President Obama proclaimed April 8th as “Equal Pay Day,” the symbolic day that women’s earnings catch up with men’s wages from the previous year. He then signed Executive Order 13665, “Non-Retaliation for Disclosure of Compensation Information” which prohibits federal contractors and subcontractors from retaliating against employees and job applicants who disclose, discuss or inquire about compensation.
As stated in the Executive Order, “When employees are prohibited from inquiring about, disclosing, or discussing their compensation with fellow workers, compensation discrimination is much more difficult to discover and remediate, and more likely to persist.”
The Obama administration would like equal pay to apply to all employers, not just federal contractors (on April 9, for example, the US Senate, considered but failed to pass a version of the Paycheck Fairness Act, which would have barred all employers - not just federal contractors - from punishing workers who share information about their pay). However, the administration is having greater success implementing fair pay within the federal contractor arena.
OFCCP's Pay Transparency NPRM
On September 17th, in response to the President’s Non-Retaliation Executive Order, the OFCCP published the Notice of Proposed Rulemaking (NPRM), “Government Contractors, Prohibitions Against Pay Secrecy Policies and Actions,” in the Federal Register. This NPRM will apply to federal contractors and subcontractors with contracts received after the date the final rule becomes effective and that exceed $10,000 in value. The OFCCP specifically seeks contractor feedback on how to disseminate the pay transparency information to applicants and employees via job applications, handbooks, manuals, and electronic or physical bulletin board postings. The public comment period is open through December 16, 2014.
The Pay Transparency NPRM quotes a variety of independent studies as well as statistics from the US Census and the Bureau of Labor Statistics (BLS) to bolster the assertion that “nondiscriminatory factors can explain some of the gender wage differences, but accounting for them does not eliminate the pay gap.” It also cites BLS data showing that the wage gap among female minorities is even higher (African American women earn 68 cents and Latina women earn 59 cents for every dollar earned by a non-Hispanic white man). One possibly contributing factor to the pay gap cited is the “prevalence of workplace prohibitions against discussing compensation,” since “employees will not have the information they need to assert their rights” under the law and obtain “legal redress.”
Leveling the Playing Field
Through the provisions of this NPRM, the OFCCP hopes to level the playing field for the 28 million estimated federal contractor and subcontractor employees in three significant ways:
First, by allowing human resource professionals, managers and employees to freely discuss compensation with each other and with OFCCP representatives, the agency hopes to gather additional corroboration and narrative evidence to support statistical findings of systemic compensation discrimination. The OFCCP has historically used statistical evidence to find support for the existence of compensation discrimination.
Second, by extending Title VII and anti-retaliation protections to discussions of compensation, the OFCCP hopes that employees will benefit from a more open, transparent culture.
Third, by ensuring that pay transparency is widely acknowledged and a part of a federal contractor’s established way of doing business, OFCCP hopes to effect lasting change. Language would be added to the equal opportunity clauses in contracts and subcontracts, and notification would be made to applicants and employees via written notifications, handbooks and manuals.
The OFCCP has published information about the proposed rule, including links to an OFCCP fact sheet and blogs about pay transparency. Contact ERS Group’s OFCCP Compliance Group for additional information about the proposed pay transparency rule.