By: Laurie A. Petersen and Samantha J. Wood

On January 11, 2016, the final rule implementing Executive Order 13665 went into effect. This rule makes it unlawful for federal contractors to discharge or discriminate in any manner against any employee or job applicant because such employee or applicant has inquired about, discussed, or disclosed his or her compensation information or has inquired about, discussed, or disclosed another employee or applicant’s compensation information.

This rule applies to any business or organization that (1) holds a single federal contract, subcontract, or federally assisted construction contract in excess of $10,000; (2) has federal contracts or subcontracts that have a combined total in excess of $10,000 in any 12-month period; or (3) holds government bills of lading, serves as a depository of federal funds, or is an issuing and paying agency for U.S. savings bonds and notes in any amount. While in effect now, the rule will apply to these employers once they enter into a new covered federal contract or subcontract or modify an existing covered federal contract or subcontract on or after January 11, 2016.

In accordance with this rule, contractors are prohibited from having policies or practices that prohibit or tend to restrict employees or applicants from discussing topics such as: salary, wages, overtime pay, shift differentials, bonuses, commissions, vacation and holiday pay, allowances, insurance and other benefits, stock options and awards, profit sharing, and retirement. Contractors must revise handbooks, confidentiality agreements, employment agreements, or other work rules and policies that restrict discussing compensation information.

The rule also requires federal contractors to do the following:

1. Post the Pay Transparency Nondiscrimination Provision either electronically or in a conspicuous location in the workplace where it can be seen by employees and applicants. This provision can be found at  http://www.dol.gov/ofccp/PayTransparencyNondiscrimination.html
2. Incorporate the Pay Transparency Nondiscrimination Provision into existing manuals or .employee handbooks, and disseminate the updated manuals or handbooks.
3. Post the updated “EEOC is the Law Poster” when it becomes available. In the interim, post the “EEOC is the Law Poster Supplement,” available at http://www.dol.gov/ofccp/regs/compliance/posters/ofccpost.htm
4. Ensure that all contracts entered into or modified after January 11, 2016, contain a revised equal opportunity clause. If the contract incorporates 41 C.F.R. § 60-1.4, by reference, no changes are necessary.

If you have questions about this material, please contact Laurie A. Petersen or Samantha J. Wood by email at lpetersen@lindner-marsack.com or swood@lindner-marsack.com, or any other attorney you have been working with here at Lindner & Marsack, S.C.