Obama Issues Symbolic Executive Order on Retaliation for Pay Disclosure

On April 8, 2014, President Obama issued Executive Order 13665—Non-Retaliation for Disclosure of Compensation Information.  The Executive Order states,

The contractor will not discharge or in any other manner discriminate 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. This provision shall not apply to instances in which an employee who has access to the compensation information of other employees or applicants as a part of such employee's essential job functions discloses the compensation of such other employees or applicants to individuals who do not otherwise have access to such information, unless such disclosure is in response to a formal complaint or charge, in furtherance of an investigation, proceeding, hearing, or action, including an investigation conducted by the employer, or is consistent with the contractor's legal duty to furnish information.

As most federal contractors are aware, this Executive Order is largely symbolic as the “concerted activity” clause found in Section 7 of the National Labor Relations Act (NLRA) has been interpreted both by the National Labor Relations Board (NLRB) and the courts to cover employee discussions about pay. Although the Executive Order seems to not add any new protections for employees, it does appear to provide broader protection to management employees, who are typically not covered under the NLRA.  The Executive Order further provides the OFCCP with yet another topic to address in its future audits.

The Executive Order being signed starts the usual rulemaking process.  Next, the Department of Labor will issue a Notice for Proposed Rulemaking (NPRM), which will be followed by a public comment period.  The effective date of the new regulations related to the Executive Order is still several months or more away.

In the meantime, contractors may voluntarily engage in best practices that are consistent with current NLRA provisions, until actual regulations are issued.  Examples of best practices include ensuring the company does not have any old polices regarding salary discussions, and that their managers are aware that it is permissible for employees to discuss their salary.


By  Mike Aamodt, Ph.D., Principle Consultant and Joanna Colosimo, M.A., Senior Consultant, DCI Consulting Group

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