Pillsbury Winthrop Shaw Pittman

President takes action meant to increase pay equity for employees of federal contractors

By Julia E Judish and Keith D Hudolin

On 8 April 2014, US president Barack Obama issued an executive order and a presidential memorandum aimed at ‘closing the persistent pay gap for women and minorities’, at least for employees of federal contractors and subcontractors. These two executive actions direct the Department of Labor to issue new regulations that will: (i) prohibit government contractors from retaliating against employees and applicants for asking about, disclosing or discussing their compensation with other workers; and (ii) require contractors to report summary compensation data for their employees, by sex and race, to the Department of Labor. By limiting the reach of these measures only to employers that are government contractors, president Obama was able to act on his own executive authority, without needing the co-operation of Congress. Government contractors comprise approximately a quarter of the US workforce. Thus, these new regulations will directly affect a significant portion of employers and may also have a ripple effect that extends even to wholly private sector employers.

In 1963, women in the US workforce earned only 59 cents for every dollar earned by male employees. In response, Congress that year passed the Equal Pay Act, which requires that employers pay men and women equally if they perform substantially the same work. The following year, Congress re-affirmed its commitment to gender equality in the workplace by passing Title VII of the Civil Rights Act of 1964, which, among other things, prohibits employers from discriminating against employees based on race or sex in any of the terms of conditions of employment, including compensation.

Nonetheless, pay inequality has remained persistent. According to the presidential memorandum, working women ‘earn only 77 cents for every dollar that a man earns’ and, ‘[f]or African-American women and Latinas, the pay gap is even greater’. The precise wage gap statistics quoted by the president are not universally accepted; the Department of Labor, for example, states that women now earn 81 cents for every dollar earned by male employees…

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