President Obama observed National Equal Pay Day by signing an Executive Order that prohibits federal contractors from retaliating against employees who discuss their pay with each other, and by releasing a Presidential Memorandum directing the Department of Labor (“DOL”) to develop a compensation data collection tool to assist the Office of Federal Contract Compliance Programs (“OFCCP”) in discovering pay discrimination.
Executive Order
The April 8, 2014 Executive Order (“EO”) amends Executive Order 11246 by prohibiting a federal contractor from discharging or retaliating against “any employee or applicant for employment because such employee or applicant has inquired about, discussed, or disclosed the compensation of the employee or applicant or another employee or applicant.” Employees, however, who have access to compensation information as part of their essential job duties, and who make unauthorized disclosures of such information are excluded from the EO’s protection.
As specified in the EO, “[i]t is the policy of the executive branch to enforce vigorously the civil rights laws of the United States, including those laws that prohibit discriminatory compensation practices.” According to the EO, “[w]hen employees are prohibited from inquiring about, disclosing, or discussing their compensation with fellow workers, compensation discrimination is much more difficult to discover and remediate, and more likely to persist.” Additionally, according to the EO, “ensuring that employees of Federal contractors may discuss their compensation without fear of adverse action will enhance the ability of Federal contractors and their employees to detect and remediate unlawful discriminatory practices . . . .”
The DOL will issue proposed regulations within the next 160 days. The National Labor Relations Act (“NLRA”), however, already generally protects the right of employees to discuss their pay. Therefore, unless a federal contractor or subcontractor does not fall within the coverage of the NLRA, the EO does not impose any new obligations on federal contractors and subcontractors.
Presidential Memorandum
The Presidential Memorandum, on the other hand, triggers the development of new obligations for federal contractors and subcontractors. In the Memorandum, President Obama directed the DOL to draft a proposed rule (i.e., data collection tool) that will require federal contractors and subcontractors to submit employee compensation data by sex and race to the DOL. President Obama noted that the rule will lead to effective enforcement of pay discrimination, which is currently impeded by a “lack of sufficiently robust and reliable data on employee compensation.”
The OFCCP has been interested in compensation practices for the last few years. Importantly, the compensation data collection tool envisioned by the Memorandum will provide the OFCCP access to compensation data, which it can use to select contractors for compliance audits. Accordingly, if a rule consistent with the Memorandum is promulgated by the DOL, federal contractors will need to fully understand their compensation data before submitting it to the OFCCP.
Hospitals and other health care providers frequently ask whether their receipt of reimbursement for medical care and services provided to Medicare or Medicaid patients renders them a federal contractor or subcontractor. According to the OFCCP, provider agreements, pursuant to which hospitals and other health care providers receive reimbursement for services covered under Medicare Parts A and B, and the provider agreements the hospitals and other health care facilities have entered into with State Medicaid agencies, are not covered government contracts under the affirmative action laws enforced by the OFCCP. Accordingly, a hospital or other health care provider is not covered under the affirmative action laws enforced by the OFCCP if its only contractual relationship with the federal government is as a participating provider under Medicare Parts A and B and Medicaid.
Stay tuned for further developments.