Federal Agencies Issue Proposed Rule on Pay Equity and Transparency for Federal Contractors
On January 30, the Department of Defense, General Services Administration, and NASA issued a proposed rule to amend the Federal Acquisition Regulation (FAR) to create a salary history ban and require pay transparency during the hiring process for federal contractors and subcontractors. The proposed rule aligns with the Biden administration’s 2022 Executive Order, “Advancing Economy, Efficiency, and Effectiveness in Federal Contracting by Promoting Pay Equity and Transparency.”
According to the proposed rule, the FAR would be amended to implement a government-wide policy that would:
- prohibit contractors and subcontractors from seeking and considering job applicants’ previous compensation when making employment decisions about personnel working on or in connection with a government contract (“salary history ban”); and
- require these contractors and subcontractors to disclose on job announcements the compensation to be offered (“compensation disclosure” or “pay transparency”).
The proposed rule comes as many states and localities have recently implemented salary history bans and pay transparency laws. As the Notice of Proposed Rulemaking notes, 21 states, 22 localities, and Washington, D.C., have put bans into place that prohibit employers from asking job applicants for their salary, and 10 states have pay transparency laws in place, with several other states working toward implementing such laws.
The agencies have provided a 70-day comment period for the proposed rule, closing on April 1. Stakeholders are invited to submit comments on their support for or opposition to the provisions of the proposed rule. CUPA-HR will monitor for additional updates on this proposed rule and other policy initiatives at the federal level as they relate to pay transparency and salary history bans.
