On Monday, the Department of Labor’s Office of Federal Contractor Compliance Programs (“OFCCP”) issued a proposed rule that would bar federal contractors from firing or otherwise retaliating against employees or applicants for discussing their pay or the pay of their co-workers.  The rule implements an executive order signed by President Obama in April, which instructed the DOL to issue a rule requiring pay transparency among federal contractors.

In the proposed rule, the OFCCP noted that contractors’ pay secrecy policies interfere with the government’s requirement that the workers of federal contractors be compensated based on merit.  OFCCP also asserts that pay secrecy policies could erode employees’ trust and motivation, leading to decreased worker productivity.

President Obama signed Executive Order 13665 on April 8.  The Order directed the Secretary of Labor to propose a rule within 160 days to require pay transparency among federal contractors.  The proposed rule, available for public inspection yesterday, would amend the equal opportunity clauses in Executive Order 11246 to afford protections to workers who discuss pay.  It would also add definitions for compensation, compensation information, and essential job functions, terms which appear in the revised clauses.

The proposed rule also establishes two defenses that contractors can raise against allegations of discrimination under EO 13665.  The first permits contractors to assert a general defense that the allegedly discriminatory employment decision was based on a legitimate workplace rule that does not violate paragraph (3) of the equal opportunity clause.  The second permits contractors to assert the defense that non-disclosure of compensation information was part of the employee’s essential job functions.

Monday’s proposed rule follows another proposed rule that would require government contractors to disclose information on how much they pay workers of different sexes and races.  That rule resulted from a memorandum signed by President Obama on the same day as the Executive Order prohibiting retaliation against employees who discuss their wages.

The rule will be published in the September 17 issue of the Federal Register and open for public comment for 90 days.