Remember how we have been telling you that the OFCCP (and President Obama) would be targeting compensation practices in the near future? It looks like the time has come! Yesterday, President Obama signed amended Executive Order 11246 to prohibit discrimination retaliation against anyone discussing their own or another employee’s pay. Here is the exact text of the amendment:
“The contractor will not discharge or in any other manner discriminate 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. This provision shall not apply to instances in which an employee who has access to the compensation information of other employees or applicants as a part of such employee’s essential job functions discloses the compensation of such other employees or applicants to individuals who do not otherwise have access to such information, unless such disclosure is in response to a formal complaint or charge, in furtherance of an investigation, proceeding, hearing, or action, including an investigation conducted by the employer, or is consistent with the contractor’s legal duty to furnish information.”
What does this amendment mean for you as a federal contractor? Perhaps not much. Sections 7 and 8 of the National Labor Relations Act already protect “concerted activities” of employees, whether or not they belong to a union. “Concerted activities” includes discussion of working conditions, including pay. The NLRA also prohibits interference with or retaliation against anyone attempting to exercise those rights. The NLRA applies to most if not all federal contractors. Therefore, you as a federal contractor, may not feel any changes resulting from this amendment.
The Presidential Memorandum issued along with the amendment, directing the Department of Labor to, within 120 days, publish proposed regulations requiring federal contractors and subcontractors to submit to the OFCCP pay, race and gender data on their employees (even without a Compliance Review) is another story, however. Hint: EO Survey. Why is this necessary when laws prohibiting pay discrimination by contractors already exist? According to the President, “effective enforcement of this mandate is impeded by a lack of sufficiently robust and reliable data on employee compensation, including data by sex and race”. The memo states that the data will enable the DOL to more effectively direct the OFCCP’s resources toward employers that may be engaging in pay discrimination, as suggested by the data itself.
The impact? You, and all federal contractors, will soon be required to submit sensitive pay data to the OFCCP, whether or not you are undergoing a Compliance Review, and the OFCCP can then use the data that you submit to decide whether it will then require you to undergo an audit. How often will you have to submit this information? Annually? Bi-annually? More often? Less often? As of now that is an unknown. There is also no indication of what if any safeguards will be in place to make sure that a third party, whether or not it is intentional, acquires this information, and then publishes it or otherwise uses it in a way that could harm employees. Now this is a change—and one that could significantly impact all federal contractors?
What should you do? If you are not already doing so, make sure you are thoroughly analyzing your pay systems for possible discrimination. OFCCP regulations already require this action. If for any reason you are not, however, it is now more important than ever to do it, because if you don’t, you will now be submitting sensitive pay data at the risk of exposing unexplained disparities to the OFCCP and without you knowing it beforehand. While pay analyses may not be your idea of fun, it is much less unpleasant that being targeted for an audit after submitting information you have not previously reviewed—and then trying to do damage control! Remember the President’s signing the amendment and memo shows, concretely, that he fully backs the OFCCP’s aggressive enforcement efforts in this area!