IMPLEMENTING THE FINAL RULE ON GOVERNMENT CONTRACTORS, PROHIBITIONS AGAINST
PAY SECRECY POLICIES AND ACTIONS
Note: This guidance offers general information about the federal regulations concerning pay secrecy policies.
It is not a comprehensive treatise on the subject. For more information, contact the campus or system Human
Resources Department of the Office of the General Counsel.
Although some gender wage inequity is attributable to occupational segregation, other factors, like sex
discrimination, including gender stereotyping, contribute to the wage gap.1 On average women make between
78 and 82 cents for every dollar that a man makes (2013) and, over the course of her career, a woman may lose
as much as $420,000 due to wage inequities.2
On April 8, 2014, President Obama issued Executive Order No. 13665, entitled “Non-Retaliation for Disclosure
of Compensation Information,” which amends Executive Order No. 11246.
The Final Rule, implementing the Executive Order cites Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S.
618 (2007), in which a woman’s claim of sex discrimination concerning her pay was found to be untimely—in
part because she was unaware of the alleged discrimination due to the company’s pay secrecy policies.
Although her claim would not be untimely today,3 the Final Rule suggests that ending pay secrecy policies will
permit employees to more easily discover if they are victims of discriminatory pay policies, which, in turn, will
lead to greater enforcement of prohibitions against discrimination in compensation and, therefore, reduce the
wage gap.4
Although, as a Massachusetts public employer, the salaries of University employees are public record, see, A
Guide to the Massachusetts Public Records Law,5 there are provisions in the new regulations that require action.
First, the Final Rule amends 41 CFR § 60-1.4(a) by inserting a new paragraph into the equal opportunity clause
that is included in any federal contract issued or amended on or after January 11, 2016:
The contractor will not discharge or in any other manner discriminate against any employee or applicant
for employment because such employee or applicant has inquired about, discussed, or disclosed the
1
Government Contractors, Prohibitions Against Pay Secrecy Policies and Actions; Final Rule, 80 Fed. Reg.
54934 (September 11, 2015) (“Final Rule”)(citations omitted).
2
Id.
3
See, Ledbetter Fair Pay Act of 2009, Public Law 111-2 (January 29, 2009), which amended Title VII to
provide that, for purposes of calculating the period of limitations for filing a discrimination claim based on
compensation, the unlawful practice occurs:


when an individual becomes subject to a discriminatory compensation decision or other practice; or
when an individual is affected by application of a discriminatory compensation decision or other
practice, including each time wages, benefits, or other compensation is paid.
42 U.S. Code § 2000e–5(e)(3)(A).
4
The Final Rule also suggests that wage secrecy policies have a negative impact on productivity.
5
M.G.L. c. 66, s.10.
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Pay Secrecy Policies and Actions
compensation of the employee or applicant or another employee or applicant. This provision shall not
apply to instances in which an employee who has access to the compensation information of other
employees or applicants as a part of such employee's essential job functions discloses the compensation
of such other employees or applicants to individuals who do not otherwise have access to such
information, unless such disclosure is in response to a formal complaint or charge, in furtherance of an
investigation, proceeding, hearing, or action, including an investigation conducted by the employer, or is
consistent with the contractor's legal duty to furnish information.
(new) 41 CFR § 60-1.4(3). (The remaining sections are re-numbered).6
The Final Rule also adds new definitions to 41 CFR § 60-1.3:
“Compensation” is defined to include (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.”
“Compensation information” is defined simply as “the amount and type of compensation provided to employees
or offered to applicants.” However, the definition includes the following examples of compensation
information:








