Following President Obama’s 2014 Executive Order, the Office of Federal Contract Compliance Programs’ final rule on pay transparency took effect January 11, 2016.  Some highlights of the final rule include the following:

  • Federal government contractors cannot have policies that restrict employees (including non-supervisors and supervisors) from discussing their compensation.
    • An exception exists for employees who have access to compensation information of others as part of their essential job functions. Those employees cannot disclose the pay of others to people who do not have access to that information. For instance, a company could have an affirmative defense to claims for disciplining HR or IT professionals who had access to other employees’ compensation as part of their jobs could and disclosed it to individuals without such access.
    • Notably, compensation is broadly defined and includes, among other things, includes salary, wages, overtime, shift differentials, bonuses, commissions, benefits, stock options/awards , etc. As such, a policy that prohibits employees from discussing their year-end bonus would violate the rule.
  • Federal contractors must provide notice that it will not discriminate against applicants/employees for discussing their pay.
    • The specific language that must be used is available through an OFCCP poster. This language should be included in employee handbook.
    • Federal contractors should also include the nondiscrimination language in government contracts and subcontracts.

The OFCCP website include several resources for employers regarding the pay transparency rule, including FAQs, access to training webinars, and the OFCCP pay transparency fact sheet. Federal contractors should familiarize themselves with these materials, and update their policies and practices based on the new rule.