OFCCP Final Rule Promotes Pay Transparency

OFCCP Protects Workers from Discrimination Based on Compensation Inquiries, Discussions, or Disclosures

Effective January 11, 2016, Executive Order 13665 amends Executive Order 11246; covered federal contractors and subcontractors are now prohibited from discriminating against employees and applicants who choose to inquire about, discuss, or disclose their own compensation or the compensation of another employee or applicant (barring few exceptions).

Additionally, this new rule encourages pay transparency, so workers have a way to potentially discover violations of equal pay laws and can seek appropriate remedies.

The Final Rule to promote Pay Transparency includes the following:

• Defines key terms such as compensation (to include salary, wages, overtime pay, shift differentials, bonuses, commissions, vacation and holiday pay, allowances, insurance and other benefits, stock options and awards, profit sharing, and retirement), compensation information, and essential job functions as used in Executive Order 11246, as amended;

• Provides employers with two defenses to an allegation of discrimination: 1) a general defense, which could be based on the enforcement of a "workplace rule" that does not prohibit the discussion of compensation information; and, 2) an "essential job functions" defense;

• Requires covered federal contractors/sub-contractors to incorporate a non-discrimination provision into existing employee manuals or handbooks, and to disseminate the nondiscrimination provision by either electronic posting or by posting a copy of the provision in conspicuous places available to employees and applicants for employment;

• Requires contractors to revise the Equal Opportunity Clause in covered federal contracts/sub-contracts and purchase orders of a single contract/order in excess of $10,000 entered into or modified on or after January 11, 2016, to include a provision that prohibits discharge or discrimination against employees or applicants who inquire about, discuss, or disclose their compensation or the compensation of other employees or applicants;

• Requires contractors to post a newly created supplement to the "EEO is the Law" poster along with the current "EEO is the Law" poster that reflects all of the recent regulatory changes. (This interim supplemental posting must be used until the EEOC revises the existing "EEO is the Law" poster to reflect the new provisions).

In response to these recent changes, the Equal Employment Opportunity (EEO) Policy Statement should now include pay transparency by reference as a protected basis. For compliance purposes, this EEO Policy Statement should be signed by your designee and posted in areas visible to employees and applicants.

THOMAS HOUSTON has made the necessary updates to the EEO Policy Statement included in the AAP(s) prepared for our clients.

For additional information and FAQs regarding the final rule to promote Pay Transparency, visit the OFCCP website at http://www.dol.gov/ofccp/PayTransparency.html.