Proposed Rule Prohibits Federal Contractors From Firing Employees Who Discuss Pay

By Kellie Luney, September 15, 2014       Government

Federal contractors would have to inform their employees of their right to openly discuss pay in the workplace without fear of retaliation under new proposed rules from the Labor Department.

Firms that do business with the federal government would have to incorporate the new non-discrimination language in their existing employee handbooks and disseminate the information, either electronically or by publicly posting a copy of the requirement, according to draft rules published in the Federal Register. They also would have to include the provision in the existing equal opportunity clause in their contracts. The proposed regulations implement an executive order signed by President Obama in April that protects employees of federal contractors who disclose their pay, or the compensation of other workers, from being fired or otherwise retaliated against by employers.

The proposed rule would apply to all federal contractors that do more than $10,000 worth of business with the government. Approximately 500,000 contractors are registered with the General Services Administration.

The draft regulations do not compel contractor employees to share compensation information with others, but protect those who do from being discriminated against by their employer. The provision would not allow employees who have access to compensation information as part of their job — for example, human resources employees — to disclose salary information, except under certain circumstances, including in response to a formal complaint, charge or investigation, or if the employee is pursuing her own compensation discrimination complaint.

“Simply allowing employees to discuss compensation may help bring illegal compensation practices to light and allow employees to obtain appropriate legal redress,” the draft rule said. “Policies prohibiting employee conversations about compensation can also serve as a significant barrier to federal enforcement of the laws against compensation discrimination.”

Outside individuals and groups have 90 days to comment on the draft rules.

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