UPDATE: Final rule to promote pay transparency takes effect in January 2016

As noted in our blog posts from June 13, 2014 and September 22, 2014, President Obama issued Executive Order (EO) 13665 prohibiting federal contractors and subcontractors from discharging or otherwise discriminating against employees and job applicants for discussing pay. On September 11, 2015, the Department of Labor issued a Final Rule implementing that order. This Final Rule takes effect on January 11, 2016.

The Final Rule amends the implementing regulations of EO 11246 by:

1. Requiring the equal opportunity clause included in covered federal contracts and subcontracts include that federal contractors and subcontractors must refrain from discharging, or otherwise discriminating against, employees or applicants for employment who inquire about, discuss, or disclose their compensation or the compensation of 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;
2. Requiring that federal contractors incorporate a written nondiscrimination provision into their existing employee handbooks and disseminate the nondiscrimination provision to employees and applicants;
3. Defining key terms such as “compensation,” “compensation information,” and “essential job functions” as used in EO 11246, as amended; and
4. Providing employers with two defenses to an allegation of discrimination:

• a general defense, which could be based on the enforcement of a “workplace rule” that does not prohibit employees to discuss compensation information; and
• an essential job functions defense.

To learn more about the Final Rule, please visit the OFCCP’s website. If you have any questions regarding the implications this rule may have on your company, please contact a member of our Labor & Employment team.