Salary Transparency and Prohibiting Use of Salary History on the Horizon for Federal Contractors

Although the White House observed that there has been some progress made toward pay equity, it cited a need for more in announcing these initiatives:

Despite this progress, the fight for equal pay continues. Women workers are still paid on average 84 cents for every dollar paid to men, and the disparities are even greater for many women of color. Today, my Administration is taking new actions to advance pay equity for the federal workforce and employees of federal contractors. These new actions adopt commonsense policies that will help pay millions of workers fairly, close gender and racial wage gaps, and yield tangible benefits for the federal government and federal contractors. These policies are good for workers, our economy, and for families.

The initiatives are designed to implement prior Executive Orders aimed at advancing pay equity for federal workers and employees of federal contractors. They include the following efforts:

• Advancing pay equity for federal workers. The Office of Personnel Management (OPM) will issue a final rule ensuring that more than 80 federal agencies will no longer consider an individual’s current or past pay when determining the salaries of federal employees. The rule will go into effect 60 days later.
• Promoting economy, efficiency, and effectiveness in federal contracting by advancing pay equity and pay transparency. The Federal Acquisition Regulatory (FAR) Council is issuing a proposal to prohibit federal contractors and subcontractors from seeking and considering information about job applicants’ compensation history when hiring or setting pay for personnel working on or in connection with a government contract. In addition, the proposal would require federal contractors and subcontractors to disclose expected salary ranges in job postings. There will be a 60-day period for interested parties to comment on the proposal.
• Affirming equal pay obligations for federal contractors. The US Department of Labor’s (DOL) Office of Federal Contract Compliance Programs will issue guidance clarifying existing protections against discrimination in hiring or pay decisions. According to the Administration, the new guidance “will help federal contractors and current and prospective contractor employees understand when reliance on an individual’s compensation history for hiring or pay decisions may result in unlawful discrimination.”

These initiatives parallel recent legislation in many states requiring salary transparency and prohibiting the use of salary history in setting compensation.