Federal Contractors – New Executive Orders Regarding Retaliation

Here is an interesting article from our friends at Thomson Reuters regarding two new Executive Orders recently signed by President Obama:

The first is Executive Order No. 13665 (79 Fed. Reg. 20,749, Apr. 11, 2014), which prohibits retaliation by covered federal contractors and subcontractors against employees or applicants who inquire about, discuss, or disclose details of their own or other employees’ or applicants’ compensation. The stated goal of the executive order is to provide workers with greater ability to identify violations of equal pay laws. New regulations implementing the executive order are to be proposed within 160 days of the date of the executive order.

The second is a Presidential Memorandum (79 Fed. Reg. 20,751, Apr. 11, 2014), which directs the Secretary of Labor to propose a new rule (within 120 days) requiring covered federal contractors and subcontractors to submit to the Department of Labor (DOL) summary data on compensation paid to their workers, including data regarding sex and race.

How does the executive order differ from the existing non-retaliation requirements of the National Labor Relations Act (NLRA)?

Most employers should already be familiar with Sections 7 and 8 of the NLRA, which prohibit employers from retaliating against covered employees who discuss the terms and conditions of their employment, including the terms of their pay, with other workers. It can come as a surprise to some employers that they are covered by these anti-retaliation provisions under the NLRA even though they do not have a unionized workforce.

In many respects, the anti-retaliation principles of the executive order mirror those under the NLRA and the applicable case law. However, federal contractors and subcontractors need to be aware that, unlike the NLRA (which does not protect supervisors), the executive order will cover all levels of employees, including management- and executive-level employees.

What impact does the non-retaliation executive order have on federal contractors?

Many employers include broad confidentiality and non-disclosure restrictions in executive and management-level employment agreements and benefit plans. Such agreements for individuals who are supervisors under the NLRA are not affected by the NLRA’s restrictions, but the scope of the executive order is not limited to non-supervisors. Federal contractors and subcontractors will need to review employment agreements and benefit plans for any provision restricting those employees from disclosing or discussing their compensation and benefits or inquiring about the compensation and benefits of others. Federal contractors and subcontractors may need to amend their employment agreements and benefit plans to avoid violating the executive order.

The presidential memorandum refers to employers submitting “summary data.” What impact will this have on federal contractors?

Until the proposed new rule is published by the DOL (which must happen within 120 days of the date of the memorandum), we do not know exactly what information will be required or the format in which data will need to be submitted to the DOL. It will be interesting to see how the rule will attempt to address the different forms of compensation (including base salary or wages, commissions, bonuses, stock options, etc.) and collect data that is meaningful and capable of being used for analysis and comparison purposes. Employers will be concerned about both the administrative burden of collecting the data and the confidentiality issues related to disclosing that data to the DOL. Federal contractors and subcontractors will already be familiar with this type of information-gathering and reporting through preparing EEO-1 and VETS-100A forms and annual affirmative action plans, but compiling compensation data is likely to be a more complicated task, and it remains to be seen how much of an additional burden the final rule will create.

President Obama directed the DOL to propose regulations in 160 days for the non-Executive Orders Regarding Retaliation” href=”http://www.ortegabusinesslawfirm.com”>retaliation executive order and 120 days for the summary data presidential memorandum. When should federal contractors expect final regulations?

That is anyone’s guess! It is likely that the proposed regulations and rule will be published within the 160/120 days specified, but at that point the proposed regulations and rule will be open for comment and may go through a number of amendments or redrafts. It could be many months before the final regulations and rule are published and take effect.