Two New Executive Actions on Pay that Federal Contractors Must Heed

by Michael Haberman on April 10, 2014 · 0 comments


The President is using the "power of the pen" to advance his "pay fairness" agenda.

The President is using the “power of the pen” to advance his “pay fairness” agenda.

One April 8, 2014 President Barak Obama signed two Executive actions that require Federal Contractors to abide with new pay rules. Failure to abide with these orders could result in loss of all federal contracts the company has and at minimum will increase scrutiny of the company by the OFCCP.

Federal contractors are any company doing business with the Federal government or any other business doing business with a federal contractor. Businesses with 50 or more employees and contracts worth $50,000 or more must not only follow these rules but must also have written Affirmative Action Plans.

Executive Order

The first of the executive actions is an Executive Order prohibits contractors from retaliating against employees who share their compensation information. The President must not have been told by his advisors that many employees have had that protection since 1935 under the law called the National Labor Relations Act. Granted, the NLRA did not afford protection to supervisor, managers and human resources. The EO does not compel employers to publish compensation information nor does it require employees to tell others what they make. The White House said, however, that it does “provide a critical tool to encourage pay transparency, so workers have a potential way of discovering violations of equal pay laws and are able to seek appropriate remedies.”

Presidential Memorandum

The second executive action was a Presidential Memorandum that instructs “the Secretary of Labor to establish new regulations requiring federal contractors to submit to the Department of Labor summary data on compensation paid to their employees, including data by sex and race.” This data will be used by the OFCCP (Office of Federal Contract Compliance Programs) to enforce all the Executive Orders and punish companies not exercising enough “pay fairness and transparency.”

These actions follow the Presidential Executive Order that raised the minimum wage that must be paid by federal contractors to $10.10 per hour. The President has made it clear that he is going to use what he called “the power of his pen” to get past the Congress. The reaction to these actions certainly falls along political lines, but regardless of your political leanings these regulations are in effect for any company with a federal contract and they must be paid attention to.


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