Biden administration proposes new pay transparency for federal contractors

On January 29, 2024—the 15th anniversary of the enactment of the Lily Ledbetter Fair Pay Act—the Biden administration announced a proposed regulation to prohibit federal contractors and subcontractors from using a job applicant’s prior salary history when setting pay and to require federal contractors to disclose the expected salary range in job postings. The proposal was published in the Federal Register on January 30, and comments were due on April 1.

Proposed rule

The proposal—which covers applicants and current employees seeking a position to perform work on or in connection with the contract—bans the use of salary history and also requires expansive compensation disclosure and notice requirements. The phrase “in connection with” is defined as “work activities necessary to the performance of the contract but not specifically called for by the contract.” This vastly expanded definition will make it difficult for contractors to determine who is covered. Under the salary history portion of the proposal, federal contractors and subcontractors may not:

• Seek directly or indirectly the compensation history of any applicant from any person;

• Retaliate against or refuse to consider any applicant for failing to respond to a compensation inquiry;

• Rely on an applicant’s compensation history for screening or considering an applicant for employment or in determining an applicant’s compensation even if the applicant volunteers compensation history.