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Federal contractors and sub-contractors will need to add a new handbook policy

October 5, 2015

By Michael J. Burns, courtesy of SBAM Approved Partner ASE

The Office of Federal Contract Compliance Programs (OFCCP) has published final regulations for federal contractors and subcontractors with:

  • Over $10,000 in revenue
  • Federal contracts or subcontracts for indefinite quantities which may exceed $10,000 in any year
  • Government bills of lading, services as a depository for federal funds or is an issuing or paying agency for U.S. savings bonds and notes in any amount  

These regulations address how a company must comply with the regulation’s pay transparency requirements. The rule sets out compliance responsibilities under Executive ‘Order 13655 prohibiting pay secrecy practices by employers covered under the Executive Order.

As part of this new set of regulations, as of January 11, 2016 covered federal contractors are required to post a new policy in their employee handbooks.  The rules publish a recommended or model policy statement that employers who must comply with the rule can place in their handbooks.

Below is the model handbook policy provided by the new regulations for firms that meet the requirements above:

Company will not discharge or in any other manner discriminate against employees or applicants because they have inquired about, discussed, or disclosed their own pay or the pay of another employee or applicant. However, employees who have access to the compensation information of other employees or applicants as a part of their essential job functions cannot disclose the pay of other employees or applicants to individuals who do not otherwise have access to compensation information, unless the disclosure is (a) in response to a formal complaint or charge, (b) in furtherance of an investigation, proceeding, hearing, or action, including an investigation conducted by the employer, or (c) consistent with the contractor’s legal duty to furnish information.

The National Labor Relations Board, though not requiring a formal policy statement, has for years had problems with employer policies prohibiting discussion or exchanges of information about wages and benefits. Further, as part of its payment of wages and fringe benefits statute, Michigan has long had a clause making it illegal to discipline or terminate an employee for disclosing his or her pay to others. This new regulation requiring notice through a formal policy statement adds another layer of compliance to long standing employment and labor law here in Michigan and elsewhere.

In addition to a new policy statement, the required “EEO is the Law’ poster will be revised for employers to post. Until that poster is updated employers can use a poster addendum found here.

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