On April 8, 2014, President Obama signed an Executive Order directing the Department of Labor (“DOL”) to propose new regulations and rules to prohibit Federal contractors from discriminating against employees for inquiring, discussing or disclosing their compensation, or the compensation of other employees. The new order, entitled “Non-Retaliation For Disclosure of Compensation Information,” amends Executive Order 11246 of September 24, 1965, which prohibits federal contractors and federally-assisted construction contractors and subcontractors who do over $10,000 in Government business annually from discriminating in employment decisions on the basis of race, color, religion, sex, or national origin.
Specifically, the new Executive Order amends Section 202 of Executive Order 11246 to include a new paragraph as follows:
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. (Emphasis added).
The President has directed the Secretary of Labor to propose regulations implementing this new rule on or before September 15, 2014. These requirements would apply to all contracts entered into after the effective date of those regulations.
Likewise, the Senate yesterday attempted to advance the “Paycheck Fairness Act” (S. 84), which would apply more broadly to all employers subject to the Fair Labor Standards Act. That bill, which failed to advance past a cloture vote, would amend the FLSA to make it unlawful for an employer to discriminate against or discipline an employee because the employee:
has inquired about, discussed, or disclosed the wages of the employee or another employee.
Curiously, both these provisions address conduct which is already largely covered by the National Labor Relations Act (“NLRA”). Longstanding National Labor Relations Board case law already prohibits an employer from forbidding employees from, or disciplining employees for, discussing their wages with each other. See, e.g., Double Eagle Hotel & Casino, 341 NLRB 112 (2004); Mobil Exploration, 323 NLRB 1064 (1997).
With respect to the Executive Order, many government contractors whose employees are not organized may not be fully aware of this — or other aspects of the NLRA (which nevertheless does apply in non-union workplaces). Also, despite some language suggesting exemption for some management personnel, the order may also apply more broadly to contractors’ supervisors who are not covered by the NLRA. In sum, this may well be the next step in the Administration’s ongoing effort to expand the use of labor law compliance information for the disqualification or debarment of Federal contractors.
Of course, the Senate bill — unlikely to go anywhere prior to 2014 midterm elections — would facilitate class action suits and provide compensatory and punitive damages, which are remedies which the NLRA does not provide.
Still, as this conduct is unlawful under current and longstanding NLRA precedent, employers would be prudent to review workrules, handbooks and policy and practice manuals with counsel to ensure compliance.
