Seyfarth Synopsis: Earlier today, the Biden Administration announced actions to support the equal pay principles set forth by Executive Orders 14035 and 14069. These actions will impact federal contractors and subcontractors who will be required to disclose pay ranges in certain job postings and prohibited from relying on salary history information when setting pay. Further, these actions will impact federal agencies who will be prohibited from considering current or past pay when determining the salary of federal employees.
Today, the Biden Administration marked the 15thAnniversary of the Lilly Ledbetter Fair Pay Act, by announcing a set of actions designed to support equal pay principles for workers of federal contractors and agencies as set forth by Executive Orders 14035 and 14069. Following the trends set by various state and local jurisdictions, the actions announced today will prohibit federal contractors and subcontractors from seeking and considering salary history when setting compensation and will require pay range disclosures in certain job postings. In addition, a final rule will be issued to prohibit more than 80 federal agencies from considering an individual's current or past pay when determining the salary of a federal employee. The final rule directed at federal agencies is to be published in the Federal Register tomorrow, while the measures that will be directed at federal contractors have not yet been released.
Promoting Equal Pay Principles for Federal Contractors
The fact sheet released by the White House provides that the Federal Acquisition Regulatory Council will be issuing a proposal to prohibit federal contractors from seeking or considering information about a job applicant's compensation history when "hiring or setting pay for personnel working on or in connection with a government contract." In addition, the White House foreshadowed a proposed rule that will require that federal contractors disclose the expected pay ranges of a job in certain job announcements.
While we have already seen multiple states implement measures to (1) ban employers from seeking or using prior salary and (2) require pay range disclosures, the move will be the first action that applies equally across state lines for federal contractors. Based on information published by the Office of Information and Regulatory Affairs, the proposed rule is anticipated to be published in the Federal Register sometime in February with a 60 day public comment period.
Additional action is also expected from the Department of Labor's Office of Federal Contract Compliance Programs who will also be issuing guidance regarding existing protections against discrimination in hiring or pay decisions. According to the White House, the guidance is intended to help both federal contractors and prospective contractors in understanding when reliance on prior compensation history may result in unlawful discrimination. A timeline on the release of such guidance was not provided.
Advancing Pay Equity for Federal Workers
In addition to the anticipated proposals and guidance materials impacting federal contractors, on January 30, 2024, the Office of Personnel Management is scheduled to publish a final rule covering federal agency employees. Under the final rule, agencies will no longer be permitted to set pay based on non-federal salary history for individuals (1) joining the federal government for the first time or (2) returning after a break in federal service. Further, agencies will not be permitted to consider the salary in a candidate's competing job offer when setting pay and will be required to have policies in place regarding setting pay based on a previous federal salary.
Workplace Solutions
In light of the continuing trend towards greater pay transparency and disclosure requirements, this is yet another terrific opportunity for employers to assess their compensation strategies and rate structures. Adding pay ranges to job announcements across multiple jurisdictions can prove to be a challenging undertaking so it will be important to think ahead and begin the planning process for pay range disclosures that may have coast-to-coast implications for some federal contractor employers.
Seyfarth's People Analytics and Pay Equity Groups will continue to monitor these proposals for additional developments. In the meantime, federal contractors and subcontractors should prepare for these significant developments, particularly if they have not yet banned salary history inquiries or implemented pay range disclosures in job advertisements either voluntarily, or in response to state or local requirements.
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