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Final Rule Prohibiting Federal Contractors Retaliating Against Employees and Applicants Who Discuss Wages Issues and Becomes Effective for Contracts Entered Into or Modified On or After January 11, 2016

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On September 11, 2015, the Office of Federal Contract Compliance Programs (OFCCP) published its final rule prohibiting federal contractors from discriminating against employees and job applicants who inquire about, discuss, or disclose job compensation information. The final rule was published in the Federal Register, Vol. 80, No. 176, pp. 54934 – 54977.

The final rule implements the directives of President Obama’s Executive Order 13665, which in short prohibits federal contractors from discharging, disciplining, retaliating, or discriminating in any way against employees or applicants who inquire about, discuss, or disclose their own compensation or the compensation of another employee or applicant.

But, of note, the final rule does not protect employees whose jobs give them access to compensation information (such as those in human resources, information technologies, or payroll positions) who disclose other employees’ compensation to others who do not have a legitimate business reason to obtain the information.

Also of note, this final rule mirrors the existing legal requirement for all employers subject to the National Labor Relations Act, as amended, to refrain from interfering with employees’ rights to discuss wages, hours, and terms and conditions of employment during non-work time.

The final rule applies to any business or organization with any single federal or federal-assisted contract or subcontract in excess of $10,000, or if they have combined contracts in excess of $10,000 in a year. Covered contracts are those entered into or modified on or after January 11, 2016.

The final rule requires notification to employees and job applicants of the non-discrimination protections created by Executive Order 13665 using existing methods of communicating to applicants and employees.

The final rule also requires covered contractors and subcontractors to include the following language in their existing employee manuals and handbooks and to disseminate the provision to employees and to job applicants:

“The contractor will not discharge or in any other manner discriminate against any employee or applicant for employment because such employees or applicant for employment has inquired about, discussed, or disclosed the compensation of the employee or another employee or applicant. This provision shall not apply to instances in which an employee who had access to the compensation information of other employees or applicants as part of such employee’s essential job functions discloses the compensation of such other employees or applicants to individuals who do not otherwise have access to such information, unless such disclosure is in response to a formal complaint or charge, in furtherance of an investigation, proceeding, hearing, or action, including an investigation conducted by the employer, or is consistent with the contractor’s legal duty to furnish information.”

The OFCCP website includes a Frequently Asked Questions webpage regarding the final rule, which is available (as of this Legal Alert’s publication) by Clicking Here.


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