Quick hits
- OMB is evaluating a proposed rule from the FAR Council that would address pay equity in federal contracting.
- Details are not yet available, but the proposed rule will contain proposed requirements for federal contractors related to requesting salary histories from applicants and requiring compensation disclosures in job advertisements.
- The proposed rule is expected to be published in the Federal Register in February 2024.
The FAR Council includes members from OMB, the U.S. Department of Defense, the National Aeronautics and Space Administration (NASA), and the General Services Administration. The FAR Council coordinates changes to the Federal Acquisition Regulation, which applies to most federal acquisitions. proposed ruleIf approved and finalized, it would implement President Biden’s March 15, 2022 resolution. Executive Order 14069.
Background
Executive Order 14069, entitled “Promoting Economy, Efficiency, and Effectiveness in Federal Contracting by Promoting Pay Equity and Transparency,” aims to eliminate discriminatory pay practices affecting the federal workforce and the procurement of goods and services by the federal government. In particular, Executive Order 14069 contains two key sections:
- Section 1—Policy: The order seeks to eliminate certain wage practices affecting the federal workforce and contracting processes. The order mentions the use of salary history in contracting and wage setting.
- Section 2—Economy, Efficiency, and Effectiveness in Federal Acquisition: The order directs the FAR Council to consider proposed rules to improve pay equity and transparency for applicants for and employees of federal contractors.
The proposed rule would implement Section 2.
Key aspects of the proposed rule
Although details of the proposed rule have not yet been released, it will contain requirements for federal contractors related to requesting salary histories from applicants and requiring compensation disclosure in job advertisements.
- Limiting or prohibiting use of salary history: Contractors and subcontractors would be limited or prohibited from seeking and considering information about job applicants’ current or past compensation when making employment decisions for certain positions.
- Compensation disclosure in job postings: Contractors and subcontractors would be required to disclose compensation or salary ranges in job postings for certain positions.
The proposed rule is expected to be published in the Federal Register in February 2024, and comments will be accepted through April 2024, after which a final rule will be published and implemented following OMB review. The announcement of the proposed rule does not require any action by federal contractors at this time, but once approved, the Federal Acquisition Regulations (rules that govern federal government procurement policies and procedures in the United States) will be revised to incorporate the provisions of the final rule.
Many employers are already balancing various state and municipal/local laws related to pay transparency and salary history restrictions for applicants and employees. Following the passage of a final rule implementing Executive Order 14069, covered federal contractors and subcontractors will need to incorporate the requirements of a federal procurement regulation to this effect.
Ogletree Deakins’ Compliance, Government Contracting, and OFCCP Reporting Practice Group will continue to monitor developments and post updates to the Compliance, Government Contracting, and OFCCP Reporting and Pay Equity blogs as additional information becomes available.
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