Obama Administration Expected To Expand Wage And Hour Protections, Disclosures For Federal Contractors' Employees

by Franczek Radelet P.C.
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Obama.jpgRecently, we told you about President Obama’s Executive Order increasing the minimum wage for employees of federal contractors to $10.10 per hour. Tomorrow, President Obama is expected to announce that he will sign two new executive orders that will apply to federal contractors: (1) one order will forbid retaliation by federal contractors against employees that discuss their compensation with other employees; and (2) the other order will require federal contractors to maintain certain records on compensation organized by race and gender, and report that data to the federal government. These Orders are being issued to further advance the Administration’s cause of equal pay for women.

Approximately 25% of the U.S. workforce engages in federal contracting at least in part, including large, well-known businesses like Northrop Grumman and Boeing and a host of smaller manufacturers, suppliers, and service companies. Unlike the recent minimum wage order, which applied only to new and certain renewed contracts because of the change in compensation rates, these orders could be implemented immediately and apply to all contractors, making these orders’ potential impact much wider.

The pay confidentiality order follows the National Labor Relations Board rule long enforced in the private sector that prohibits employers from taking action against employees who discuss their terms and conditions of employment with others. This Executive Order’s language is expected to be somewhat narrower than the NLRB rule and target only those discussions about compensation, rather than all terms and conditions of employment. Also, the Order is expected to draw language similar to that in the Paycheck Fairness Act that the Senate will consider this week. The timing of the Order may relate to the fact that this Act is unlikely to pass the Senate, and has almost no chance of passage through the GOP-controlled House. 

President Obama is also expected to sign a second order instructing Department of Labor Secretary Thomas Perez to create new regulations requiring federal contractors to report summary compensation data to the government, including breakdowns by gender and race. White House officials hope that the records will encourage other employers to voluntarily submit such data to the government. The Order could also highlight potential pay disparities for study by federal contractors, other employers, researchers and employee rights’ advocates alike. Alleviating pay disparity between the genders has been a continuing issue championed by the Obama Administration. When it raised the minimum wage, the White House argued that such action works toward closing the gender pay gap.

While the Orders continue President Obama’s aggressive approach on wage and hour and discrimination issues in the workplace, history shows us that similar executive actions are not uncommon. In 1941, President Roosevelt outlawed discrimination based on race, color, creed and national origin in the federal government and defense industries, an order that President Kennedy expanded in 1961. More recently, President George W. Bush added the requirement that federal contractors use E-Verify to confirm that all new hires have valid authorizations to work in the United States.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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