United States: New OFCCP Changes To Federal Contractor Pay Practices

September was a busy month for federal contractors due to new regulatory requirements. Earlier last month, we told you about  President Obama's new executive order requiring covered government contractors to provide their employees with paid sick leave. Now, the US Department of Labor (DOL) has made it official that (1) government contractors may not discriminate against their employees for discussing their pay or the pay of co-workers; and (2) the minimum wage for employees of federal contractors will increase in 2016.

New pay discrimination rule

In September, the DOL's Office of Federal Contract Compliance Programs (OFCCP) issued a Final Rule implementing Executive Order 13665, which prohibits federal contractors from firing or otherwise disciplining employees or job applicants for discussing their pay or the pay of co-workers. The new rule goes into effect January 11, 2016, and applies to all federal contracts and subcontracts that exceed $10,000 in value.

The new rule amends Executive Order 11246, which prohibits federal contractors and subcontractors from discriminating based on race, color, religion, sex, sexual orientation, gender identity and national origin. The new rule adds employees and applicants who inquire about, discuss, or disclose their "compensation" as a protected category under Executive Order 11246. "Compensation" is broadly defined under the new rule to include "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," but does not include "paid leave" or "sick time."

Shifting the burden

The new rule is noteworthy because the OFCCP has chosen to frame the issue as one of anti-discrimination rather than anti-retaliation. In so doing, aggrieved employees will need only to show that their compensation-related discussions were a "motivating factor" for an adverse employment action (the current standard under federal anti-discrimination laws), rather than showing the adverse action would not have occurred "but for" said discussions (the current standard under federal anti-retaliation laws). The OFCCP will also follow the commonly used burden-shifting analysis announced in McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973) to determine whether violations have occurred.

Defenses available

Covered contractors will have two defenses under the new rule. First, a contractor may pursue a "general defense" by showing that the alleged discriminatory act was based on a violation of a "consistently and uniformly applied company policy," so long as that policy does not prohibit employees or job applicants from discussing or disclosing their compensation or the compensation of other employees or applicants. Second, a contractor may take adverse action against an employee who discloses "compensation information" if the employee has access to "compensation information" as part of his or her "essential job functions," provided, however, that the disclosure was not in response to a formal complaint, charge, or was otherwise part of the contractor's legal obligation to disclose said information. The phrases "compensation information" and "essential job functions" are broadly defined under the new rule.


  • The new rule goes into effect January 11, 2016, and will require future contracts to include a revised equal opportunity clause. Contractors should also include the new nondiscrimination provision in their employee manuals and handbooks, and disseminate the same internally through electronic or physical postings.
  • The new rule expands the protections already available under the National Labor Relations Act (NLRA). The OFCCP's Final Rule extends those protections to management-level employees of federal contractors and subcontractors, as managers and supervisors are generally not within the protections of the NLRA. The new OFCCP rule also applies to information about the amount and type of pay and decisions, statements and actions related to setting or altering employee compensation.
  • The new rule does not require covered contractors to develop and deliver new staff or management training. The OFCCP notes, however, that such "training is considered a best practice."

Minimum wage increase in 2016

The DOL has also announced that the minimum wage for employees of federal contractors will increase in 2016. This new increase comes after President Obama's 2014 Executive Order 13658, which raised the minimum wage for certain employees of covered federal contractors to $10.10 per hour, and the minimum cash wage for tipped employees working on or in connection with covered federal contracts to $4.90 per hour. These changes went into effect in January 2015. The DOL is required to increase these amounts each year to adjust for inflation.

Last week, the DOL's Wage and Hour Division published its official Notice in the Federal Register and announced that the minimum wage for certain employees of covered federal contractors will increase by five cents to $10.15 per hour in 2016, and the minimum cash wage for tipped employees working on or in connection with covered federal contracts will increase to $5.85 per hour. These changes will take effect January 1, 2016, and are based on the adjustment for inflation under the Consumer Price Index, which was only 0.345 percent (the hourly rate for tipped employees is rising more than the inflation index as the result of a prior order requiring that rate to increase by $.95 per year until reaching 70 percent of the minimum wage).

These new requirements for federal contractors are just a small example of the larger movement by the Obama administration to regulate the American workforce through executive orders and federal regulation. Over the past two years, the president has issued a number of executive orders addressing federal contractor practices, including increasing minimum wage standards, expanding federal contractor anti-discrimination policies, and creating new reporting requirements.

The Dentons employment and labor team has followed these developments closely, and is ready to assist you in auditing your current practices or handling any future disputes that may arise.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
24 Oct 2017, Seminar, Washington, DC, United States

The Dentons Forum for Women Executives invites you to join us for a luncheon featuring guest speaker Liza Mundy, journalist and author. Ms. Mundy recently released her latest book, Code Girls, the riveting untold story of more than 10,000 spirited young American women who cracked German and Japanese codes to help win World War II.

27 Oct 2017, Seminar, New York, United States

Please join us for a milestone event, our 10th annual CLE Seminar for In-House Counsel.

24 Jan 2018, Seminar, San Francisco, United States

Dentons will host our Fourth Annual Courageous Counsel Leadership Institute in January, centered on the theme "Cultivating Innovation."

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.