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.
NOTE: The Final Rule does not require contractors to disclose such information; rather the Final Rule
only prohibits discrimination against applicants or employees who inquire about, discuss, or disclose such
information (subject to certain defenses, see below).
A definition of “essential job functions” is also added. See below for discussion on employer defenses.
6
NOTE: as of 9/30/15 the Electronic Code of Federal Regulations has not been update to include the new
provisions (which are effective on January 11, 2016).
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Pay Secrecy Policies and Actions
Specific Action Items:
1. Disseminate the new nondiscrimination statement
a. In employee manuals or handbooks
Although the new regulations do not require employers to produce an employee manual or handbook, they do
require that a notice of the new nondiscrimination section be incorporated into any existing employee manual or
handbook. See, 80 Fed. Reg. 54934, 54949; 41 CFR § 60-1.35(c). Campuses should update any existing
employee manual or handbook to include a statement substantially similar to the following:
The University will not discriminate against applicants or employees for inquiring about, disclosing, or
discussing their compensation or the compensation of other applicants or employees. However,
employees who have ready access to compensation information or who are designated to protect or
maintain the privacy of applicants’ or employees’ compensation information should refer requests for or
inquiries about compensation information to the appropriate chief human resources officer and should
not disclose or discuss such matters directly.
Even in the absence of an existing employee manual or handbook, campuses should consider adopting a work
rule incorporating the second sentence. See below for discussion on employer defenses.
b. To employees and job applicants
The Office of Federal Contract Compliance Programs (OFCCP) is taking steps to produce a new “EEO is the
Law” poster, which will include the new nondiscrimination provision. See, 80 Fed. Reg. 54934, 54949; 41 CFR
§ 60-1.35(c). In the meantime, OFCCP has issued a Poster Supplement that reflects all of the recent regulatory
changes (including this one). Campuses should:
1) confirm that the most recent version (revised 11/09) of the “EEO is the Law” poster is posted
electronically or in conspicuous places available to employees and applicants for employment;
and
2) post the Poster Supplement (electronically or in conspicuous places available to employees and
applicants for employment).
What is NOT required:
The Final Rule does not require contractors to:

make any additional disclosures about what they pay their employees. See, Frequently Asked
Questions: EO 13665, Final Rule, #15.

collect any additional data or conduct any additional analyses. See, 80 Fed. Reg. 54934, 54951-2
(specifically pointing out that compensation analyses are already required pursuant to 41 CFR § 602.17(b)(3)).

change the general equal opportunity statement in solicitations and advertisements for employees. See,
41 CFR § 60-1.4(a)(2).
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Pay Secrecy Policies and Actions

change training curricula to include a review of new nondiscrimination provision (although the Final
Rule suggests that providing such training is considered a best practice). See, 80 Fed. Reg. 54934,
54940.
The Final Rule continues to allow contractors to incorporate the general equal opportunity clause into
subcontracts by reference. See, 80 Fed. Reg. 54934, 54952; see also, 41 CFR § 60-1.4(d).
The Final Rule also does not change the requirement to send a notice advising unions of the contractor’s
obligations. See, 41 CFR § 60-1.4(a)(4).7
Employer Defenses.
The Final Rule adds a new section, 41 CFR § 60-1.35, which contains two employer defenses to claims of
discrimination on the basis of inquiring about, discussing, or disclosing compensation information:
1. General Defense
The Final Rule describes a catch-all defense that permits contractors to enforce uniform and consistently
applied work rules, as long as the work rules do not “prohibit or tend to prohibit employees or applicants from
discussing or disclosing their compensation or the compensation of other employees or applicants.” 80 Fed.
Reg. 54934, 54947; 41 CFR § 60-1.35(a). However, the OFCCP has declined to offer any examples of such
work rules.
2. Essential Job Functions Defense
The Final Rule permits contractors to discipline employees who have access to compensation information as
part of their “essential job functions” and who disclose such information to other employees or applicants who
do not otherwise have access to the information.8
For the purposes of the administering the new nondiscrimination provision only,9 a job function is considered
“essential” when “access to the 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.” 41 CFR § 60-1.3.
7
Although the Final Rule does not change this requirement, the University may not be in compliance with the
prior requirement.
8
except in limited circumstances, like “in response to a formal complaint or charge, in furtherance of an
investigation, proceeding, hearing or action, including an investigation conducted by the contractors, or
consistent with the contractor’s legal duty to provide information.” 80 Fed. Reg. 54934, 54949. See also, 41 §
CFR § 60-1.35(b).
9
The definition of Essential Job Functions is limited to the application of the new provision. See, 41 CFR § 601.3.
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