New Proposal Would Require Federal Contractors to Post Salary Ranges and Ban Use of Prior Salary History

Earlier this week, as part of the Biden Administration’s celebration of the signing of the Lilly Ledbetter Fair Pay Act, the Federal Acquisition Regulatory Council (FAR) published a proposed rule that would (1) prevent federal contractors and subcontractors from considering an applicant’s salary history when making employment decisions and (2) require contractors to disclose the pay range for certain job postings.

The proposal is intended to implement Executive Order 14069, Advancing Economy, Efficiency, and Effectiveness in Federal Contracting by Promoting Pay Equity and Transparency which President Biden signed on March 15, 2022. The proposal also comes on the heels of significant state and local pay transparency and disclosure legislation in 2023.

The proposal has two main components. First, federal contractors and subcontractors would not be allowed to ask for or consider information about a job applicant’s compensation history when making employment decisions about personnel working on or in connection with a covered government contract. Many state and local jurisdictions already prohibit employers from seeking or using prior salary history information, although the specific prohibitions vary by jurisdiction. Second, federal contractors and subcontractors would be required to disclose in job advertisements the compensation to be offered for job openings involving work on or in connection with a government contract. The proposal states the salary disclosure must indicate the salary or wages that the contractor in good faith believes it will pay for the advertised position, such as the pay scale for the role, the range of compensation for incumbents working in similar jobs, or the budgeted amount for the position. Contractors also must include a general description of available benefits for the advertised position as part of the pay disclosure.

The proposal also includes a two-pronged complaint process. Applicants would be able to submit a complaint to the contracting agency for investigation. The contracting agency will determine whether the complaint relates to a covered role, meaning a position working on or in connection with a federal contract. The contracting agency will forward any discrimination complaints to the OFCCP.

Comments on the proposal are due by April 1. Berkshire will be following this proposal and will share more information as it becomes available.