The U.S. Department of Labor’s Office of Federal Contract Compliance Programs on September 15, 2014, announced a proposed rule that would prohibit federal contractors from maintaining pay secrecy policies. Under the terms of the proposal, federal contractors and subcontractors may not fire or otherwise discriminate against any employee or applicant for discussing, disclosing or inquiring about their compensation or that of another employee or applicant.

President Obama signed Executive Order 13665 on April 8, instructing the Secretary of Labor to propose a rule within 160 days to require so-called "pay transparency" among federal contractors. The proposed rule would amend the equal opportunity clauses in Executive Order 11246 to restrict contractors from taking adverse employment actions against employees because they inquire about, discuss, or disclose compensation information.  It would also add definitions for compensation, compensation information, and essential job functions, terms which appear in the revised clauses. The proposal also establishes two types of defenses that contractors can use against allegations of discrimination under EO 13665. 

The proposed rule would impose notice requirements on federal contractors. Specifically, the proposed rule would require the incorporation into existing employee manuals or handbooks of a revised equal opportunity clause that includes the prohibition against discrimination against those who inquire about, discuss or disclose pay information. It also would require dissemination of the revised equal opportunity clause to employees and job applicants.

In addition to Executive Order 11246, OFCCP enforces Section 503 of the Rehabilitation Act of 1973 and the Vietnam Era Veterans' Readjustment Assistance Act of 1974. As amended, these three laws prohibit those who do business with the federal government, both contractors and subcontractors, from discriminating in employment on the basis of sex, race, color, religion, national origin, disability or status as a protected veteran.

The Department of Labor's deadline for comments on the proposed pay-secrecy rule is December 16, 2014.  More information is available at http://www.dol.gov/ofccp/PayTransparencyNPRM.html.