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.

Webinar Invitation: OFCCP'S Final Rule on Prohibiting Pay Secrecy Policies

OFCCP’s Final Rule on Pay Transparency Takes Effect January 11, 2016

The Office of Federal Contract Compliance Programs (OFCCP) will host a public Webinar on January 11, 2016, the effective date for its final rule promoting pay transparency. The final rule amends the existing regulations that implement Executive Order 11246, and helps renew the promise of equal pay for equal work for millions of applicants and employees of covered federal contractors and subcontractors. The final rule will provide these workers with a way to safely discuss their pay, identify potential pay disparities, and seek timely remedies for unwarranted disparities in pay.

During the Webinar, presenters from OFCCP’s Division of Policy and Program Development and the Department’s Office of the Solicitor will provide an overview of the final rule, address questions received by the agency since the rule’s September publication, and illustrate the practical application of defenses provided in the rule through several hypothetical scenarios. 

Register for the Webinar at https://dolevents.webex.com/dolevents/onstage/g.php?MTID=ed75f4ff0dcf77fb3886cf540d39ec598.

OFCCP Announces a Final Rule to Promote Pay Transparency

In too many workplaces around the country, women and people of color don’t know what their counterparts are earning for the same work. A culture of secrecy prevents them from finding out if they are being discriminated against in time to act on it. Lilly Ledbetter learned, only after decades at her job, that she had been paid less than her male counterparts. Her company’s policy forbidding her from discussing pay with co-workers prevented her from getting the information she needed to bring a complaint in time. The Lilly Ledbetter Fair Pay Restoration Act, the first piece of legislation signed by President Obama in 2009, helped people like her more effectively challenge unequal pay. However, pay secrecy policies still stand in the way of the fundamental principle of equal pay for equal work. If one of Lilly Ledbetter’s co-workers had simply been able to tell her about the discrimination that was taking place, she would have been better able to act in time to exercise her workplace rights. Indeed, the ability of workers to share information and effectively organize for their rights is a cornerstone of building an economy that works for everyone. Promoting pay transparency by prohibiting pay secrecy policies helps make the federal contractor workforce more efficient. Pay transparency helps level the playing field for women and people of color, and provides employers access to a diverse pool of qualified talent.

We know that Lilly Ledbetter’s case was not unique. Despite the existence of laws protecting workers from gender-based compensation discrimination for more than five decades, a pay gap between men and women persists today. Assuming that she works every year between ages 25 and 65, the typical woman will have lost $420,000 over her working lifetime because of the earnings gap, based on median annual earnings for full-time, year-round workers at age 25 and above in 2013. In addition to a wage gap between men and women, the research reveals a wage gap amongst various racial groups. At the beginning of 2015, median weekly earnings for African-American men working at full-time jobs totaled $680 per week - only 76 percent of the median for white men, who earned $897 per week. The median weekly earnings for African-American women equaled $611 per week, or 68 percent of the median for white men. When employees and applicants are prohibited from inquiring about, disclosing, or discussing their compensation with other workers, compensation discrimination is much more difficult to discover and remediate, and more likely to persist.

That is why, in 2014, President Obama issued Executive Order 13665, promoting pay transparency and openness, making it possible for workers and job applicants to share information about their pay and compensation without fear of discrimination. On September 10, 2015, the Department of Labor issued a Final Rule implementing that order. This Final Rule takes effect on January 11, 2016, 120 days after its publication in the Federal Register, and amends the existing regulations that implement EO 11246.
 
The Final Rule amends the EO 11246 implementing regulations by:

• Requiring that certain information be included in covered federal contracts and subcontracts. The Final Rule requires that the equal opportunity clause included in covered federal contracts and subcontracts be amended to include that federal contractors and subcontractors must 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. An exception exists where the employee or applicant makes the disclosure based on information obtained in the course of performing his or her essential job functions;

• Requiring that federal contractors incorporate a prescribed nondiscrimination provision into their existing employee manuals or handbooks and disseminate the nondiscrimination provision to employees and to job applicants;

• Defining key terms such as compensation, compensation information, and essential job functions as used in EO 11246, as amended; and

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

The Final Rule is effective January 11, 2016 and applies to all new contracts over $10K.  The FAQ section provides additional insight and details on this final rule.

Read the Final Rule and Executive Orders
•    Read the Final Rule
•    Read Executive Order 13665
•    Read Executive Order 11246

Source: Office of Federal Contract Compliance Programs (OFCCP)