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FAQ about Federal Acquisition Regulation (FAR) Amendment re: Non-Retaliation for Employee Disclosure of Compensation Information

Why Should I Care About this Amendment?

The federal government is mandating another disclosure to your employees, and adding new language to your government contracts.

Issue Date:

September 30, 2016

Summary of the Amendment:

Interim rule amending the Federal Acquisition Regulation (FAR) “to provide for a uniform policy for the Federal Government to prohibit Federal contractors from discriminating against employees and job applicants who inquire about, discuss, or disclose their own compensation or the compensation of other employees or applicants.”

Who does the rule apply to?

All federal contractors, both large and small.

How do employers communicate the rule to employees?

“In implementing the additional prohibition, the rule requires that contractors and subcontractors disseminate the nondiscrimination provision, using language prescribed by the Director of the Office of Federal Contract Compliance Programs (OFCCP), including incorporating the nondiscrimination provision into existing employee manuals and handbooks and posting it electronically or in conspicuous places available to employees and applicants.”

Why was the rule issued without prior public comment?

“Issuance of an interim rule allows for the requirements to be included in solicitations and contracts immediately and puts contractors on clear notice of legal responsibilities that are already in effect. If the FAR rule is not issued as an interim rule, this new requirement will not be incorporated into contracts, and contractors will be put at unnecessary risk of non-compliance with the [Executive Order] and labor rule. More importantly, this may unnecessarily delay action by contractors in providing the important protections for contractor employees that the E.O. and labor rule are designed to provide.”

How does this rule change government contracts?

The following language must now be included in all government contracts:

“(c)(5)(i) The Contractor shall 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 prohibition against discrimination does 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.

(ii) The Contractor shall disseminate the prohibition on discrimination in paragraph (c)(5)(i) of this clause, using language prescribed by the Director of the Office of Federal Contract Compliance Programs (OFCCP), to employees and applicants by—

(A) Incorporation into existing employee manuals or handbooks; and

(B) Electronic posting or by posting a copy of the provision in conspicuous places available to employees and applicants for employment.”

Now what?

The new language is required in all federal government contracts issued after September 30, 2016. If you have any specific questions about whether or not an employee discussion of compensation is covered by this rule, please contact attorney Adam Zuwerink at adam@govconlawyer.com or 231.457.4235