New Interim Rule Prohibits Federal Contractors From Retaliating Against Employees Who Discuss Compensation With Colleagues
On September 30, 2016, the Department of Defense, General Services Administration, and National Aeronautics and Space Administration issued an interim rule titled “Non-Retaliation for Disclosure of Compensation Information.” The interim rule implements Executive Order 13665 (the “Order”). The Order, which President Obama signed on April 8, 2014, prohibits federal contractors from retaliating against employees who discuss their compensation. Our prior blog posts on the Order can be found here and here. The OFCCP published regulations implementing the Order on September 11, 2015. Our blog post on those regulations can be found here.
Consistent with the Order and the OFCCP’s regulations, the interim rule amends existing FAR provisions to expressly prohibit contractors from taking adverse employment actions against employees or job applicants who discuss or disclose compensation information, with certain exceptions. Specifically, the new interim rule makes clear that contractors cannot “discharge or in any other manner discriminate against any employee or applicant for employment because such employee or applicant has inquired about, discussed, or disclosed the compensation of the employee or applicant or another employee or applicant.” The interim rule applies to solicitations and contracts that are issued on or after September 30, 2016. Even so, the interim rule provides that “[c]ontracting officers are expected to work with their existing contractors and bilaterally modify their contracts, to the extent feasible.”
The FAR Council found that this interim rule was necessary to ensure that the requirements in the Order and OFCCP regulations would “be included in solicitations and contracts immediately and puts contractors on clear notice of legal responsibilities that are already in effect.” The FAR Council stated that it was concerned that if it followed standard rulemaking requirements, the requirements of the Order would “not be incorporated into contracts, and contractors will be put at unnecessary risk of noncompliance with the [Order] and labor rule.”
As such, the interim rule represents another step in the implementation of the Order. Contractors have already been required to comply with the requirements of the Order since January 11, 2016 when the OFCCP’s regulations implementing the Order went into effect. The interim rule now ensures that pay transparency obligations are a term of the federal contract.
The FAR Council is accepting written comments on the interim rule through November 29, 2016. The FAR Council will consider these comments in developing the final rule.
