DOL Attorneys Discuss Enforcing Pay Transparency Rule

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By Lydell C. Bridgeford

Jan. 12 — The Labor Department's controversial pay transparency rule, effective Jan. 11, introduces a new posting requirement and requires covered federal contractors and subcontractors to update their employee manuals and handbooks to reflect new nondiscrimination protections, an attorney from DOL's Office of Federal Contract Compliance Programs said Jan. 11.

The requirement to post in the workplace the nondiscrimination provision on pay transparency “is a separate requirement” from posting the “EEO is the Law” poster and its supplement poster, according to Christopher Seely, OFCCP's branch chief for regulatory, legislative and policy development, division of policy and program development. He spoke at the second agency-sponsored webinar on the pay transparency rule.

The rule prohibits federal contractors and subcontractors from maintaining pay secrecy policies and from discriminating against employees and applicants who discuss, disclose or inquire about compensation. It implements Executive Order No. 13,665, which amends Section 202 of Executive Order No. 11,246 and applies to covered federal contracts entered into or modified on or after Jan. 11, 2016.

Rule Ushers in New Posting Obligation

Seely addressed the posting requirements under the new rule and fielded a question on whether the “EEO is the Law” poster requirement satisfied the posting requirement on the nondiscrimination provision on pay transparency. His reply was “No.”

“The OFCCP published a supplement to the ‘EEO is the Law’ poster on our website. The supplement does include a reference to the protections of the pay transparency rule. However, contractors are required to post the pay transparency nondiscrimination provision separately from the ‘EEO is the Law' poster and its supplement poster,” he added.

Federal contractors are now subject to three posting requirements under OFCCP regulations: the “EEO is the Law” poster, which was revised in 2009, the “EEO is the Law” poster supplement and the nondiscrimination provision on pay transparency, which is required by the pay transparency rule.

“The provision reflects the equal employment opportunity (EEO) clause's language on pay transparency and it explains the worker's protections in more detail than the EEO poster supplement for applicants or employees who otherwise may not be aware of the contract clause or the regulations,” Seely said.

EEO Clause Is Affected

The final rule implements the new nondiscrimination provision mandated by the amended executive order by inserting a new paragraph in the standard EEO clause that's incorporated in all federal contracts.

Contractors can include the nondiscrimination provision by reference in the EEO clause they use for subcontracts and purchasing orders, instead of including the full language of the executive order's EEO clause. Contractors need to reference the clause “in purchasing orders and subcontracts or include the full language,” Seely said. The rule doesn't change incorporation by reference.

Update Employee Handbooks on Pay Secrecy

In addition to amending the EEO clause, covered federal contractors also must incorporate the nondiscrimination provision on pay transparency into their employee manuals or handbooks, and post the provision for employees and job applicants in a conspicuous place using language prescribed by the OFCCP, Seely said.

On its website, the agency has made the nondiscrimination provision on pay transparency available in two formats, one designed for printing and placing in existing manual and handbooks, and one that is designed to be used as a poster for contractors to post in conspicuous places, he added.

Auditors May Vet for Rule Compliance

The webinar also outlined how the agency's auditors will determine during a compliance evaluation if a contractor is in compliance with the pay transparency rule. The compliance officer will verify that the new EEO clause is included in subcontracts, and will also ask to see the prescribed nondiscrimination provision on pay transparency in employee manuals and handbooks.

The agency also will be inspecting to determine whether a contractor posted the nondiscrimination provision electronically or as a hard copy for all job applicants and employees to access and see. In a compliance evaluation, the auditor may interview a contractor's employees to determine if there is possible discrimination attributed to a worker's inquiries, discussions or disclosures of compensation, Seely said. “If we uncover potential discrimination, then the OFCCP will investigate further.”

Compliance evaluations are one way the agency will enforce E.O. 13,655. It will also accept complaints alleging discrimination based on the pay transparency rule. Employees and job applicants of government contractors may file a complaint of discrimination alleging that the contractor violated the executive order by taking adverse action against an individual for discussing, inquiring about or disclosing the compensation of an employee or applicant, he added. The agency will investigate both individual and group complaints that allege such discrimination.

Seely said the agency is revising its complaint form to include the protected status under the pay transparency and sexual orientation and gender identity rules. He expects the new form to be available in 2017 once the current Office of Management and Budget-approved form expires.

“In the meantime, complainants may write in ‘pay secrecy' or ‘pay transparency' in the section that asks why you think your employer discriminated against you, or complainants can explain the reason why they were discriminated against in the narrative portion of the complaint form,” he said.

No Training Requirement Imposed

Employers can defend against alleged violations of the pay transparency rule if their defense is based on legitimate workplace policies and the essential functions of an employee's job (176 DLR A-11, 9/11/15). However, it's not required that the essential job functions be in writing as part of the employee's official job description. Whether something is an essential job function will be determined based on the facts of the investigation, Jennifer Frey of the DOL's Office of the Solicitor said during the webinar.

The attorneys were asked during the webinar whether a contractor must train those employees whose essential job functions entail having access to compensation information in the pay transparency rule before the employer could lawfully take action against such an employee for disclosing compensation information. Frey replied that the final rule does not impose any training requirements, but the OFCCP would encourage all contractors to incorporate training on this provision into their existing training as a best practice.

Enforcement Actions, Remedies Examined

Discussing the government's pursuit of enforcement actions under the rule, Frey reminded participants that the OFCCP set forth in the final rule that a motivating factor framework is available to analyze claims under the executive order. If discrimination motivated the contractor's action even partially, then the contractor could still be liable for the actions that it took, Frey said.

“While the motivating factor framework is the permissible approach for claims brought under E.O. 13,365, it is not the only approach that the OFCCP can use to prove discrimination,” she added. “Relevant case law holds that while the motivating factor analysis is available in discrimination cases, plaintiffs may also proceed under the determinative factor framework as well.”

The agency will determine which approach to consider based on the specific facts of the case as they develop in the investigation and discovery. The OFCCP may decide to use both the motivating factor and the determinative factor to prove its case, “arguing, for example, that discrimination was the determinative factor in an employer's adverse action, but in the alternative, that it was at least a motivating factor,” she said.

The Supreme Court and multiple circuit courts have recognized this approach as permissible under Title VII of the 1964 Civil Rights Act, according to Frey. “The agency's remedies are designed to make the discrimination victim whole to the extent reasonably possible,” she said. Make-whole relief could include a job offer, back pay or front pay, if appropriate.

Additionally, the agency may pursue injunctive-type relief or corrective remedies to stop the violations and to prevent the violation from occurring. Other types of corrective remedies include training, monitoring, and reporting requirements, Frey added. Compensatory and punitive damages are not available in enforcement actions under the executive order. If the OFCCP is unable to resolve a violation, it will refer the violation to the DOL's Office of the Solicitor for further administrative enforcement proceedings, which may result in debarment from receiving future contracts and for modifications and extensions of existing contracts.

To contact the reporter on this story: Lydell C. Bridgeford in Washington at

To contact the editor responsible for this story: Heather Bodell at

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