Office of Federal Contract Compliance Programs (OFCCP)
Frequently Asked Questions
EO 13665 Final Rule
EO 13665 Final Rule
On September 11, 2015, the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) published a Final Rule to help renew the promise of equal pay for equal work among the millions of employees working for covered federal contractors. By prohibiting federal contractors and subcontractors from discharging or otherwise discriminating against their employees and job applicants for discussing, disclosing, or inquiring about compensation, the Final Rule will provide these workers with a potential way of discovering violations of equal pay laws so they can seek appropriate remedies in a timely manner. The Final Rule implements Executive Order (EO) 13665, signed by President Barack Obama on April 8, 2014. Additional information about the new Final Rule is provided in the below list of Frequently Asked Questions.
- Why did OFCCP issue this Final Rule?
- What does this Final Rule do?
- Where can I find a copy of the Final Rule?
- Which employers are covered under this Final Rule?
- If I am already a federal contractor or subcontractor, when will the Final Rule apply to me?
- Which employees are covered under this Final Rule?
- Which employee activities are protected by this Final Rule?
- Which employee activities are not protected by this Final Rule?
- How do the Final Rule’s employee protections differ from protections under the National Labor Relations Act (NLRA)?
- How do I file a complaint?
- When did the Final Rule take effect?
- If I am already a federal contractor, do I have to make any changes before the Final Rule takes effect on January 11, 2016?
- The Final Rule states that it applies to contracts entered into or modified on or after the effective date of the Final Rule. What are some examples of modifications to existing contracts?
- When will the Federal Acquisition Regulation (FAR) be updated to reflect the new Final Rule requirements?
Overview of the Final Rule
- Does the Final Rule prohibit contractors from having formal and informal pay secrecy policies?
- Does the Final Rule’s definition of “compensation” only include an employee’s paycheck or salary?
- Is the Final Rule’s definition of “compensation” different from the definition in OFCCP’s Directive 2013–03?
- What is “compensation information”?
- Is the Final Rule’s definition of “essential job functions” different from the definition under the Americans with Disabilities Act, as amended (ADA)?
- Are there any contractor defenses for alleged violations?
- What is the general, or “workplace rule” defense to alleged violations?
- What is an example of when a federal contractor might raise the general, or “workplace rule” defense?
- What is the “essential job functions” defense to alleged violations?
- What is an example of a job or job function that meets the definition of “essential job functions” under the Final Rule?
- Can an employee discuss or disclose a potential pay discrepancy discovered during the performance of her essential job functions?
- How will OFCCP analyze an allegation of discrimination to determine whether a violation has occurred?
- Why does the Final Rule use a discrimination framework, rather than a retaliation framework?
- Does the Final Rule make changes to the equal opportunity clause in federal contracts and subcontracts?
- Does the Final Rule change the way the equal opportunity clause may be incorporated “by reference” into contracts and subcontracts?
- Does the Final Rule require employers who are federal contractors to make disclosures about what they pay their employees?
- Does the Final Rule require contractors to collect data or conduct any additional data analysis relating to compensation?
- Does the Final Rule change the requirements for solicitations and advertisements for employees?
- Will the “EEO is the Law” poster be revised in light of the Final Rule? If so, should contractors stop using the current poster when the Final Rule takes effect?
- Do I need to update my company’s manual or handbook?
- Where can contractors find the prescribed nondiscrimination provision required by the Final Rule?
- May the nondiscrimination provision language be altered when incorporating it into existing manuals or handbooks, or when posting it for applicants?
- Does the Final Rule require a posting requirement, separate from the “EEO is the Law” poster?
- Does the Final Rule impose a training requirement?
- Does the Final Rule prohibit contractors from having policies designed to protect proprietary business information or trade secrets?
Technical Assistance and Public Education
- What will OFCCP do to provide technical assistance?
- How do I sign up to participate in these events?
- What should I do if I have a question that is not answered by OFCCP’s Final Rule or other materials?
