On September 11, the U.S. Office of Federal Contract Compliance Programs (OFCCP) issued its implementing , which prohibits federal contractors from discriminating against employees and applicants who ask about or discuss compensation. The regulations are effective January 11, 2016.
Which contractors are covered?
The pay transparency requirements will apply to all contractors and subcontractors covered by the non-discrimination and affirmative action provisions of Executive Order 11246, including contractors who are not required to develop written Affirmative Action Plans. Thus, an organization that meets the criteria will be covered if it:
鈥 Has a single federal contract, subcontract, or federally assisted construction contract worth more than $10,000, or
鈥 Has federal contracts or subcontracts that, combined, are worth more than $10,000 in any 12-month period, or
鈥 Has government bills of lading, or
鈥 Serves as a depository of federal funds, or
鈥 Is an issuing and paying agency for U.S. savings bonds and notes in any amount.
The Final Rule will apply to contracts entered into or modified on or after January 11, 2016. Contracts are considered 鈥渕odified鈥 if there is any alteration in their terms and conditions, including supplemental agreements and extensions.
What conduct is protected?
Employees cannot be disciplined for asking about or discussing their own or other employees鈥 pay and benefits, and applicants cannot be discriminated against for asking about or discussing employees鈥 compensation. Specifically, the Equal Opportunity Clause is revised to include the following language:
鈥淭he contractor will not discharge or in any manner discriminate against any employee or applicant for employment because such employee or applicant has inquired about, discussed, or disclosed the compensation of the employee or applicant or another employee or applicant鈥︹
This non-discrimination provision does not apply if the employee has access to the employer鈥檚 compensation information as part of his or her job responsibilities. The following language is also included in the revised Equal Opportunity Clause:
鈥淭his provision shall not apply to instances in which an employee who has access to the compensation information of other employees or applicants as part of such employee鈥檚 essential job functions discloses the compensation of such other employees or applicants to individuals who do not otherwise have access to such information, unless such disclosure is in response to a formal complaint or charge, in furtherance of an investigation, proceeding, hearing, or action, including an investigation conducted by the employer, or is consistent with the contractor鈥檚 legal duty to furnish information.鈥
The OFCCP modified its proposed definition of 鈥渆ssential job functions鈥 in a way that benefits contractors. Under the proposed definition, a contractor would have violated the provision if it had disciplined an employee who had authorized access to compensation information but such access was not a 鈥渇undamental鈥 part of the employee鈥檚 job responsibilities. Heeding concerns from the contractor community, the Final Rule defines a job function as essential if:
(i) the access to compensation information is necessary in order to perform that function or another routinely assigned business task; or
(ii) the function or duties of the position include protecting and maintaining the privacy of employee personnel records, including compensation information.
Thankfully, the OFCCP recognized that the main issue is whether an employee has authorized access to compensation information, rather than the importance of that access in performing the job.
How is "compensation" defined?
鈥淐辞尘辫别苍蝉补迟颈辞苍鈥 is defined as 鈥渁ny payments made to, or on behalf of, an employee or offered to an applicant as remuneration for employment, including but not limited to 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.鈥
鈥淐ompensation information鈥 is defined as 鈥渢he amount and type of compensation provided to employees or offered to applicants, including, but not limited to, the desire of the contractor to attract and retain a particular employee for the value the employee is perceived to add to the contractor鈥檚 profit or productivity, the availability of employees with like skills in the marketplace; market research about the worth of similar jobs in the relevant marketplace; job analysis, descriptions, and evaluations; salary and pay structures; salary surveys; labor union agreements; and contractor decisions, statements and policies related to setting or altering employee compensation.鈥
Do contractors have any defenses to claims alleging retaliation for discussing compensation?
Yes, as long as the defense is not based on a policy that prohibits, or tends to prohibit, employee or applicants from discussing compensation. A contractor can take advantage of this defense by showing that it has consistently and uniformly disciplined similarly situated employees.
In addition, the 鈥渆ssential job functions defense鈥 鈥 which the OFCCP describes as a 鈥渃omplete defense鈥 鈥 provides protection to contractors who take adverse action against an employee who has access to compensation information and discloses the information to individuals who do not otherwise have access to it. However, the employee鈥檚 disclosure would still be protected if it was 鈥渋n response to a formal complaint or charge, in furtherance of an investigation, proceeding, hearing, or action, including an investigation conducted by the contractor, or is consistent with the contractor鈥檚 legal duty to furnish information.鈥
Are contractors required to provide any notice to applicants or employees?
Contractors must use language prescribed by the OFCCP in notifying applicants and employees of their rights. This mandatory language must be included in existing employee handbooks or other manuals, and must be posted electronically or in conspicuous places. The OFCCP will also be updating the 鈥淓EO is the Law鈥 poster to include this notice. Presumably, this required language and the updated poster will be provided before the January 11, 2016, effective date.
Editor鈥檚 Note: The content of this article was contributed by , a partner with the law firm of Constangy, Brooks, Smith & Prophete, LLP. This information should not be relied upon as legal advice.
澳门六合彩开奖预测 submitted on the in December of 2014. 澳门六合彩开奖预测鈥檚 comments asked OFCCP to implement compliance requirements that are simple and non-burdensome for construction contractors. Specifically, 澳门六合彩开奖预测 requested that OFCCP eliminate any management training requirements listed in the proposed rule. 澳门六合彩开奖预测 also suggested that OFCCP revise the current Federal Poster to include language associated with this rule and allow contractors to post the new poster in lieu of the policy dissemination requirements proposed. OFCCP accepted 澳门六合彩开奖预测鈥檚 suggestion to eliminate the management training requirements altogether, as well as the request to revise the Federal Poster. However, OFCCP declined to allow the use of the Federal Poster in lieu of the dissemination policies.
Additionally, 澳门六合彩开奖预测 asked OFCCP to insert language into the final rule that would eliminate risks to prime contractors and project efficiency when subcontractors and vendors are removed for noncompliance. OFCCP declined to implement those requests.