Pay Transparency and Equity
Feb 22, 2024A proposed rule for federal contractors seeks to correct longstanding inequities
At the end of January, the Department of Defense, General Services Administration, National Aeronautics and Space Administration, and Office of Federal Procurement Policy jointly published a proposed rule to help correct ongoing pay equity and transparency issues in the federal government. The rule, “Advancing Pay Equity in Governmentwide Pay Systems,” will, if enacted intact, prohibit federal contractors from “seeking and considering information about a job applicant’s compensation history when making employment decisions.”
The rule will amend the Federal Acquisition Regulation (FAR) and require that all covered contractors “disclose the compensation being offered to the hired applicant in job announcements for certain positions.” The rule applies to recruiting and hiring for positions connected with a covered contract. Contractors are encouraged, but not required, to apply these requirements to all other positions.
An anniversary announcement
The proposed rule announcement came on the 15th anniversary of the signing of the Lilly Ledbetter Fair Pay Act, which passed through Congress with bipartisan support and then was signed into law by President Obama on January 29, 2009. This legislation made it easier for employees to sue for alleged pay discrimination. After Ledbetter, employees charging their employers with discrimination could file for every unequal paycheck, not just those received within 180 days after the first one. While the Ledbetter law made it easier for employees to have their day in court, it did little to combat wage discrimination itself. In the 15 years since the Ledbetter bill became law, the wage gap for women has closed by just 7 cents, according to a recent National Women’s Law Center analysis. That leaves a gap of $9,900. Despite the wage gap shrinking by 7 cents, the wage gap is wider for women of color. On average, the analysis indicates Native American women are typically paid as little as 59 cents, Latinas 57 cents, Black women 67 cents, and Asian-American and Pacific Islander women 80 cents for every dollar paid to white, non-Hispanic men.
Trending executive and legislative activity
This latest action is part of implementing President Biden’s Executive Order — “Advancing Economy, Efficiency, and Effectiveness in Federal Contracting by Promoting Pay Equity and Transparency” — issued on March 15, 2022. It also follows and reflects the growing trend of states passing pay equity and transparency laws — requiring employers generally (i.e. not simply federal contractor employers) to post pay information in job postings and prohibiting the use of salary history information.
New Hampshire, where the Orr and Reno Employment Law Group is based, has statutes concerning equal pay and unlawful discriminatory practices that include language protecting an employee’s right to “inquire about and discuss his or her wages or those of another employee.” Similar equal pay and nondiscrimination statutes are on the books in Connecticut, Maine, Massachusetts, Rhode Island, and Vermont.
Mandated disclosure
Covered government contractors will be required to provide all applicants with this written notice:
This employer is a Federal contractor or subcontractor. Under 48 CFR (FAR) 52.222–ZZ, Prohibition on Compensation History Inquiries and Requirement for Compensation Disclosures by Contractors During Recruitment and Hiring, Federal contractors and subcontractors may not inquire about or rely on an applicant’s compensation history to screen an applicant for employment or to determine the applicant’s pay for a position on or in connection with a Federal contract or subcontract, even when the information is offered without prompting. The employer must also disclose the compensation for the position in all advertisements for the job opening. Applicants who allege violations of these requirements by a Federal contractor or subcontractor may submit a complaint to the central collection point of the agency that issued the solicitation for the Federal contract or awarded the Federal contract or order, as identified at www.dol.gov/general/labor-advisors. The complaint must be submitted within 180 days of the date the alleged violation occurred. The agency that issued the solicitation or awarded the contract or order on which this applicant would primarily work is ______. For applicants supporting multiple agencies, complaints should copy the central collection point of all known agencies to be supported by the applicant’s position.
Applicants alleging discrimination on the basis of race, color, religion, sex, sexual orientation, gender identity, national origin, disability, or protected veteran status should file a complaint with the Office of Federal Contract Compliance Programs (OFCCP). If complaints alleging discrimination are submitted to an agency central collection point rather than directly with OFCCP, the complaints will be forwarded to OFCCP. Information on the process for filing a formal complaint of discrimination with OFCCP can be found at the following website:
Broad federal contractor coverage
If adopted unchanged, this rule will be “included in all solicitations and contracts, where the principal place of performance will be in the United States, which is defined as including its outlying areas.” Contractors subject to the amended FAR must also include its provisions in all subcontracts “with a principal place of performance within the United States including outlying territories.”
The public has until April 1, 2024, to submit comments at the federal eRulemaking portal. Search for “FAR Case 2023–021”.
While often characterized as a woman’s issue, policies concerning equal pay and transparency affect all employees. If you have any questions or concerns about how this proposed rule will impact your business, please get in touch with Orr & Reno for assistance.
