Written By ESR News Blog Editor Thomas Ahearn
In March of 2022, United States President Joe Biden signed an “Executive Order on Advancing Economy, Efficiency, and Effectiveness in Federal Contracting by Promoting Pay Equity and Transparency” to eliminate discriminatory pay practices that inhibit the economy, efficiency, and effectiveness of the U.S. Federal workforce and the procurement of property and services by the U.S. Federal Government.
The Office of Personnel Management (OPM) anticipates issuing a proposed rule that will address the use of salary history in the hiring and pay-setting processes for Federal employees, consistent with Executive Order 14035 of June 25, 2021 (Diversity, Equity, Inclusion, and Accessibility in the Federal Workforce). The purpose of this order is to direct the consideration of parallel efforts with respect to Federal procurement.
The Federal Acquisition Regulatory (FAR) Council, in consultation with the Secretary of Labor and the heads of other executive departments and agencies, “shall consider issuing proposed rules to promote economy, efficiency, and effectiveness in Federal procurement by enhancing pay equity and transparency for job applicants and employees of Federal contractors and subcontractors,” the Executive Order stated.
In doing so, the FAR Council may specifically consider whether any such rules should limit or prohibit Federal contractors and subcontractors from seeking and considering information about job applicants’ and employees’ existing or past compensation when making employment decisions. The FAR Council may also consider the inclusion of appropriate accountability measures in any such rules.
“Pay equity” is a means of eliminating sex and race discrimination in the wage-setting system, which means that the criteria employers use to set wages must be sex- and race-neutral, according to the National Committee on Pay Equity (NCPE), a coalition of women’s and civil rights organizations working to eliminate sex- and race-based wage discrimination and close the wage gap between women, as well as people of color, and men.
The U.S. Equal Employment Opportunity Commission (EEOC) enforces federal employment discrimination laws and can file equal pay discrimination lawsuits against employers who allegedly violate the Equal Pay Act (EPA) of 1963 and Title VII of the Civil Rights Act of 1966 (Title VII). Both Acts prohibit sex-based wage discrimination. However, the gender gap in pay has remained relatively stable in the United States over the past 15 years.
In 2020, women earned 84 percent of what men earned, according to a Pew Research Center analysis, and women would have to work an extra 42 days to earn what men did in 2020 based on this estimate. As a result, laws prohibiting employers from asking about salary history have increased to narrow the gender pay gap. As of 2022, salary history question bans exist in many major American cities and several states.
A list of states and localities that have passed salary history bans is available here. When an employer has a background screening firm perform past employment verifications as part of a pre-employment background check on a job applicant, it is critical that the screening firm knows which cities, counties, and states prohibit salary history questions, or else that employer could be fined or sued.
Employment Screening Resources (ESR) – a service offering of ClearStar, a leading provider of Human Capital Integrity℠ technology-based services specializing in background checks and medical screening – offers flexible and customizable employment verification solutions for employers in all industries that closely follow federal, state, and local salary history and pay equity laws. To learn more, contact ESR today.
NOTE: Employment Screening Resources (ESR) – a service offering of ClearStar – does not provide or offer legal services or legal advice of any kind or nature. Any information on this website is for educational purposes only.
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