President Obama Takes Executive Action on National Equal Pay Day

On April 8, 2014, the President signed an Executive Order prohibiting federal contractors from retaliating against employees who choose to discuss their compensation. The President also issued a Memorandum instructing the Secretary of Labor to establish new regulations requiring federal contractors to submit to the Department of Labor (DOL) summary data on compensation paid to their employees, including data by sex and race. These executive actions were issued on Equal Pay Day, and implement the less drastic provisions of the Paycheck Fairness Act for federal contractors, which failed to advance in the Senate.1

Executive Order

The President's Executive Order amends Executive Order 11246 to add language prohibiting federal government contractors from discharging or discriminating against employees or applicants because they inquire about, discuss, or disclose their compensation or the compensation of another employee or applicant. However, the Order states that this protection does not extend to employees who have access to the compensation information of other employees or applicants as an essential function of their job and disclose such information to individuals who do not have similar access. The Order also directs the Secretary of Labor to propose regulations to implement these requirements within 160 days.

Presidential Memorandum

The President's Memorandum directs the Secretary of Labor to propose, within 120 days, a rule that would require federal government contractors and subcontractors to submit to the DOL summary data on the compensation paid to their employees, including data by sex and race.

Over the past several years, the DOL's Office of Federal Contract Compliance Programs (OFCCP) has been developing a new data collection compensation tool that would identify contractors likely to engage in sex- and race-based compensation discrimination. On August 20, 2011, the DOL published an Advanced Notice of Proposed Rulemaking2 (ANPRM) soliciting input from the public on the development and implementation of a compensation data collection tool. The ANPRM drew over 2,000 comments, including several from the employer community questioning the effectiveness of a generic tool for collecting compensation data due to the numerous factors that are taken into consideration when setting individual employee compensation. The comments further expressed concern that the data collection requirement would result in an undue burden to contractors.

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