On January 29, 2024, the Biden administration announced plans to implement Executive Order 14035 aimed at advancing pay equity for employees of federal contractors. The plans stem from the administration’s attempt to position the United States government as a national leader in pay equity efforts.
Accordingly, the Federal Acquisition Regulatory (FAR) Council has put forth proposed rules designed to address key aspects of pay equity for federal contractors and subcontractors. The proposed rules include the following:
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Prohibiting federal contractors and subcontractors from seeking and considering information about job applicants’ compensation history when hiring or setting pay for personnel working on or in connection with a federal government contract.
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Requiring federal contractors and subcontractors to disclose expected salary ranges in job postings for positions performing work on or in connection with the contract.
The proposed rules follow efforts by other state and local jurisdictions to enact pay transparency and salary history restrictions for job candidates and employees. Notably, the proposed rules would require federal contractors to adhere to salary history bans and pay transparency requirements across multiple states when engaged in government contracts.
At this time, there is no immediate action to be taken, as interested parties can provide feedback on the proposed rules until April 2024. Following the comment period, a final rule is expected to be published and implemented, likely later this year.
In a complementary move, the Department of Labor’s Office of Federal Contract Compliance Programs also issued guidance clarifying existing protections against discrimination in hiring or pay decisions. The new guidance will help federal contractors and current and prospective contractor employees understand when reliance on an individual’s compensation history for hiring or pay decisions may result in unlawful discrimination.
The proposed rules represent further strides toward increased pay equity and transparency requirements, particularly for employers that contract with the federal government. Federal contractors are encouraged to seize this opportunity to evaluate and potentially adjust their compensation strategies and planning processes to align with the proposed rules. For federal contractors seeking guidance on pay equity analysis, Employers Council is available as a resource, offering valuable information and assistance. Contact us at info@employerscouncil.org.
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