Prohibitions Against Pay Secrecy Policies and Actions – Effective 1/11/2016

Compliance Alert

Final Rule:  Prohibitions Against Pay Secrecy Policies and Actions

Effective Date:   January 11, 2016

On September 11, 2015, the Office of Federal Compliance Programs (OFCCP) published the final rule regarding Prohibitions Against Pay Secrecy Policies and Actions in the Federal Register.  The new rule prohibits Federal contractors from prohibiting discussion of compensation between employees and/or applicants, or retaliating against individuals for doing so.

Action Items:

• Employee handbooks, manuals, and/or company intranet documents should be revised to include the new rule.  The following text was provided by the OFCCP to satisfy this requirement.

PAY TRANSPARENCY POLICY STATEMENT

The contractor will not discharge or in any other manner discriminate against employees or applicants because they have inquired about, discussed, or disclosed their own pay or the pay of another employee or applicant.  However, employees who have access to the compensation information of other employees or applicants as a part of their essential job functions cannot disclose the pay of other employees or applicants to individuals who do not otherwise have access to compensation information, unless the disclosure is (a) in response to a formal complaint or charge, (b) in furtherance of an investigation, proceeding, hearing, or action, including an investigation conducted by the employer, or (c) consistent with the contractor’s legal duty to furnish information.

• “EEO is the Law” posters will need to be updated.  This update is not yet available, but will be forwarded to you once it’s published.  In the meantime, you can continue using the existing version along with the Agency provided supplement.
  [1]  This supplement should be added to company bulletin boards, on career pages, and anywhere else the “EEO is the Law” poster is currently displayed.

Other Items:

• The Equal Opportunity Clause (EO Clause) is revised to include the requirements of the new rule.  For contractors utilizing the “incorporation by reference” version of the EO Clause in contracts and purchase orders, no revisions are required.

• Protections provided under this rule do not extend to employees whose essential job functions include access to the compensation information of other employees, and who disclose such information to others outside of the context of a formal complaint or charge.

Definitions:

• Compensation means any payments made to, or on behalf of, an employee or offered to an applicant as remuneration for employment, including but not limited to 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.

• Compensation information means the amount and type of compensation provided to employees or offered to applicants, including, but not limited to, the desire of the contractor to attract and retain a particular employee for the value the employee is perceived to add to the contractor’s profit or productivity; the availability of employees with like skills in the marketplace; market research about the worth of similar jobs in the relevant marketplace; job analysis, descriptions, and evaluations; salary and pay structures; salary surveys; labor union agreements; and contractor decisions, statements and policies related to setting or altering employee compensation.

• Essential job functions—(1) In general. The term essential job functions means the fundamental job duties of the employment position an individual holds.  (2) A job function may be considered essential if: (i) The access to compensation information is necessary in order to perform that function or another routinely assigned business task; or (ii) The function or duties of the position include protecting and maintaining the privacy of employee personnel records, including compensation information.  (3) The application or interpretation of the ‘‘essential job functions’’ definition in this part is limited to the discrimination claims governed by Executive Order 13665 and its implementing regulations.

If you have any questions, or would like to discuss this Compliance Alert further, please feel free to contact me.

Maly Consulting, LLC – September 2015