The Labor Department issued a new rule Thursday prohibiting federal contractors from disciplining employees for discussing or inquiring about their company’s pay rates. The department said such “pay secrecy” rules conflicted with federal equal pay laws so companies would have to drop them.
“It is a basic tenet of workplace justice that people be able to exchange information, share concerns and stand up together for their rights. But too many women across the country are in the same situation: they don’t know how much they make compared to male counterparts, and they are afraid to ask,” said Labor Secretary Tom Perez.
He cited in particular the Lilly Ledbetter Fair Pay Act, which removed the statute of limitations on pursuing fair play claims. The department’s press release also included the often-debunked claim that women on average earn 77 cents for every dollar men make.
The rule was based on an executive order President Obama signed last year and will be enforced by the department’s Office of Federal Contract Compliance Programs. It will prohibit any company that is awarded a federal contract from firing or otherwise discriminating against employees for “discussing, disclosing, or inquiring about their own pay or that of their co-workers. The rule also protects pay discussions by job applicants.”
Employees of contractors who feel they have been punished or discriminated against can file a complaint through the the office.
“Pay secrecy practices will no longer facilitate the pay discrimination that is too often perpetrated against women and people of color in the workplace,” said office Director Patricia Shiu.
Federal contracting is a substantial part of the economy. The government spent $447 billion on contracting in 2014, according to a study by Bloomberg, and the Labor Department has said an estimated 28 million people are employed by federal contractors or subcontractors.
Altering the rules for federal contracting is one of President Obama’s favorite ways to make policy since the executive branch has exclusive control over it, allowing him to bypass Congress. Obama has issued numerous executive orders for contractors, including setting the minimum wage for them at $10.10 an hour, clarifying that federal anti-discrimination statues extend to transgendered contractors, and requiring all contractors to divulge any labor violations complaints during the bidding process.
His latest order, made Monday, requires all contractors to provide paid leave for workers.
The orders are mostly symbolic, meant to prod Congress to enact similar measures for all employers. The White House, for example, estimated that its paid leave order would affect 200,000 people — less than 1 precent of all people employed through federal contracting.
