E.O. 13665 Non-Retaliation for Disclosure of Compensation Information (Pay Transparency)

Date: 1/11/16
Title: E.O. 13665 Non-Retaliation for Disclosure of Compensation Information (Pay Transparency)

Today, January 11, 2016 the final rule implementing Executive Order 13665, otherwise known as Pay Transparency, goes into effect.  Even though the E.O. is now effective, it does not impact government contractors until they enter into a new or modified contract of $10,000 or more.

The following are highlights of the rule.

Overview

E.O. 13665 amends E.O. 11246 and the Equal Opportunity Clause to prohibit policies and practices which prevent applicants and employees, including supervisors and managers, from inquiring about, discussing or disclosing their pay or that of other employees or applicants.  Contractor’s employees are not required to disclose information about pay; however, if they chose to do so, you cannot fire or discipline them or job applicants for addressing pay with 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 (see defenses below).

Coverage

Applies to any business or organization that (1) holds a single federal contract, subcontract, or federal assisted construction contract in excess of $10,000; (2) has federal contracts or subcontracts that have a combined total in excess of $10,000 in any 12-month period; or (3) hold government bills of lading, serves as a depository of federal funds, or is an issuing and paying agency for U.S. savings bonds and notes in any amount. 

Compensation Information – refers to the amount and type of compensation given to employees and applicants and includes:

  • Salary and pay structures
  • Market research studies/salary surveys
  • Job analyses
  • Job descriptions
  • Performance evaluations
  • Policies related to setting or altering compensation
  • Decisions or statements regarding pay

Compensation Defined – any payments made to an employee, or on behalf of an employee, or offered to an applicant, including:

  • Salary
  • Wages
  • Overtime pay
  • Bonus
  • Commission
  • Vacation/holiday pay
  • Allowances
  • Insurance & other benefits
  • Stock options and awards
  • Profit sharing and retirement

Contractor Defenses

Examples of these rules are provided in the OFCCP material with links below.

  1. “Essential job functions” – A job function may be considered essential if: (a) the access to compensation information is necessary in order to perform that function or another routinely assigned business task; or (b) the function or duties of the position include protecting and maintaining the privacy of employee personnel records, including compensation information.
  2. “Workplace rule” -  if the adverse action against the employee was for violating a consistently and uniformly applied workplace rule that does not prohibit, or tend to prohibit, employees and applicants from discussing or disclosing their compensation or compensation of other employees or applicants.

Action Items

  1. Ensure that your E.O. includes either a reference to E.O. 13655, all the language in E.O. 11246, Subpart B, Section 202, or includes a provision prohibiting contractors from discharging, or in any manner discriminating against, any employee or applicant for employment because the employee or applicant inquired about, discussed, or disclosed the compensation of the employee or applicant or another employee or applicant.
  2. Until the EEO is the Law poster is updated, post the OFCCP supplement to the EEO is the Law poster on the careers page of your website, on all bulletins, and intranet to be communicated to employees and applicants. 
  3. Disseminate the Pay Transparency Nondiscrimination Provision to employees and applicants – must be included in employee handbooks or manuals and posted on any physical bulletin boards or electronically.  Post on your careers page of your website to communicate to applicants.  The statement cannot be substantially modified. 

Refer to our previous compliance update: http://www.workplace-dynamics.com/News/Newsdetails.php?newsID=116

FAQ - http://www.dol.gov/ofccp/regs/compliance/faqs/PayTransparencyFAQs.html

Fact Sheet - http://www.dol.gov/ofccp/pdf/OFCCPPaySecrecyFactSheetKnowYourRights_ES_QA_508c.pdf

 


Disclaimer: The foregoing has been prepared for the general information of clients and friends of Workplace Dynamics LLC and is not being represented as being all-inclusive or complete. It has been abridged from legislation, administrative ruling, agency directives, and other information provided by the U.S. Department of Labor. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel.