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Compliance

OFCCP Pay Transparency

I. PURPOSE

Executive Order 13,665 and its related regulations aim to “promote economy and efficiency in Federal Government procurement” and help “Federal contractors and their employees detect and remediate unlawful discriminatory practices” related to compensation by ensuring that employees can freely discuss their pay without fear of adverse action. The law also intends to address gender pay gaps.

II. HISTORY

On April 8, 2014, President Barack Obama issued Executive Order 13,665, which amended a prior executive order prohibiting employment discrimination. As required by the new order, implementing regulations were subsequently proposed in September 2014. On September 11, 2015, the OFCCP published the final version of regulations that prohibit federal contractors from discriminating against employees or job applicants who ask about, talk about, or disclose compensation information.

III. APPLICABILITY TO BYU–HAWAII

The pay transparency requirements contained in Executive Order 13,665 and its related regulations apply to federal contractors with contracts exceeding $10,000 that were entered into or modified after January 11, 2016. Specifically, a business or organization must comply with the requirements if it (1) holds a single federal contract, subcontract, or federally assisted construction contract in excess of $10,000; (2) has federal contracts or subcontracts that have a combined total in excess of $10,000 in any twelve-month period; or (3) holds government bills of lading, serves as a depository of federal funds, or is an issuing and paying agency for U.S. savings bonds and notes in any amount. Importantly, if a company has a covered contract, the requirements extend to all the employees and job applicants of
the company (not just those persons employed on the federal contract).

Generally, BYU–Hawaii does not participate in federal research contracts in excess of $10,000, either singly or combined; therefore, the university is not subject to the OFCCP’s pay transparency regulations. Should the university elect to accept such contracts, it would be subject to these regulations.

IV. REQUIREMENTS

General Nondiscrimination Requirement

The pay transparency rule prohibits covered employers from discharging or discriminating against any employees or job applicants because they asked about, discussed, or disclosed their own or another person’s compensation. Simply having a policy that prohibits employees from talking about compensation is considered a prohibited form of discrimination.

One exception whereby a company can take adverse action against an employee for disclosing compensation information is if an employee who has access to compensation information as part of their job discloses that information to others for any reason other than the following:

  1. Disclosures made in response to a formal complaint or charge
  2. Disclosures made in furtherance of an investigation, proceeding, hearing, or action (including an internal investigation)
  3. Disclosures consistent with a legal duty to furnish the information

Employers also have the ability to claim a defense to a violation of the nondiscrimination rule (e.g., disciplining an employee for disclosing compensation information) only if the defense “is not based on a rule, policy, practice, agreement, or other instrument that prohibits employees or applicants from discussing or disclosing their compensation or the compensation of other employees or applicants.” In other words, employers may impose discipline “for violation of a consistently and uniformly applied company policy” so long as the “policy does not prohibit or tend to prohibit, employees or applicants from discussing or disclosing their compensation or the compensation of other employees or applicants.”

Thus, while it would be permissible to discipline an employee for exceeding an allotted break time, it would be illegal to discipline that employee (or impose more severe discipline) because the employee was discussing compensation.14 Even so, employers are permitted to take disciplinary action against employees who violate security policies and applicable privacy laws.

Dissemination of Policy Statement

Federal contractors subject to the pay transparency rule must disseminate the following specific nondiscrimination policy statement to their employees and job applicants:

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.

The pay transparency policy statement must be disseminated to employees and applicants in the following two ways: (1) by incorporating the statement in existing employee manuals or handbooks and (2) by posting the statement either electronically or physically in a conspicuous place.

Training

Although not required, training for staff and management on the new pay transparency rule is encouraged by the OFCCP as a best practice.