Happy New Year!  For the government contractor community 2016 seems to be picking up right where 2015 left off  – with implementation of new compliance obligations.

Eleven days into the new year and federal contractors are now subject to Executive Order 13665 – the Pay Transparency Executive Order.  While January 11, 2016 is officially the first day government contractors can be subject to the EO, the obligations are not immediately effective and instead trigger once a contractor enters into a new or modified contract of $10,000 or more.

The Pay Transparency Executive Order is one of the tools the Obama administration has provided OFCCP to address the persistent pay gap and pay discrimination. Other tools in OFCCP’s “tool box” include the Agency’s recently revised scheduling letter and the proposed Equal Pay Report.

Executive Order 13665 amends Executive Order 11246 and the Equal Opportunity Clause (EO Clause) to prohibit policies and practices which prevent applicants and employees from freely discussing their pay. While prohibiting discrimination or retaliation against employees or applicants for discussing pay, OFCCP has made clear that contractors and contractor employees are not required to disclose information to applicants or employees regarding the pay of other employees or applicants. Rather, the Rule prohibits adverse action against those who permissibly discuss or inquire about pay.

What do contractors need to do to implement the Pay Transparency regulations?

The good news for contractors is the Final Rule implementing the EO does not require any changes to language incorporating the EO Clause by reference into covered subcontracts or purchase orders. Whew.  However, if your contracts include the full language of the clause, instead of incorporating by reference, you will need to update the language.

The rule does require dissemination of a proscribed Pay Transparency Policy Statement. The Statement cannot be substantively modified and must be:

•  Included in employee handbooks or manuals (to the extent they exist); and
• Disseminated to applicants and employees by either posting it electronically or conspicuously posting it physically where applicants and employees can see it.

As a practical matter, the statement can be “posted” to applicants in the same manner in which the EEO is the Law is made available – through a link on the company’s career webpage.

With respect to the EEO is the Law poster, OFCCP says it will be updated to include a provision regarding pay transparency. In the meantime, the Agency has released a supplement which contains both pay transparency as well as LGBT notices. The supplement, and eventually the updated poster, will need to be posted in addition to dissemination of the prescribed policy statement as described above.

Given the regulatory agenda and OFCCP enforcement efforts, 2016 promises to be an eventful year for government contractors.  We’ll be here every step of the way, so make sure you join us for the adventure.