The U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) announced a Notice of Proposed Rulemaking (NPRM) to prohibit pay secrecy policies and actions by covered Federal contractors and subcontractors (“Contractors”). The NPRM seeks to implement Executive Order 13665, signed by President Obama earlier this year, by proposing to prohibit pay secrecy policies and practices.

The proposed rule would amend the Equal Opportunity Clause of Executive Order 11246, that requires certain information be included in Federal contracts and subcontracts, by mandating the inclusion of a requirement that Contractors refrain from discharging, or otherwise discriminating against, employees or applicants who inquire about, discuss, or disclose their compensation or the compensation of other employees or applicants. The nondiscrimination provision would also need to be incorporated in the Contractor’s employee manuals or handbooks and be disseminated to employees and applicants.

Although a Contractor’s workforce may be subject to the protections of the National Labor Relations Act (“NLRA”), which prohibits employers from discriminating against employees and job applicants who discuss or disclose their own compensation or the compensation of other employees or applicants, the NPRM seeks to expand the protection to include supervisors, managers and activity that may not be “concerted” under the NLRA.  It would also provide an affirmative defense for Contractors, if 1) the adverse action taken was to enforce a rule that does not prohibit or tend to prohibit employees or applicants from discussing or disclosing their compensation or the compensation of other employees or applicants or 2) if the employee asserting an adverse action had access to the compensation information of other employees or applicants as part of that employee’s essential job functions, and the disclosure of compensation information was not in response to a formal complaint or charge, or in furtherance of an internal or external investigation. 

“Compensation” would be defined to align with the types of information OFCCP relies on when conducting compensation discrimination investigations, and would include “payments made to an employee, or on behalf of an employee, or offered to an applicant as remuneration for employment, including but not limited to salary, wages, overtime pay, shift differentials, bonuses, commissions, vacation and holiday pay, allowances, insurance and other benefits, stock options and awards, profit sharing and contributions to retirement.” 

The NPRM was published in the Federal Register on September 17, 2014 and is open for comment for 90 days.