On January 29, 2009, then-President Barack Obama signed into law the Lilly Ledbetter Fair Pay Act, which sought to make equal pay laws more enforceable. The Biden administration marked the 15th anniversary of a landmark federal pay equity law and called for new action to help close gaps in pay for federal employees and employees of federal contractors.
“Women workers are still paid on average 84 cents for every dollar paid to men, and the disparities are even greater for many women of color. These inequities can add up to millions of dollars lost over the course of a lifetime,” the White House said in a January 29 statement.
The White House further issued two Executive Orders that were aimed at advancing pay equity for both the federal workforce and employees of federal contractors.
Advance Pay Equity for Federal Workers
As part of the White House’s efforts, the Office of Personnel Management (OPM) issued a final rule ensuring that more than 80 federal agencies will no longer be able to consider an individual’s current or past pay when determining the salaries of federal employees.
It further ended the use of salary history in pay-setting decisions as a proven way to help curb pay discrimination that can follow workers from job to job and ensure that salaries are based on applicants’ skills, experience, and expertise. OPM noted that salary history is not necessarily a good indicator of worker value, experience, and expertise, and it also may contain or exacerbate biases.
“For individuals receiving their first appointment as a civilian employee of the Federal Government (or a reappointment after a break in service) in one of these pay systems, agencies will not be able to set pay based on a job candidate’s non-Federal salary or pay history, which could vary between equally qualified candidates, or based on a competing job offer,” OPM announced via the Federal Register. “Agencies will also be required to have policies regarding setting pay based on a previous Federal salary for employees who have previous civilian service in the Federal Government.”
This final rule is effective April 1, and agencies must be in full compliance with this final rule no later than October 1.
“The federal government has been, and continues to be, a national leader in pay equity,” said OPM Director Kiran Ahuja in a statement. “Relying on a candidate’s previous salary history can exacerbate preexisting inequality and disproportionally impact women and workers of color. With this regulation, the Biden-Harris Administration sets a new standard and demonstrates to the nation that we mean business when it comes to equality, fairness, and attracting the best talent.”
Promoting Economy, Efficiency, and Effectiveness in Federal Contracting
The White House has further sought to advance pay equity and pay transparency. The Federal Acquisition Regulatory (FAR) Council has issued a proposal to prohibit federal contractors and subcontractors from seeking and considering information about job applicant’s compensation history when hiring or setting pay for personnel working on or in connection with a government contract.
In addition, the FAR proposal would require federal contractors and subcontractors to disclose expected salary ranges in job postings, a policy that has been shown to reduce pay secrecy, help workers negotiate, and reduce pay gaps. Such proposed policies are seen as helping federal contractors recruit, diversify, and retain talent; improve job satisfaction and performance; and reduce turnover—all factors associated with promoting the economy, efficiency, and effectiveness of the federal contractor workforce.
The Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA) are proposing to amend the FAR to implement a proposed Government-wide policy developed by the Administrator for Federal Procurement Policy (OFPP Administrator)
Under the proposed policy and the proposed regulatory amendments, contractors and subcontractors would also be required to disclose the compensation to be offered to the hired applicant in job announcements for certain positions.
Interested parties have until April 1, to submit written comments to the Regulatory Secretariat to be considered in the formation of the final rule.
Affirming Equal Pay Obligations for Federal Contractors
The Department of Labor’s (DoL’s) Office of Federal Contract Compliance Programs has also issued guidance clarifying existing protections against discrimination in hiring or pay decisions.
It was meant to help federal contractors and current and prospective contractor employees understand when reliance on an individual’s compensation history for hiring or pay decisions may result in unlawful discrimination.
“Inquiring into and relying on an applicant’s compensation history for making hiring and compensation decisions can perpetuate and compound existing pay disparities for workers who have experienced inequality in the past, such as women, workers of color, workers who entered the labor market during a recession, and workers who temporarily left the workforce due to caregiving responsibilities,” the DoL’s Office of Federal Contract Compliance Programs (OFCCP) noted in its recently updated FAQ on its website, and added, “This practice also creates inefficiencies for employers and the economy as a whole, as pay disparities decrease job satisfaction, performance, retention and productivity.”
