On April 8, 2014, U.S. President Barack Obama signed a pair of executive actions aimed at increasing transparency about wages among federal contractors. The administration believes that increasing transparency will provide a boost to the Lilly Ledbetter Fair Pay Act, which addresses the gender wage gap and was signed by President Obama on January 29, 2009.
President Obama first signed an executive order entitled "Non-Retaliation for Disclosure of Compensation Information," which bans federal contractors from retaliating against employees who discuss their pay with co-workers. The executive order states that a federal contractor may not discharge or in any other manner discriminate against any employee or applicant for employment because the employee or applicant has inquired about, discussed or disclosed his or her own compensation or the compensation of another employee or applicant. The order clarifies that it does not apply to employees, including those in human resources, whose access to compensation information of other employees is part of the essential duties of their job.
President Obama then signed a presidential memorandum entitled "Advancing Pay Equality Through Compensation Data Collection." The memorandum states that one impediment to equal pay has been an absence of sufficiently robust and reliable data on employee compensation, including data by sex and race. The memorandum directs the U.S. Secretary of Labor to propose rules, within the next 120 days, requiring federal contractors and subcontractors to provide compensation data based on sex and race.
The signing of these executive actions coincides with National Equal Pay Day and highlights the president's commitment to his promise to champion women's rights in the workplace. The U.S. Senate voted on April 9 on the Paycheck Fairness Act, which would affect private employers as well as federal contractors, but the bill has failed to pass for the third time. The bill's congressional supporters have indicated they will reintroduce it.
What This Means for Employers
The executive order signed by President Obama applies to employers who are federal government contractors, and the rules pending proposal by the Secretary of Labor will apply to federal contractors and subcontractors. Federal contractors should consider checking their current policies to ensure they do not prohibit employees from discussing their compensation. Federal contractors and subcontractors also may want to ensure their data systems capture gender, race and pay data for each employee. This may be a good time for federal contractors to review employee compensation by gender and race and to address wage disparities between protected classes of employees not supported by business reasons.