New Regulation Preventing Contractors From Retaliating Against Employees Who Disclose their Compensation Level

Last week the FAR (Federal Acquisition Regulation) Councils published a spate of new regulations. We discussed one of those last Friday (see Prohibition on Contracting with Delinquent Taxpayers and Felons) and will continue our coverage this week on several that directly affect Government contractors (and prospective contractors). Today we'll discuss the new prohibition on retaliating against employees who disclose or discuss compensation matters. Now you might think that this is old news and it is, in a way. In 2014, the President issued an executive order (E.O.) called "Non-Retaliation for Disclosure of Compensation Information". That was followed in September 2015 with the Department of Labor's implementing rule entitled "Government Contractors, Prohibitions Against Pay Secrecy Policies and Actions". So, why is it necessary to add more rules; rules upon rules? The FAR Council's rationalize it this way:

Issuance of an interim rule allows for the requirements to be included in solicitations and contract immediately and puts contractors on clear notice of legal responsibilities that are already in effect. If the FAR rule is not issued ... this new requirement will not be incorporated into contracts, and contractors will be put at unnecessary risk of non-compliance with the E.O and labor rule. More importantly, this may unnecessarily delay action by contractors in providing the important protections for contract employees that the E.O. and labor rule are designed to provide.

The new rule prohibits contractors (and subcontractors) from discharging, or in any other manner discriminating against, any employee or applicant for employment because the employee or applicant inquired about, discussed, or disclosed the compensation of the employee or applicant or another employee or applicant.

This prohibition against discrimination does not apply to instances in which an employee who has access to compensation information of other employees or applicants as 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.

So now, employees may chatter freely about the compensation levels without fear of reprisal. A quick internet search didn't show any cases of reprisals against employees who disclosed their compensation information but, by golly, we now have a regulation in place - just in case it ever happens.