Last week, the Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) released proposed regulations that would bar federal contractors from adopting or enforcing policies that prohibit employees from discussing their compensation. In prior years, it was fairly common for employers to adopt rules that banned employees from discussing their compensation among themselves, presumably out of concerns that they might discover that they are paid less than a coworker performing comparable duties. In recent years, these policies have largely disappeared due to (1) their inherent unenforceability; and (2) NLRB decisions that have characterized such policies as an unfair labor practice.

 

The OFCCP rules would expand this ban to supervisors and managers of federal contractors not under the NLRB’s jurisdiction. The rule would also protect applicants, although it does not require employers to disclose employee pay information to applicants. The proposed ban would need to be included in the contractors’ EEO policies, handbooks and postings.

 

OFCCP justified the proposed rule as a means for employees to discover and respond to pay disparities, especially those based on gender. The proposed rule contains an exception for disclosures by human resource personnel whose essential job functions include maintenance of confidential compensation information.

 

Comments on the proposed rules are due by December 16, 2014. The proposed rule may have little financial impact on employers. However, the slew of new contractor labor rules announced this year may collectively result in enough of a burden to discourage smaller employers from bidding on federal contracts.