The White House released the Fact Sheet: Expanding Opportunity for All announcing President Obama’s Executive Order (EO) prohibiting federal contractors from retaliating against employees who choose to discuss their compensation, and a Presidential Memorandum instructing the Secretary of Labor to establish new regulations requiring federal contractors to submit to the Department of Labor summary data on compensation paid to their employees, including data by sex and race.
The EO prohibits federal contractors from retaliating against employees who talk about pay. Expect the written rules in employee handbooks forbidding conversations about pay to disappear. The theory is employees talking about pay will eliminate disparities in pay among employees performing the same duties, particularly between men and women.
As with any new regulation, implementation and enforcement are open to speculation at this point. Expect to see the EO listed in future federal contracts, flowed down to sub-contractors, and potentially included in annual certifications and representations required for participation in federal contracts.
Federal contractors can add another report to the list of requirements for doing business with the U.S. Government – summary data on compensation paid to employees, by sex and race. Reporting time periods, formats, and penalties will not be known until the Secretary of Labor establishes the new regulations – a process of months of formulation, public feedback, and implementation.
The second half of today’s announcement gives oversight and enforcement to the Department of Labor. Anti-retaliation claims may show up in U.S. District Court cases years from now as employees sue employers for wrongful termination, retaliation, or whistle-blowing.
The full effect on Federal Contractors is unknown this early in the game. Expect more conversation and debate – in Congress, in the media, and with the next Administration set to take office January 20, 2017.