New rule: Employees of federal contractors must be free to discuss pay

signs an employee will quit
Christian Schappel
by Christian Schappel
2 minute read

You’d think this would’ve gone without saying, given all of the one-sided legal hullabaloo in this area recently. But this is the federal government we’re talking about, and what should go without saying must be said (or, rather, carved into stone).
In a new rule issued by the DOL, the feds are officially saying: Let employees talk and ask questions about their pay — and the pay of others.
The issuing of the rule was the result of an executive order by President Obama.
The rule prohibits federal contractors from keeping “pay secrecy” policies.
The nuts and bolts of the new rule:

  • It applies to any organization that holds any contracts, subcontracts or federally assisted construction contracts that have a combined total of $10,000 or more in any 12-month period. It also applies to any organization that holds government bills of lading, serves as a depository of federal funds, or is an issuing and paying agency for U.S. savings bonds and notes in any amount.
  • It says federal contractors and subcontractors may not fire or discriminate against employees for discussing, disclosing or inquiring about their own pay or that of their co-workers.
  • It also protects those same types of pay discussions by job applicants.

What the NLRB has said

The National Labor Relations Board (NLRB) has already made it clear to employers — unionized or not — that employees must be free to discuss their wages. Any attempt to prevent these discussions violates Section 7 of the National Labor Relations Act. (We highlighted one such NLRB decision last May.)
In a nutshell, the NLRB said Section 7 allows employees to participate in “concerted activity” to improve the terms and/or conditions of their employment. Discussing wages falls under “concerted activity,” said the NLRB.

DOL: Protects women, people of color

In explaining the reasoning for issuing the rule, the DOL said:

“In too many workplaces around the country, however, a culture of secrecy keeps women from knowing that they are underpaid, and makes it difficult to enforce equal pay laws. Prohibiting pay secrecy policies and promoting pay transparency helps address the persistent pay gap for women …”

In addition, Patricia Shiu, director of the DOL’s Office of Federal Contract Compliance Programs, the office which drafted the rule, said:

“Pay secrecy practices will no longer facilitate the pay discrimination that is too often perpetrated against women and people of color in the workplace.”