Executive Order Aimed at Promoting Pay Equity and Transparency for Federal Contractors
On March 15, 2022, the Biden administration issued an Executive Order (E.O.) on Advancing Economy, Efficiency, and Effectiveness in Federal Contracting by Promoting Pay Equity and Transparency, one of several announced initiatives geared towards celebrating "Equal Pay Day." As seen with other recent executive orders, the directive reflects a broad policy goal of the administration. Here, that goal is to eliminate discriminatory pay practices and promote pay equity and transparent hiring practices.
Citing the Office of Personnel Management's (OPM) anticipated proposed rule that will "address use of salary history in the hiring and pay-setting processes for Federal employees” consistent with E.O. 14035, the E.O explains that its purpose is to implement "parallel efforts with respect to Federal procurement." The E.O. directs the Federal Acquisition Regulatory (FAR) Council, in coordination with the Secretary of Labor, to consider issuing rules designed to promote economy, efficiency, and effectiveness in federal procurement by enhancing pay equity and transparency for job applicants and employees of federal contractors and subcontractors. Specifically, the FAR Council is to consider rules that "limit or prohibit Federal contractors and subcontractors from seeking and considering information about job applicants' and employees' existing or past compensation when making employment decisions."
While the E.O. does not impose a timeline on the FAR Council, the announcement should put contractors on notice that forthcoming rules are likely to impact their hiring practices. The E.O. was announced on the same day the Office of Federal Contract Compliance Programs (OFCCP) issued Directive 2022-01 providing guidance on how the office should evaluate federal contractors' compliance with pay equity audit obligations. These announcements demonstrate that the Biden administration is committed to addressing apparent pay inequalities in federal procurement and that contractors can expect new FAR requirements regarding pay equity and transparency before too long.
If you have any questions about the E.O. or how it may impact your hiring practices, please contact the Miller & Chevalier attorneys listed below:
Elizabeth J. Cappiello*
*Former Miller & Chevalier attorney
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