New Pay Equity Rule Proposed for Contractors

By Angela Adams, CEBS, SPHR, Director, EEO & Compliance Solutions
Published February 6, 2023

On January 29, 2024, the Biden Administration released a proposed rule called Pay Equity and Transparency in Federal Contracting. This rule will potentially prohibit government contractors and subcontractors (“contractors”) from asking about or considering prior compensation of applicants and require contractors to post salary ranges for positions in ads. 

The public can comment on the rule until April 1, 2024, after which the government agencies involved will consider the remarks before issuing a final rule. There is no timeline for a final rule to be released, but once it is, affected employers typically have 60 days to implement it. The rule also has a complaint procedure for employees.

The proposed rule was published on a significant day – the 15th anniversary of the Lilly Ledbetter Fair Pay Act, which resets the statute of limitations for pay inequity claims each time an employee is paid.

Contractors in Illinois most likely know that the State of Illinois has similar requirements for employers already in effect or that will go into effect soon. Since a 2019 amendment to the Illinois Equal Pay Act, Illinois employers can’t ask applicants about their previous salaries. In a 2023 amendment to the same law, starting on January 1, 2025, Illinois employers must include pay scale and benefits information in their job ads. 

Other states have rules like these as well. To keep up with all the various state requirements, many employers have already set policies that prohibit inquiries about previous pay and provide salary information in job ads, as jobs are often advertised in multiple states or nationally. Although we are not planning to address the proposed contractor rule specifically at our upcoming Altogether HR 2024 conference, we have planned a breakout session to discuss these issues generally. Registration is open now.

Contractors should note that while the rule is just proposed at this point, we’re happy to discuss what you may already be doing and whether it would comply with what the proposed rule mandates. Please reach out to the Affirmative Action staff at HR Source at info@hrsource.org or 800-448-4584.