Earlier this month, President Obama took action to impose additional compliance obligations on federal government contractors. An executive order will prohibit federal contractors from retaliating against employees who discuss their pay with each other. He also directed the Department of Labor to adopt regulations requiring federal contractors to Person Wrapped Up in Red Tape of Bureaucracy Rules of Orderprovide compensation data based on sex and race.

Non-Retaliation: This executive order provides that contractors will not discharge or in any other manner discriminate against any employee or applicant for employment because the employee or applicant has inquired about, discussed, or disclosed compensation information with another employee or applicant. This executive order supports the National Labor Relations Board’s position that employees may discuss wages, hours and working conditions.

Compensation Data: The President also directed the Department of Labor to establish new regulations requiring federal contractors to submit data on compensation paid to employees, including data by sex and race. The Department of Labor may then use this data to target enforcement efforts when the data reveals discrepancies between employees of different race or gender.

Take Away: Contractors should review their policies and eliminate any that prohibit or limit an employee’s ability to discuss wages with fellow employees and they should review their compensation practices to make sure they do not detrimentally impact particular groups based on ethnicity or sex.