The U.S. Department of Labor's Executive Order 13655, which requires federal contractors to disclose compensation information to employees and allows workers to openly discuss salary without punishment, was sent to the Office of Management and Budget for final approval in July. This proposed regulation re-opens a dialogue concerning payment transparency in the workplace.
If implemented, the DOL's salary transparency rule would allow employees at all levels to see their fellow workers' pay. While some believe making this pay categorization procedure completely available to workers can be beneficial to both employers and employees, others are not so sure.
"When employees are prohibited from inquiring about, disclosing, or discussing their compensation with fellow workers, compensation discrimination is much more difficult to discover and remediate, and more likely to persist," the executive order stated. "Such prohibitions (either express or tacit) also restrict the amount of information available to participants in the federal contracting labor pool, which tends to diminish market efficiency and decrease the likelihood that the most qualified and productive workers are hired at the market efficient price."
However, employers do have exceptions they can utilize where compensation transparency is concerned.
First, the proposed regulation prohibits employees from disclosing compensation information they gain access to through their jobs. For example, an HR professional who has access comensation details other employees do not, would not be protected under the rule. The second exception relates to workplace disruption. Individuals who harass coworkers with questions about their compensation after being asked not to would not be protected.
"Workers cannot solve a problem unless they are able to identify it. And they cannot identify it if they aren't free to talk about it without fear of reprisal," said Office of Federal Contract Compliance Programs Director Patricia A. Shiu. "Pay transparency isn't just good for workers. It's good for business. Fairness and openness are great qualities for a company's brand."
Not everyone agrees. Some industry observers have described the proposed rule as an overreach, as well as one more example of the Obama administration creating challenges for federal contractors by placing new compliance burdens on them. Still others see it as a continuation of too many executive orders being handed down, a viewpoint illustrated by the Ward and Smith law firm at the beginning of 2015.
Regardless, if passed, the regulation could significantly impact the way compensation is discussed in the workplace, making it essential for HR professionals to take note.