Obama Takes Executive Action Regarding Discussions of Pay at Work and Compensation Reporting

April 11, 2014

On April 8, 2014, President Barack Obama signed a new executive order prohibiting federal contractors from retaliating against applicants or employees who inquire about, discuss or divulge their compensation or that of another applicant or employee. In issuing these new requirements, the White House contends that a central challenge to achieving equal pay across race and gender lines is transparency concerning compensation. For example, although women make up approximately half of America’s workforce and currently graduate from college at higher rates than men, the White House asserted that “according to the latest U.S. Census statistics, on average, full-time working women still earn 77 cents to every dollar earned by men.”

In a Fact Sheet released by the White House, the administration emphasized that the executive order “does not compel workers to discuss pay, nor does it require employers to publish or otherwise disseminate pay data.” The executive order does, however, specifically provide that:

The contractor will not 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. This provision shall not apply to instances in which an employee who has access to the compensation information of other employees or applicants as a part of such employee’s essential job functions discloses the compensation of such other employees or applicants to individuals who do not otherwise have access to such information, unless such disclosure is in response to a formal complaint or charge, in furtherance of an investigation, proceeding, hearing, or action, including an investigation conducted by the employer, or is consistent with the contractor’s legal duty to furnish information.

Regulations implementing this requirement are to be proposed by the secretary of labor no later than Sept. 17, 2014, and the executive order will apply to contracts entered into on or after the effective date of those rules.

Further, separate and apart from the executive order, the president also issued a presidential memorandum on the same day, directing the secretary of labor to propose new regulations that will require federal contractors and subcontractors to submit summary compensation data to the Department of Labor, categorized by sex and race. The Office of Federal Contractor Compliance Programs (OFCCP) previously published an Advance Notice of Proposed Rulemaking on a proposed new compensation data collection tool in 2011. OFCCP’s current regulatory agenda also notes that OFCCP had planned to move to the next step and publish a Notice of Proposed Rulemaking in January 2014, but no such action has yet occurred. Thus, specifics of when and how the compensation data referenced in the president’s memorandum must be compiled and submitted apart from already-existing obligations imposed on contractors when undergoing an OFCCP compliance review is unclear and will need to be fleshed out in upcoming regulations.

What is clear is that the non-retaliation provisions of the executive order are not new. The executive order simply provides a different, additional enforcement mechanism to prohibit retaliation against employees who discuss their pay in certain circumstances. The National Labor Relations Act (NLRA) has long been construed to prohibit employers from taking adverse actions against non-supervisory employees who discuss their pay or from making compensation information confidential. See, e.g., Scientific-Atl., Inc., 278 N.L.R.B. 622, 625 (1986). The National Labor Relations Board has also asserted that the NLRA prohibits employers from restricting non-supervisory employees’ rights to discuss compensation via social media outlets as well. See Gen. Motors, LLC, No. 07-CA-53570, 2012 NLRB LEXIS 304, at *10 (May 30, 2012).

  • To view the executive order, click here. 
  • To view the presidential memorandum, click here.
  • To view the White House’s Fact Sheet regarding the executive order, click here.
  • In addition, to review a summary of the similar, recent executive action taken by the president with respect to overtime pay for employees of certain federal contractors and subcontractors, click here.

For questions regarding the president’s executive actions or assistance with affirmative action compliance generally (including the new veterans and disabled employee regulations that took effect in March 2014), please reach out to the authors, your McGuireWoods contact, or a member of the firm’s affirmative action team or labor and employment group.