By Dennis Mulgrew and Laurie Holmes
As we’ve previously covered here, on April 8, 2014 President Obama signed Executive Order 13665 (“Non-Retaliation for Disclosure of Compensation Information), at an event commemorating National Equal Pay Day, an annual public awareness event that aims to draw attention to the gender wage gap. On September 10, 2015, the Department of Labor’s Office of Federal Contract Compliance Programs (“OFCCP”) announced the Final Rule implementing the Order, which will take effect on January 11, 2016.
In its press release announcing the Final Rule, the DOL highlighted its intent to specifically address the gender pay gap, stating that “a culture of secrecy keeps women from knowing that they are underpaid, and makes it difficult to enforce equal pay laws. Prohibiting pay secrecy policies and promoting pay transparency helps address the persistent pay gap for women . . .”
The Final Rule seeks to promote pay transparency by, among other things:
- Revising the Equal Opportunity Clause included in covered federal contracts to include a provision prohibiting employers from discriminating against employees or job applicants for discussing or disclosing their or their co-workers’ compensation;
- Requiring covered contractors to notify employees and applicants of these nondiscrimination protections in existing policies;
- Enabling employees and job applicants who believe they have been discriminated against for discussing or inquiring about pay to file discrimination complaints with the OFCCP.
The Final Rule outlines two defenses that a contractor may assert where a violation of the nondiscrimination requirement is alleged. The first is a “general defense” that the contractor “disciplined the employee for violation of a consistently and uniformly applied company policy . . . [which] does not prohibit, or tend to prohibit, employees or applicants from discussing or disclosing their compensation or the compensation of other employees or applicants.” The second is the “essential job functions” defense, which essentially permits a contractor to take action against an employee (such as a Human Resources Director) whose job duties and functions necessarily entail access to compensation information, and who discloses such information other than in response to a formal complaint, charge, investigation, or proceeding.
The Obama administration has in the past few years issued multiple orders or memoranda to accelerate change in employment-related areas it believes are within the authority of the Executive Branch, without the need for legislation. As described in more detail here, there is an often lengthy rule-making process required for these mandates to become effective law, but the DOL is close to (or has) announced Final Rules on many of the administration’s proposals. Accordingly, employers should be aware that many of the prospective regulatory changes discussed in the past few years are, in the near future, set to become reality.