Order Prohibits Retaliation for Disclosing Compensation Information

President Obama today signed an Executive Order prohibiting federal contractors from retaliating against employees who choose to discuss their compensation. The order is designed to promote economy and efficiency in federal procurement and to reinforce the civil rights laws that prohibit discriminatory practices with respect to compensation. According to a White House fact sheet, this E.O. provides “a critical tool to encourage pay transparency, so workers have a potential way of discovering violations of equal pay laws and are able to seek appropriate remedies.” Ensuring that contractor employees can discuss their compensation without fear of retaliation will enhance the ability of contractors and their employees to detect and remediate unlawful discriminatory practices, which will contribute to a more efficient federal contracting marketplace.

This order amends Section 202 of E.O. 11246, Equal Employment Opportunity, by adding a new paragraph that prohibits a contractor from discharging or discriminating against any employee (or applicant for employment) because the employee inquired about, discussed, or disclosed his or her compensation to another employee. The order requires the Secretary of Labor to propose implementing regulations within 160 days. The order is effective immediately and applies to contracts entered into on or after the effective date of the rules promulgated by the Department of Labor.

Also today, the White house released a Presidential Memorandum to the Secretary of Labor that directs the Secretary, within 120 days, to propose a rule that would require contractors and subcontractors to submit to DOL summary data on the compensation paid their employees, including data by sex and race. The rule should maximize efficiency and effectiveness by enabling DOL to direct its enforcement resources toward entities for which reported data suggest potential discrepancies in worker compensation. The rule should also minimize, to the extent feasible, the burden on contractors and subcontractors, in particular small entities. The collected data will be used to encourage greater voluntary compliance by employers with federal pay laws and to identify and analyze industry trends.

About George Gullo

George Gullo is an attorney editor in the Government Contracts group at Wolters Kluwer Law and Business. George serves as the principal editor of Cost Accounting Standards Guide and supports all of the group’s print and electronic publications, as well as legal research tools, including the Government Contracts Reporter, Board of Contract Appeals Decisions, and the FAR and DFARS Matrix Smart Charts. With more than 20 years experience in the legal publishing industry, including over 10 years in the government contracts area, George also has a background in legal and business transactions. He is a graduate of DePaul University College of Law and a licensed Illinois attorney.
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