On April 8, President Obama took two executive actions that will impact federal contractors. First, the president signed an executive order (EO) that will require federal contractors to allow their employees to discuss their earnings with one another. Second, the president signed a presidential memorandum (PM) instructing the U.S. Secretary of Labor to issue new regulations requiring federal contractors to submit to the Department of Labor (DOL) data on compensation paid to their employees, including by sex and race.
The new EO applies to employers with federal and federally-assisted contracts and their subcontractors, as it amends EO 11246 with provisions allowing for the disclosure of employee compensation. According to the White House, the EO does not compel employees to discuss pay, nor does it require employers to publish or otherwise disseminate pay data. The EO protects the rights of employees to disclose not only their own compensation, but also that of “another employee or applicant.” While the National Labor Relations Board has long-interpreted the National Labor Relations Act as protecting the right of workers to discuss compensation, the EO now solidifies the interpretation. This does not apply to employees who have access to compensation information of other employee applicants as a part of such an employee’s essential job function, unless disclosure is required as part of a judicial procedure or federal agency investigation. The EO applies to contracts entered into on or after the effective date of rules issued by the Department of Labor (DOL) for the EO, a date for which is not specified.
In contrast, the PM applies only to federal prime contractors and subcontractors that perform work directly for federal agencies. The White House notes that it will allow DOL to use the data submitted to encourage compliance with equal pay laws and to “target enforcement more effectively by focusing efforts where there are discrepancies.” Federal contractors were previously required to complete a similar survey, which was put into place by DOL’s Office of Federal Contract Compliance Programs during the Clinton Administration. The tool was later rescinded during the Bush Administration. The PM requires DOL to issue a proposed rule within 120 days.
These presidential actions come on the heels of the president signing an executive order raising the minimum wage for federal contractor employees to $10.10 per hour.