On April 8, 2014, President Obama signed a new Executive Order prohibiting federal contractors from discriminating or retaliating against employees who discuss their compensation.  On the same date, President Obama also issued a Presidential Memorandum directing the Secretary of Labor to issue new rules governing the collection of summary compensation data from federal contractors. 

New Executive Order Similar to Proposed Fair Paycheck Act

These recent actions by the President came nearly a month after he signed Executive Order 13658, which raised the minimum rate of pay for employees of federal contractors as explained here.  The requirements in the new Executive Order are similar to a portion of the proposed Fair Paycheck Act, a bill which has been stalled in Congress for years and has little chance of passing a GOP-controlled House of Representatives.

Specifically, the new Executive Order, entitled “Non-Retaliation and Disclosure of Compensation Information,” will amend EO 11246 by adding the following new paragraph:

“The contractor will not discharge or in any other manner discriminate against any employee or applicant for employment because such employee or applicant has inquired about, discussed, or disclosed the compensation of the employee or applicant or another employee or applicant. This provision shall not apply to instances in which an employee who has access to the compensation information of other employees or applicants as a part of such employee’s essential job functions discloses the compensation of such other employees or applicants to individuals who do not otherwise have access to such information, unless such disclosure is in response to a formal complaint or charge, in furtherance of an investigation, proceeding, hearing, or action, including an investigation conducted by the employer, or is consistent with the contractor’s legal duty to furnish information.”

These requirements are effective immediately and will be applicable to all contracts entered into on or after the effective date of implementing regulations, which the Secretary of Labor has been instructed to propose within 160 days.  The impact is not as great as it might seem, though, as non-supervisory employees of private employers already enjoy similar protection under the National Labor Relations Act.

New Summary Compensation Data Collection Tool Coming

On the same day he signed the Executive Order, the President also issued a Memorandum entitled, “Advancing Pay Equality Through Compensation Data Collection.”  The Memorandum directs the Secretary of Labor to propose rules that will require federal contractors and subcontractors to submit summary compensation data, including data by sex and race, to the DOL, similar to what federal contractors must currently disclose during compliance reviews by OFCCP.  The data submitted will be analyzed by OFCCP in an effort to identify and remedy discriminatory pay practices by federal contractors.  Notably, the development of a new summary compensation data collection tool is something that OFCCP has already been working on for the past several years.

These two recent developments confirm this Administration’s emphasis on closing the perceived “pay gap” between men and women workers and signal the President’s willingness to exercise his executive authority when he has been unable to convince Congress to pass new legislation.