Handbook Revisions Required for Companies with New Federal Contracts
In April 2014, President Obama issued Executive Order 13665 prohibiting retaliation by covered federal contractors (generally, companies with federal contracts or subcontracts totaling $10,000 or more) against any employee or applicant because the employee or applicant inquired about, discussed, or disclosed the compensation of the employee or applicant or another employee or applicant. Because the National Labor Relations Act already prohibits such retaliation by most employers, this Executive Order did not receive as much attention as other recent Executive Orders related to federal contractors. Nonetheless, covered federal contractors need to be familiar with the final rule issued by the Office of Federal Contractor Compliance Programs (OFCCP) in September, 2015. The final rule is effective on January 11, 2016 and applies to contractors who enter into a new covered federal contract, or modify an existing covered federal contract, on or after that date. If your company enters into such federal contracts, you will need to make a change to your employee handbook in addition to modifying your postings.
To comply with the new rule, covered federal contractors must include specific language (which can only be changed to properly identify the employer) in their employee handbooks or manuals. The language that has been prescribed by the OFCCP is as follows:
The contractor will not discharge or in any other manner discriminate against employees or applicants because they have inquired about, discussed, or disclosed their own pay or the pay of another employee or applicant. However, employees who have access to the compensation information of other employees or applicants as a part of their essential job functions cannot disclose the pay of other employees or applicants to individuals who do not otherwise have access to compensation information, unless the disclosure is (a) in response to a formal complaint or charge, (b) in furtherance of an investigation, proceeding, hearing, or action, including an investigation conducted by the employer, or (c) consistent with the contractor's legal duty to furnish information.
In addition, covered federal contractors must also post a revised copy of the "Equal Employment Opportunity is the Law" poster once it is issued by the OFCCP. In the meantime, the OFCCP requires that covered contractors post a supplemental posting, which can be found here.
Covered federal contractors are also required to distribute the nondiscrimination language provided above to employees and applicants through either an electronic posting (if electronic applications are accepted and other postings are made electronically) and/or by posting a copy of the provision in conspicuous places available to employees and applicants for employment. Further, if the contractor incorporates the required equal opportunity clauses into its subcontracts by reciting the full clauses, those clauses will need to be updated.
If you have questions related to this new requirement or any other employment-related requirements for federal contractors (including affirmative action), please contact Tami A. Earnhart
or any member of our Labor, Employment and Immigration Group.
This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.