What’s New in 2016 For Federal Contractors

2016 01 07 New requirements for fed contractorsIn a previous article, I wrote about the new requirements 2015 brought federal contractors in employment compliance: a new minimum wage was implemented and protected categories were expanded (to include LGBT) and modified concerning the disabled and veterans.

However, 2015 was only a harbinger of more changes for 2016. The focus in this new year is on pay. Pay transparency is happening in a few days and the Equal Pay report, when implemented, will create a whole new reporting industry!

Pay Transparency

This is a new rule will take effect Jan. 11, 2016 for covered federal contractors. The pay transparency rule applies to employers with federal contracts or subcontracts of at least $10,000. It prohibits federal contractors and subcontractors from acting against employees who inquire about, discuss, or disclose their compensation or the compensation of others. It also prohibits discrimination of job applicants who make inquiries and discuss pay.  The term “compensation” includes employee benefits, and not just pay.

There are exceptions to the pay transparency rule.  Employees still may not disclose compensation information obtained in the course of performing “essential job functions.”  That means HR professionals still have to protect confidential pay information obtain in the course of their work. If not, the employer may discipline them.

How to get ready for the Pay Transparency requirement?

Federal contractors and subcontractors subject to this requirement must update their employee handbook with a non-discrimination provision and post it in conspicuous places for employees and applicants to see. It is good practice to inform employees of the new policy during regularly scheduled meetings. A memo sent via email to all employees is also in order, as well as posted on the company’s intranet and website.

This new policy should also be included in the annual training for supervisors and managers on employee relations and employment laws.

Equal Pay Report

The Obama administration is focused on the “wage gap” and pay discrimination through federal contractors. Taking its cue from California who implemented a Fair Pay Act a few days ago, the federal government is creating a new requirement for federal contractors to ensure their payroll dollars are fairly distributed among their workforce. Employers would have to submit compensation data for employees, aggregated by gender, race and hours worked.  The Department of Labor (DOL) will use the data to target enforcement where the largest discrepancies appear.

No date for implementation has been set for this new requirement. This reporting creates a major burden for federal contractors. However, there are many unanswered questions at this time so stay tuned. I will update you as soon as more info is released by the DOL.

What else?

Previous years have seen an increase in enforcement by the DOL. If you have not done it yet and you are a federal contractor, 2016 is the year to audit your policies and procedures.

In particular you should make sure that updates have been made to:

  1. Contracts and purchase orders to reflect the new minimum wage rate
  2. Employee manuals and handbooks, and employee notices, application forms, and postings to reflect expanded protections.

Employers also need to ensure that supervisors have been properly trained regarding new non-discrimination requirements. The risk for non-compliance is high.  Failure to comply with applicable rules is subject to a host of potential sanctions, including the possible suspension of federal work, financial penalties, and even possible criminal penalties. Don’t assume that small contractors are immune. The DOL audits many subs and small contractors sometimes to get to the prime.

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