclosing information about another employee’s salary without a legitimate business reason to do so.

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