This rule provides a critical tool to encourage pay transparency, so workers have a potential way of discovering violations of equal pay laws and can seek appropriate remedies. Prohibiting pay secrecy policies contributes to building an economy that works for everyone, and helps make the contractor workforce more efficient. Pay transparency helps level the playing field for women and people of color, and provides employers access to a diverse pool of qualified talent. OFCCP issued this Final Rule to implement Executive Order (EO) 13665 signed by President Barack Obama on April 8, 2014. EO 13665 amends section 202 of Executive Order 11246, which already prohibits employment discrimination by federal contractors based on race, color, religion, sex, sexual orientation, gender identity, and national origin.
The Final Rule prohibits federal contractors from discharging or discriminating against employees or applicants who inquire about, discuss, or disclose their own compensation or the compensation of another employee or applicant. The rule will also contribute to reducing pay discrimination and ensuring that employees receive fair compensation by enhancing the ability of federal contractors and their employees to detect and remediate unlawful discriminatory practices.
The Final Rule is available on the OFCCP Web site at www.dol.gov/ofccp/PayTransparency.html where you can read the rule as published in the Federal Register.
The Final Rule generally applies to any business or organization that (1) holds a single federal contract, subcontract, or federally assisted construction contract in excess of $10,000; (2) has federal contracts or subcontracts that have a combined total in excess of $10,000 in any 12–month period; or (3) holds government bills of lading, serves as a depository of federal funds, or is an issuing and paying agency for U.S. savings bonds and notes in any amount.
Employers that enter into a new covered federal contract, or modify an existing covered federal contract, on or after January 11, 2016 will be subject to the Final Rule.
The Final Rule applies to any employee or job applicant that works for, or applies to work for, a company that has a covered contract with the Federal Government.
The Final Rule protects an applicant or employee’s inquiries, discussions, and disclosures regarding his or her own compensation, or the compensation of another applicant or employee. This protection would typically apply where the applicant or employee obtains this information through ordinary means, such as conversations with co–workers or an anonymous note from a co–worker.
There are two broad categories of inquiries, discussions, or disclosures that may not be protected.
First, inquiries, discussions, or disclosures of compensation information that employees obtain through their “essential job functions” are not protected. Information is obtained as a part of an employee’s “essential job functions” if:
- access to compensation information is necessary to perform that function or another routinely assigned business task, or
- the function or duties of the position include protecting and maintaining the privacy of employee personnel records, including compensation information.
However, employees with such essential job functions are protected under the Final Rule to the extent that they (a) discuss their own compensation with other employees or (b) discuss possible disparities involving another employee’s compensation with a management official or while using the contractor’s internal complaint process. Additionally, even if an employee has access to compensation information as part of her essential job functions, she may disclose or discuss the compensation of applicants or employees in response to a formal complaint or charge, investigation, proceeding, hearing or action. Further, these employees are protected by the Final Rule to the extent that they disclose or discuss the compensation of other applicants or employees based on information received through means other than essential job functions access.
Second, the Final Rule provides a defense for contractors in the event that compensation inquiries are made while violating a consistently and uniformly applied workplace rule, so long as that rule doesn’t generally prohibit compensation disclosures. For example, an employer may have a rule that prohibits employees from being disruptive in the workplace. An employee may violate that rule by standing on his desk and repeatedly and disruptively shouting out his pay. In this case, the employee may be disciplined for those actions, if he were disciplined for being disruptive and not for disclosing his pay, as long as the employer consistently and uniformly applied the workplace rule.
Although both the NLRA and the Final Rule prohibit contractors from discriminating against employees and job applicants who discuss or disclose their own compensation or the compensation of other employees or applicants, there are differences in the extent of the protections. Unlike the NLRA, the Final Rule extends protections to supervisors, managers, agricultural workers, and employees of rail and air carriers.
You may file a discrimination complaint by:
- Completing and submitting a form online through OFCCP's Web site;
- Completing a form in person at the OFCCP office nearest to where you live or work; or
- Mailing or faxing a completed form to the OFCCP regional office that covers the state where you live or work.
The complaint form is available online at https://www.dol.gov/ofccp/regs/compliance/pdf/pdfstart.htm and in paper format at all OFCCP offices. To find the office nearest you, visit the online listing of OFCCP offices at https://www.dol.gov/ofccp/contacts/ofnation2.htm.
