Labor Department Issues Rule Allowing Federal Contractors to Discuss Salaries

By on September 10, 2015 in Pay & Benefits with 3 Comments

Image of a pay check

A new Department of Labor regulation allows federal contractors to discuss and inquire about their own pay or that of their co-workers without fear of being fired.

Most federal employees are comfortable knowing at least the GS (General Schedule) level of their co-workers and bosses, even if they may not know their actual exact pay, but the same is not true for employees in the private sector.

For many employees, knowing the salaries of co-workers or even disclosing their own pay to other employees can be grounds for termination, so the change for federal contractors will be a culture shock.

Under the new rule to be enforced by the DOL’s Office of Federal Contract Compliance Programs, federal contractors and subcontractors may not fire or discriminate against employees for discussing, disclosing, or inquiring about their own pay or that of their co-workers. The rule also protects pay discussions by job applicants.

One goal of the new rule is to reduce pay disparities between men and women by creating greater transparency so that women may ask about the pay of co-workers without fear of retribution.

“It is a basic tenet of workplace justice that people be able to exchange information, share concerns and stand up together for their rights. But too many women across the country are in the same situation: they don’t know how much they make compared to male counterparts, and they are afraid to ask,” said U.S. Secretary of Labor Thomas E. Perez. “When he signed the Lilly Ledbetter Fair Pay Act, President Obama made clear his commitment to equal pay for equal work. Today’s final rule is another important step toward that important goal.”

“Pay secrecy practices will no longer facilitate the pay discrimination that is too often perpetrated against women and people of color in the workplace,” said OFCCP Director Patricia Shiu. “Indeed, forward thinking companies that have embraced greater transparency find that it benefits them and their workforce by helping them attract and retain talented workers. And research suggests these approaches have a substantially positive impact on society, workers, the workforce, and the economy as a whole.”

The final rule implements Executive Order 13665, signed by President Barack Obama on April 8, 2014.

Stemming from the Lilly Ledbetter Fair Pay Act, Executive Order 13665 amended OFCCP’s existing legal authority under Executive Order 11246, which also prohibits federal contractors and subcontractors from discriminating based on race, color, religion, sex, sexual orientation, gender identity, and national origin.

The final rule becomes effective 120 days from its publication on Sept. 11 in the Federal Register. More information is available at http://www.dol.gov/ofccp/PayTransparency/.

© 2016 Michael Wald. All rights reserved. This article may not be reproduced without express written consent from Michael Wald.

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About the Author

Michael Wald is an independent economics analyst and writer based in the Atlanta area. He specializes in topics related to business, labor, and human resources. Prior to his retirement from the U.S. Department of Labor, he served as the agency’s Southeast Regional Director of Public Affairs and Southeast Regional Economist.

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