On April 8, 2014, President Obama signed Executive Order 13665 to encourage greater pay transparency by prohibiting federal contractors and subcontractors from discharging or otherwise discriminating against their employees and job applicants for discussing, disclosing or inquiring about compensation.
On September 15, 2014, the OFCCP released a Notice of Proposed Rulemaking that, if adopted, will implement the mandates set forth in Executive Order 13665. According to the proposal, a "pay transparency rule" will cover federal contractors and subcontractors, as well as federally assisted construction contractors and subcontractors, that hold a contract or contracts exceeding an aggregate value of $10,000 in a 12-month period entered into – or modified on or after – the rule's effective date.
The proposal offers two defenses to the prohibition against "pay secrecy" rules. The first defense generally permits (with some exceptions) covered entities to discipline an employee who, as part of his or her essential job functions, has access to the compensation information of other employees or applicants, and the employee discloses such compensation information to individuals who do not otherwise have access to it. This defense was provided with human resource (HR) personnel in mind.
The second defense protects employers from liability when the employer takes action against an employee for violating legitimate workplace rules while engaging in otherwise permitted "compensation" discussions.
The public has until December 16, 2014 to submit written comments to the OFCCP regarding the proposal.