You must file your complaint within 180 days from the date of the alleged discrimination, unless the filing date is extended for a good cause shown. Some examples of what might be good cause include the existence of some extraordinary circumstance that prohibited you from filing before the deadline such as a significant health issue, military deployment, incarceration, or possibly being unaware of the discrimination. In addition, you must remember to sign your completed complaint form. If you fail to do so, OFCCP will still take your complaint but an OFCCP investigator will ask you to sign the form during a follow–up interview.
The Final Rule became effective 120 days after its publication in the Federal Register. This means that it is effective on January 11, 2016, and it applies to covered contracts entered into or modified on or after that date.
No. The Final Rule becomes effective on January 11, 2016, and only applies to employers that enter into a new covered federal contract or subcontract, or modify an existing covered federal contract or subcontract, on or after that date. Contractors are not required to make changes before January 11, 2016, although contractors are encouraged to review their policies and procedures to ensure that they will be consistent with the Final Rule once it is effective.
Contractors and contracting agencies may reach an agreement to modify an existing contract for a variety of reasons. For example, a modified contract may extend the length of an existing contract beyond the original end date, or a modified contract may reflect revised requirements or specifications.
Updating the FAR is a separate process that is currently underway through the FAR Council. OFCCP is being consulted during that process and is working to ensure that updates to the FAR reflect the Final Rule’s requirements. Regardless of that separate FAR process, this Final Rule applies to all contracts entered into or modified on or after January 11, 2016, the effective date of the Final Rule.
For more information about the process, please visit the FAR Council Web page at https://acquisition.gov/far/.
Overview of the Final Rule
Yes. Contractors are prohibited from having polices that prohibit or tend to restrict employees or applicants from discussing or disclosing their compensation or the compensation of others. Therefore, if a contractor has a policy that prohibits employees from talking to each other about end–of–the–year bonuses, it would be considered a discriminatory action under the Final Rule, as it prohibits employees from discussing their compensation.
No. The Final Rule includes a broad definition of “compensation,” which includes more than an employee’s paycheck or salary. The definition of “compensation,” which extends to employees and applicants, includes, but is not limited to, salary, wages, overtime pay, shift differentials, bonuses, commissions, vacation and holiday pay, allowances, insurance and other benefits, stock options and awards, profit sharing, and retirement.
The definition of “compensation” in the Final Rule has the same meaning as “compensation” in OFCCP’s Directive 2013–03, entitled “Procedures for Reviewing Contractor Compensation Systems and Practices.” Although the wording of the “compensation” definition in Directive 2013–03 is not identical to the definition of “compensation” in the Final Rule, Directive 2013–03 should be interpreted in a manner consistent with the Final Rule.
“Compensation information” refers to the amount and type of compensation provided to employees or offered to applicants. Examples of “compensation information” include the desire of the contractor to attract and retain a particular employee for the value the employee is perceived to add to the contractor’s profit or productivity; the availability of employees with like skills in the marketplace; market research about the worth of similar jobs in the relevant marketplace; job analyses, descriptions, and evaluations; salary and pay structures; salary surveys; labor union agreements; and contractor decisions, statements and policies related to setting or altering employee compensation.
Yes. The Final Rule’s definition of “essential job functions” is different from the ADA in that it emphasizes access to and the use of compensation data, while the ADA focuses on the general duties and uniqueness of a position. The Final Rule uses categories or factors to determine whether a job or job function falls under the definition of “essential job functions.” These categories are: (1) the access to compensation information is necessary in order to perform that function or another routinely assigned business task; or (2) the function or duties of the position include protecting and maintaining the privacy of employee personnel records, including compensation information.
Yes. The Final Rule provides a general, or “workplace rule,” defense and an “essential job functions” defense to alleged violations.
The general defense allows contractors to pursue a defense to alleged violations so long as that defense is not based on a rule or policy that prohibits employees or applicants from discussing or disclosing compensation information. This defense could apply, for example, in situations where a contractor disciplines an employee for a violation of a consistently and uniformly applied workplace rule.
A federal contractor might have a rule to give verbal warnings to employees who exceed their allotted break time one time by five minutes. For the contractor to act in a uniform manner, it would apply the same corrective action — here, a verbal warning — to employees who exceed their allotted break time once by five minutes, including any employees who may have been discussing compensation. The fact that the employees were discussing compensation should not impact the severity of the discipline they receive pursuant to the workplace rule. The Final Rule requires that contractors uniformly apply workplace rules to similarly situated employees, regardless of their protected activity, to prevent contractors from using the rule as a way to avoid liability for discrimination.
