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OBAMA ADMINISTRATION CONTINUED TO ADD MORE OBLIGATIONS ON FEDERAL CONTRACTORS WITH NEW PAY TRANSPARENCY REGULATIONS

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Stymied by a Republican led Congress, the Obama Administration has demonstrated its willingness and ability to use the pen to enact its liberal agenda through executive and agency action.  In the past few years alone, the Administration has raised the minimum wage for federal contractors to $10.10 (Executive Order 13658), prohibited federal contractors from discriminating on the basis of sexual orientation or gender identity (Executive Order 13672), and pushed through new OFCCP rules requiring federal contractors to track and record disability and veteran status information for applicants and new hires.

The Administration has now introduced new pay transparency regulations through Executive Order 13655 which was signed by President Obama on April 8, 2014.  This executive order prohibits federal contractors and subcontractors from discriminating against employees who discuss their compensation or the compensation of their fellow employees and is designed to promote equal pay for women and people of color by promoting pay transparency.  Specifically, the Final Rule "prohibit[s] Federal contractors from discharging or discriminating in any way against employees or applicants who inquire about, discuss, or disclose their own compensation or the compensation of another employee or applicant."  There are certain exceptions such as for employees who obtain this information during the course of the essential job functions such as in HR or payroll.

The Final Rule only applies to contracts entered into or modified on or January 11, 2016 in excess of $10,000 but covered federal contractors should get a jump start on the new obligations.  Under the new rules, a federal contractor must post the attached pay transparency poster either electronically or in conspicuous places.  They must also incorporate the attached prescribed nondiscrimination provision into its existing employee manuals or handbooks and disseminate the nondiscrimination provision to employees and to job applicants.

Most employers probably do not have such policies preventing non-supervisory employees from discussing their compensation as they have been harshly scrutinized by the NLRB.  However this new final rule on pay transparency covers supervisors as well as non-supervisory employees so covered federal contractors may need to revisit its policies in this regard in addition to complying with the new posting and disclosure requirements.

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