Biden Administration Proposes to Ban Federal Contractors From Requesting Job Applicants’ Compensation History

Last week the Biden administration released a proposal that would prohibit federal contractors from using a job applicant’s prior salary history when setting pay and require contractors to post expected salary ranges in their job postings.  Federal contractors would also be required to provide applicants with written notice of the salary history inquiry ban and salary/benefits disclosures on either the job announcement or as part of the application process.

The proposed rule would apply to work performed “on or in connection with” a federal contract or subcontract, which would include “work activities necessary to the performance of the contract but not specifically called for by the contract.”  Enforcement would be handled by the contracting agency and the Office of Federal Contract Compliance Programs (OFCCP) if a complaint alleged discrimination

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.  If finalized, the Biden administration’s proposal would result in significant changes to contractors’ hiring practices in states such as Michigan that do not already have similar pay transparency laws.

Public comments on the proposed rule are due April 1, 2024.

Contractors should assume the proposal will be finalized later this year.  As a result, they may wish to begin evaluating whether they would be covered by the rule, and if so identify positions involving work performed “on or in connection with” a federal contract, and consider whether they prefer a patchwork or company-wide approach to compliance.

Please contact the authors of this alert if you have any questions or would like assistance drafting a comment on the proposal.  We will be sure to keep you apprised of any developments.