President Obama directed U.S. Secretary of Labor Thomas E. Perez to propose a rule requiring that federal contractors submit summary compensation data to the U.S. Department of Labor (DOL) and issued an executive order prohibiting retaliation against employees and applicants who discuss compensation information. The executive order and presidential memorandum issued are designed to further the Obama administration’s emphasis on pay equity and wage transparency.
The executive order, entitled “Non-Retaliation for Disclosure of Compensation Information” amends Executive Order 11246 by prohibiting federal contractors and subcontractors from retaliating against any employee or applicant for employment “for inquiring about, discussing, or disclosing the compensation of” the employee, the applicant, or any other employee or applicant. The National Labor Relations Board already prohibits both unionized and non-unionized employers from retaliating against employees for discussing wages, hours, and working conditions. The executive order instructs the Secretary of Labor to propose implementing regulations—likely to be enforced by the Office of Federal Contract Compliance Programs (OFCCP)—by September 15.
President Obama also issued a memorandum for the Secretary of Labor regarding “Advancing Pay Equality Through Compensation Data Collection.” This memorandum states that federal law advancing equal pay “is impeded by a lack of sufficiently robust and reliable data on employee compensation, including data by sex and race.” Citing OFCCP’s August 2011 Advanced Notice of Proposed Rulemaking (ANPRM), in which OFCCP received comments about the design and implementation of such a tool for federal contractors, President Obama’s memorandum directs the DOL to propose a rule by August 6 requiring that summary compensation data be provided by federal contractors to DOL. It should be noted that current federal contractors must already provide summary and detailed pay information to OFCCP during compliance reviews, yet OFCCP has found very few instances of pay discrimination.
Interestingly, President Obama has directed the Secretary of Labor to, among other things, “consider independent studies regarding the collection of compensation data,” perhaps referring to a report issued in August 2012 by the National Research Council finding that no regulatory agency had a comprehensive plan for using compensation data if it was required to be collected, that there was no basis to determine the cost and benefits of such a data collection, and that there were security concerns in collecting such highly sensitive data.
Clearly, the Obama administration has been frustrated by Congress’s failure to pass the Paycheck Fairness Act and implement other recommendations by the president’s task force on pay equity, the National Equal Pay Enforcement Task Force. The issuance of another executive order on pay and a directive to the DOL to require submission of compensation data from federal contractors could be perceived as a last-ditch effort to move the pay equity discussion forward. Details of when and how the proposed data collection tool will be implemented are uncertain for now, but we will update you as soon as more information is available.