• President Obama Takes Two Executive Actions Impacting the Pay Practices of Federal Contractors and Subcontractors
  • April 16, 2014
  • Law Firm: Blank Rome LLP - Philadelphia Office
  • On April 8, 2014, President Barack Obama, in honor of National Equal Pay Day, signed two executive actions designed to address pay discrimination and strengthen the enforcement of equal pay laws among federal contractors.

    First, the President signed an Executive Orderprohibiting federal contractors from retaliating against employees who choose to discuss their compensation.  The Executive Order does not compel workers to discuss pay or require employers to publish pay data.  Rather, the Executive Order prohibits federal contractors from discharging “or in any matter discriminating against any employee or applicant for employment because such employee or applicant has inquired about, discussed, or disclosed the compensation of the employee or applicant or another employee or applicant.”  Importantly, the Executive Order does not apply to situations where an employee with access to other employees’ or applicants’ compensation information as part of his or her essential job functions discloses that information to persons who otherwise would not have access to the information, unless one of a few limited exemptions applies.  The Department of Labor (“DOL”) is expected to issue proposed regulations implementing the Executive Order within 160 days.

    Second, the President signed a Presidential Memoranduminstructing the Secretary of Labor to propose new regulations within 120 days that require federal contractors and subcontractors to submit to DOL “summary data on the compensation paid to their employees, including data by sex and race.”  The President further instructed the Secretary to consider approaches that would (1) enable DOL to direct its enforcement resources toward entities whose reported data suggests potential discrepancies in compensation, (2) minimize the reporting burden on federal contractors and subcontractors generally, and particularly on small businesses and small nonprofit organizations, and (3) encourage greater voluntary employer compliance with federal pay laws and identify industry trends.  Additionally, the President requested that, where feasible, the Secretary avoid new record-keeping requirements by relying upon existing frameworks to collect the summary data.