President Obama recently signed an executive order prohibiting federal contractors from retaliating against their employees who discuss their compensation with one another. Although the order is limited in scope, it still has a sizable impact, as nearly one quarter of American workers are employed by federal contractors. In addition, many companies have written policies that specifically tell employees not to discuss their compensation with their fellow employees, which would now be deemed improper.
President Obama also instructed the Department of Labor to craft rules requiring federal contractors to report compensation data by gender and race. Federal contractors have expressed their concerns about the burden of providing such data, which could also lead to more wage-related lawsuits from employees.
These developments come on the heels of other executive actions regarding wage issues. In February, the president signed an executive order boosting the hourly minimum wage paid by federal contractors from $7.25 to $10.10. In March, he ordered the Department of Labor to create rules that would require employers to pay overtime to millions of low-salaried “executive, administrative, and professional” employees who are currently exempt from overtime; these new rules are not expected to take effect until 2015.
In light of these recent actions, it is imperative that employers—especially those who do business with the federal government—review their procedures and employee handbooks to make sure they are compliant with all recent changes.
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