by Burton J. Fishman, Fortney & Scott, LLC

President Barack Obama issued two new requirements — an Executive Order (EO) plus a memorandum to the U.S. Department of Labor (DOL) — aimed at closing the wage gap for women and minorities as part of the White House's initiatives in support of Equal Pay Day on April 8, 2014. The requirements apply to all new federal contracts under EO 11246, about the broadest range possible. The memorandum focuses on compensation data. The EO deals with retaliation for disclosing or inquiring about wages. However, the new requirements largely put "old wine in new bottles" and are best understood as part of the administration's orchestrated effort to influence the political debate on women and minority compensation issues and to carry out the president's pledge to wield his executive power with a pen.

The memorandum directing the DOL's Office of Federal Contract Compliance Programs (OFCCP) to expand the collection of compensation data is a presidential imprimatur on an advance notice of proposed rulemaking (ANPRM) that was announced by the OFCCP in August 2011, nearly three years ago. Although it still has not completed that effort, the OFCCP already receives and can obtain enormous amounts of compensation data during the course of an audit. The independent National Academy of Sciences identified a number of serious concerns about the government's ability to collect, analyze, and use compensation data from employers in a meaningful manner. Perhaps in recognition of that critique, the new memorandum's provisions include:

• Directing the OFCCP to publish the proposed regulation in 120 days;
• An instruction to maximize the efficiency of the data-collection process, in part by avoiding new record-keeping requirements; and
• A goal of using the data to increase voluntary compliance.

The new EO prohibiting federal contractors from restricting employees' and applicants' ability to discuss compensation amends EO 11246. These requirements have also been addressed and enforced by another agency, the National Labor Relations Board (NLRB). The NLRB already has imposed similar obligations on organized and unorganized employers alike, although the EO will expand these requirements to managers, supervisors, and rail and air carrier employees. The EO's provisions include:

• Nonretaliation for inquiring about or discussing compensation with fellow workers or applicants;
• Recognition that employers may still require employees whose job duties involve compensation (e.g., HR and payroll positions) to keep such information confidential, while acknowledging that there may be instances where such information must be disclosed (e.g., in an investigation, in response to a charge, or consistent with a legal duty);
• An immediate effective date; and
• An order directing the DOL to publish proposed regulations in 160 days.

Because of the duplicative nature of the new requirements, it is not expected that they will have a material impact on the issues they are intended to address, although the consequences for noncompliance, including loss of federal contracts, are significantly greater. Nonetheless, these new compensation-related requirements are the latest in the growing list of expanded obligations and potential liabilities imposed on federal government contractors that will increase the burdens on and costs to the federal contractor community. The next action will be the publication of proposed regulations by the DOL later this year.