The “essential job functions” defense provides contractors with a defense for alleged violations when an employee (a) as part of that employee’s essential job functions has access to the compensation information of other employees or applicants and (b) discloses such compensation information to individuals who do not otherwise have access to it.
The position of a human resource manager who has access to the sensitive compensation information of others within an organization is an example of a job that would fall under the Final Rule’s definition of “essential job functions.” In this particular example, a human resource manager is authorized access to compensation information to perform routinely assigned business tasks. A human resource manager may also have a duty to protect this type of information from disclosure. Therefore, a human resource manager who discloses or discusses the compensation of applicants or employees, based on information that the manager obtained through the performance of his or her job, is not protected under the Final Rule.
In contrast, a janitor’s job functions would not meet the Final Rule’s definition of “essential job functions.” If the primary purpose of the janitor’s position is to clean (i.e., sweep, dust, vacuum), doing so does not require the janitor to access confidential compensation information. Similarly, merely cleaning does not require the janitor to maintain the privacy of personnel records. Finally, janitors are not typically authorized to access compensation information. The contact with the compensation information must be more than incidental; therefore, if the janitor discloses or discusses the compensation of applicants or employees, the janitor’s actions would be protected under the Final Rule.
An employee who has access to pay and compensation information as part of her essential job functions has a duty to protect such information from disclosure. However, this duty does not preclude her from pursuing her own possible compensation discrimination claim, responding to a formal complaint or investigation, or raising potential pay disparities involving the compensation of other employees to a management official with the contractor or while using the contractor’s internal complaint process. The employee would also not be prohibited from sharing her own compensation with others, even if she does not believe she is being discriminated against.
Executive Order 13665 and the Final Rule prohibit discrimination against any employee or applicant. Therefore, OFCCP will use the causation frameworks that are available in discrimination cases — including the “motivating factor” framework. Under the motivating factor framework, where the contractor has a lawful reason for its action, OFCCP would have to determine that the improper reason, i.e., disclosure or discussion of compensation by the applicant or employee, was a motivating factor for the adverse action even if a lawful reason also motivated the adverse action. Under this framework, the contractor cannot defeat liability once the existence of an impermissible motivating factor has been established. However, if the contractor can demonstrate that it would have taken the same action in the absence of the impermissible motivating factor, it would not be required to provide monetary relief and certain injunctive relief.
Although the motivating factor framework is a permissible approach, it is not the only approach OFCCP may use to analyze allegations of discrimination. OFCCP has the discretion to determine the approach it will take on a case–by–case basis. For example:
- In “mixed motive” cases — where, for instance, the employer can show that it fired an employee in part for taking excessive breaks, but where there is also evidence that the employer fired the employee in part for discussing compensation — the motivating factor approach would be appropriate.
- In “single motive” cases — where, for instance, the employer claims that it fired an employee for taking excessive breaks but the evidence shows that this is demonstrably false — OFCCP may opt to proceed under the more traditional “determinative factor” or “pretext” approach.
- OFCCP may also analyze a case via both frameworks, finding, for instance, that discrimination was the determinative factor in an employer’s adverse action but, in the alternative, that it was a motivating factor.
The Final Rule adopts a discrimination framework rather than a retaliation framework for a number of reasons. First, the protection afforded by Executive Order 13665 differs from the traditional Title VII retaliation framework. While Title VII retaliation claims currently require either opposition to an unlawful employment practice or participation in a formal investigation, the protection in Executive Order 13665 protects any compensation inquiries, discussions, or disclosures. Additionally, the protections in Executive Order 13665 are inherently and uniquely connected to discrimination claims. The Order’s protections are geared not only to safeguard the integrity of existing pay discrimination laws, but also to allow workers to discover discrimination that would otherwise be hidden. This protection is also interrelated with contractors’ existing and ongoing affirmative action obligations to evaluate and report on their compensation systems for the existence of potentially discriminatory disparities.
Finally, there is a close relationship between the activity protected by Executive Order 13665 and the National Labor Relations Act, which also permits a “motivating factor” analysis. Many claims would be actionable under both laws, and thus maintaining a uniform standard of analysis, to the extent possible, should minimize confusion for all parties.
