New Action Items for Federal Contractors

Authored by Karen E. Milner

Sep 30, 2015

The Office of Federal Contract Compliance Programs (OFCCP) recently published a Final Rule implementing Executive Order 13665, signed by President Obama on April 8, 2014. The Final Rule promotes pay transparency by prohibiting federal contractors and subcontractors from discharging, or otherwise discriminating against, employees or job applicants for discussing, disclosing, or inquiring about compensation. The Final Rule takes effect on Jan. 11, 2016.

In covered federal contracts and subcontracts, the Final Rule requires that the equal opportunity clause be amended to include that federal contractors and subcontractors must refrain from discharging, or otherwise discriminating against, employees or applicants who inquire about, discuss, or disclose their compensation or the compensation of other employees or applicants. An exception exists where the employee or applicant makes the disclosure based on information obtained in the course of performing essential job functions.

The Final Rule also requires that federal contractors incorporate a prescribed nondiscrimination provision into their existing employee manuals or handbooks and disseminate the nondiscrimination provision to employees and job applicants.

Furthermore, the Final Rule defines key terms as used in the Executive Orders and provides employers with two defenses to an allegation of discrimination: a general defense, which could be based on the enforcement of a “workplace rule” that does not prohibit the discussion of compensation information; and an essential job functions defense.

The OFCCP also posted a Mandatory Supplement to the Equal Employment Opportunity Commission’s (EEOC) “EEO is the Law” poster. The supplement outlines the regulatory updates for federal contractors which are not yet reflected in the EEOC’s poster. Specifically, the supplement updates the EO 11246 section to reflect sexual orientation and gender identity as protected classes and add a pay secrecy clause, and revisions are reflected under the individuals with disabilities and protected veteran sections. The OFCCP’s FAQs indicate that the agency is working with EEOC to update the poster, but this supplement should be used in the interim.

Action Items for Federal Contractors:

  • Update your contracts and subcontracts, as described in the first bullet point above.
  • Update your policies and handbooks.
  • Post the Supplement, which can be found here, anywhere the “EEO is the Law” poster is displayed, which would include any online application systems and company intranet sites.
  • Be on the lookout for an updated “EEO is the Law” poster.

If you have any questions about the information above, or would like assistance updating your contract clauses and handbooks, please don’t hesitate to contact Karen Milner or Ashlyn Wedding.

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