On April 8, President Obama signed two executive actions designed to strengthen equal pay laws and narrow pay disparities based on gender or race. The executive order and presidential memorandum marked National Equal Pay Day—the day that highlights the extra time the average American woman would need to work to earn as much as her average male counterpart did in the previous year.
The President’s executive order prohibits federal contractors from firing, demoting, or otherwise retaliating against employees who choose to discuss their compensation. The order does not require employees to discuss their pay and does not require employers to publish pay data. Rather, it encourages transparency in hopes that in discussing their pay, employees may discover potential violations of equal pay laws and seek remedial measures. Currently, most private sector employees have the right to discuss their pay under the National Labor Relations Act.
The presidential memorandum instructs Secretary of Labor Tom Perez to establish new regulations mandating federal contractors to submit to the Department of Labor summary data on compensation paid to their employees. The memorandum calls for the data produced to include a breakdown by sex and race. The Department of Labor intends to use the data to encourage voluntary compliance with equal pay laws and to implement more targeted enforcement in areas where there are discrepancies.
The President’s actions follow his announcement in February that he will require federal contractors to raise the minimum wage from $7.25 per hour to $10.10 per hour on new contracts beginning next year.
Although both executive orders apply only to employers contracting with the federal government, the directives will have a wide impact. Federal contracting extends to nearly one-quarter of the U.S. workforce. Also, such actions may lead to action in the broader economy, which is notable given that the U.S. Senate is poised to consider the Paycheck Fairness Act this week. If passed, this measure would impose new regulations designed to ensure that women are paid equal to their male counterparts. During remarks coinciding with his signing the executive actions, President Obama pressed Republican lawmakers to support the Paycheck Fairness Act, which has twice failed to pass.