Yes. The equal opportunity clause that is currently included in covered federal contracts and subcontracts, federally assisted construction contracts and subcontracts, and purchase orders must be revised. The revised clause includes a provision prohibiting contractors from discharging, or in any manner discriminating against, any employee or applicant for employment because the employee or applicant inquired about, discussed, or disclosed the compensation of the employee or applicant or another employee or applicant.
No. Contractors may continue citing to 41 CFR 60–1.4, the equal opportunity clause provision of the regulations, to incorporate by reference the Executive Order 11246 equal opportunity clause into their contracts and subcontracts. The Final Rule does not change this option.
No. The Final Rule does not require contractors to make any additional disclosures about what they pay their employees. Covered contractors are only prohibited from discharging, or in any other manner discriminating against, any employee or applicant for employment because the employee or applicant inquired about, discussed, or disclosed their own compensation or the compensation of others, subject to the defenses in the rule.
No. The Final Rule does not require contractors to conduct any additional data analysis related to the compensation of applicants and employees.
No. The Final Rule does not change the requirements for solicitations and advertisements.
OFCCP is currently working with the Equal Employment Opportunity Commission (EEOC) to update the “EEO is the Law” poster in light of changes in several new regulations. While OFCCP is working with EEOC to revise the poster, contractors should continue using the existing poster. OFCCP will post a notice on its Web site to let contractors know when the new poster is available for use. In the interim, OFCCP has a supplement or insert for contractors to use along with the current poster that will reflect all of the recent regulatory changes. The supplement is available on OFCCP’s Web site.
Contractors are required to incorporate a nondiscrimination provision, as prescribed by the Director of OFCCP and made available on the OFCCP Web site, into existing employee manuals or handbooks.
The nondiscrimination provision is available on OFCCP’s Web site at www.dol.gov/ofccp/PayTransparency.
Because OFCCP believes that uniform use of the nondiscrimination provision is necessary to ensure consistency and clarity in the information provided to applicants and employees, contractors must, at a minimum, use the nondiscrimination provision provided on the OFCCP Web site. Of course, nothing in the Final Rule limits a contractor from providing additional information to their employees about their rights and obligations.
Yes. In addition to the “EEO is the Law” poster, contractors must also disseminate the nondiscrimination provision by either electronic posting or by posting a copy of the provision in conspicuous places available to employees and applicants for employment. The nondiscrimination provision is prescribed by the Director of OFCCP and made available on the OFCCP Web site.
No. The final rule does not require contractors to modify their existing trainings or meetings to include a review of the new prohibition in the Final Rule. Although the Final Rule does not require training, OFCCP encourages all contractors to incorporate training on this new nondiscrimination provision into its existing personnel training as a best practice.
Although contractors are generally prohibited from discriminating against applicants or employees for discussing or disclosing compensation, a company policy that is narrowly tailored to prohibit disclosure of specific proprietary business information or trade secrets, or that is otherwise designed to be consistent with federal or state privacy laws, could fall within the general “workplace rule” defense already set forth in the rule.
Technical Assistance and Public Education
During the period between publication and the effective date, OFCCP will publish compliance assistance materials such as a “Fact Sheet” and “Frequently Asked Questions.” OFCCP will also host Webinars on the amended requirements, and conduct workshops and forums to listen to any questions and concerns contractors and other stakeholders have about the requirements of the Final Rule. As with the implementation of its other rules, OFCCP is committed to engaging its stakeholders with the goals of providing access to information, identifying and addressing issues that might hinder the successful implementation of this Final Rule, and providing compliance assistance to contractors. OFCCP will publish additional technical assistance materials after the effective date of the Final Rule, as appropriate.
OFCCP will provide advance notice of these opportunities on its Web site, along with information about how to participate. To view scheduled technical assistance webinars and stakeholder events, visit https://www.dol.gov/ofccp/PayTransparency.html or the DOL Events Calendar at http://webapps.dol.gov/calendar/.
Contractors and other stakeholders may always reach out to OFCCP’s Customer Service Desk at 1–800–397–6251, to OFCCP District or Area offices, or to OFCCP’s public email box at OFCCP–Public@dol.gov with questions about the application of the Final Rule.