On September 11, 2015, the Department of Labor’s Office of Federal Contract Compliance Programs issued its Final Rule in response to Executive Order 13665. The Rule, which can be found here, is codified at 41 CFR Part 60 and becomes effective in 120 days.
The Rule prohibits federal contractors (or subcontractors) with contracts (or subcontracts) worth over $10,000 from discriminating against employees (including supervisors) or job applicants based on discussions those employees or applicants may have concerning their or other employees’ compensation. Contractors are required to disseminate this information to employees and include the language in their handbooks or manuals. The revised equal employment clauses will also be required to be included in future governmental contracts and subcontracts.
The Rule also creates and codifies two defenses contractors have to such discrimination claims. The first is a general defense, which allows a contractor to impose discipline for a violation of a consistently applied rule or policy that does not prohibit, or tend to prohibit, employees or applicants from discussing compensation. The second defense is an essential job functions defense. This defense is a complete defense to be applied if an employee discloses compensation information obtained through an essential job function (think payroll administrator).
Doesn’t the NLRA already prohibit adverse action based on discussions about compensation? The DOL notes accompanying the Rule mention the prevalence of prohibited policies designed to prohibit discussions about compensation despite the application of the NLRA, and also notes that the Rule is broader in application and scope than the NLRA.
The new Executive Order continues the current Administration’s effort to achieve through executive fiat what it cannot accomplish through legislative action. The NLRA has prohibited employers from banning discussions about salary for decades, but its restrictions are limited to non-supervisors. Rather than attempt to amend the NLRA, the Administration has simply decreed that federal contractors must comply with its view of how the law should be.