On Monday, January 11, the OFCCP hosted a webinar to review the final rule regarding pay transparency, which went into effect on the same day, January 11, 2016. The final rule implements Executive Order 13665, which ensures that employees and applicants of federal contractors and subcontractors are able to freely discuss pay without fear of retaliation. The hope is that this will, in turn, help promote pay transparency.
To remain in compliance with the new regulations, contractors must make a few minor adjustments to items that should already be in place:
- Update the equal opportunity clause included on your contracts and purchase orders to include the provision which prohibits employers from discriminating against employees or applicants who discuss or inquire about pay. This only applies if you utilize the entire equal opportunity clause. If you use the shortened version which incorporates EO 11246 by reference, then you do not need to change anything.
- Define “compensation,” “compensation information,” and “essential job function” with respect to your organization
- Incorporate the new pay transparency provision into your employee handbooks and other materials, including the policy statement in your affirmative action plan as well as on the company website (a PDF of the verbiage can be found here: http://www.dol.gov/ofccp/pdf/EO13665_PrescribedNondiscriminationPostingLanguage_JRFQA508c.pdf).
- Post the EEO is the Law poster and supplement (http://www.dol.gov/ofccp/regs/compliance/posters/ofccpost.htm) in a conspicuous place within your organization.
Along with the black-and-white aspects of the final rule, the webinar also covered some grey areas concerning defenses a contractor can take with regard to discipline of an employee who discusses pay. Several hypothetical scenarios were introduced to illustrate these potential defenses. While each situation is different and there many nuances that may shift a scenario from ‘defensible’ to ‘indefensible,’ there are two rules to determine whether the contractor is justified in its disciplinary decision. First, the contractor must show that the employee had access to compensation information as a part of their essential job functions. Second, they must show that the employee disclosed the information to people who didn’t have access to it. If these two criteria are met, the contractor can make the argument that the employee disclosed confidential information and take whatever action they deem necessary. However, it doesn’t mean that the employer will always win that argument.
Again, given the nuance of all of the possible scenarios, it can be hard to determine whether a contractor will be justified in whatever disciplinary action it takes against an employee who discusses pay. The bottom line is that the final rule, while it seems to be more focused on the rights of the employee, also takes the concerns of the contractor into account, as the OFCCP recognizes that confidentiality of employee information is a primary concern for most employers.
Pay transparency is not a new concept. More than 80 years ago in 1935, the National Labor Relations Act was signed into law, protecting the rights of employees to, among other things, “engage in other concerned activities for the purpose of collective bargaining,” which by inference means that employees can discuss pay. However, the present rule not only places more emphasis on the fact that employees can discuss pay freely, it outlines specific provisions which should help both the employee and employer understand their respective rights regarding the discussion of such a sensitive topic.
To read more about the final rule, as well as access the pay transparency provision and EEO is the Law poster and supplement, please visit http://www.dol.gov/ofccp/PayTransparency.html, and the Frequently Asked Questions section of the OFCCP website (http://www.dol.gov/ofccp/regs/compliance/faqs/PayTransparencyFAQs.html).
Lastly, due to high demand, the Office of Federal Contract Compliance Programs (OFCCP) will host a second public webinar on January 28, 2016, on its final rule promoting pay transparency. 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 January 28, 2016 webinar introducing the general requirements of the OFCCP final rule on pay transparency at:
https://dolevents.webex.com/dolevents/onstage/g.php?MTID=e0dba28c08d053114706380b4940399ac