U.S. Department of Labor Proposes Improved Pay Transparency for Federal Contractor Employees

WASHINGTON—The U.S. Department of Labor’s Office of Federal Contract Compliance Programs announced a proposed rule that would prohibit federal contractors from maintaining pay secrecy policies. Under the terms of the proposal, federal contractors and subcontractors may not fire or otherwise discriminate against any employee or applicant for discussing, disclosing or inquiring about their compensation or that of another employee or applicant.

“Workers cannot solve a problem unless they are able to identify it. And they cannot identify it if they aren’t free to talk about it without fear of reprisal,” said OFCCP Director Patricia A. Shiu. “Pay transparency isn’t just good for workers. It’s good for business. Fairness and openness are great qualities for a company’s brand.”

President Obama signed Executive Order 13665 on April 8, instructing the secretary of labor to propose a rule within 160 days to require pay transparency among federal contractors. The proposed rule, currently available for public inspection, would amend the equal opportunity clauses in Executive Order 11246 to afford protections to workers who talk about pay. It would also add definitions for compensation, compensation information and essential job functions, terms which appear in the revised clauses. The proposal also establishes two types of defenses that contractors can use against allegations of discrimination under EO 13665.

The rule is published in the Federal Register and open for public comment for 90 days.