Explainer: What Does President Obama’s Equal Pay Day Executive Order Change?

On April 8, Equal Pay Day, President Obama signed two orders meant to promote gender equality in pay among federal contractors.  We covered the story at the time.  The first, Executive Order 13665, entitled “Non-Retaliation for Disclosure of Compensation Information,” prohibited federal contractors from retaliating against employees who discuss their salary with coworkers.  The second, a Presidential Memorandum, instructed the Secretary of Labor to collect data from federal contractors about employee salaries, including data by race and gender.

Although the Non-Retaliation order received attention in the press and praise from advocacy groups, it was already illegal to retaliate against employees who share their salary information.  Section 8(a)(1) of the National Labor Relations Act (NLRA) makes it an unfair labor practice for an employer to interfere with an employee’s section 7 right to engage in “concerted activities” for “mutual aid and protection.”  The National Labor Relations Board (NLRB) and federal courts have long interpreted section 7 to protect an employee’s right to discuss her salary with coworkers—which means it’s generally illegal for an employer to prohibit such discussion, or to retaliate against an employee who does so.  Employees generally have this right to discuss their salaries regardless of whether their workplace is unionized.  In fact, this specific protection is so well established that it’s included as an example of protected activity on the NLRB’s fact sheet for employees.  The NLRA generally covers federal contractors, along with most other private sector employers and employees (although some categories of workers, such as agricultural workers, independent contractors, and domestic workers, are excluded).

So what does this Executive Order change?

It requires federal contractors to notify their employees of this right, and importantly, it dramatically increases the penalty for retaliating against employees who share salary information.  As Professor Cynthia Estlund explains to NPR, if an employer violates this right, the NLRB is only empowered to order the employer to rehire the employee and give her backpay—the NLRB can’t award any other damages.  Perhaps because these penalties are so weak, employers routinely violate the law: the Institute for Women’s Policy Research reports that over half of all private sector employers have formal or informal policies encouraging pay secrecy. A 2001 study published in the University of Pennsylvania Journal of Labor and Employment Law found that one-third of all private sector employers have official policies prohibiting employees from discussing their salaries with their coworkers.

In contrast to the weak NLRA remedies, this Executive Order puts violators at risk of losing their federal contract and of being barred from future contracts.  President Obama’s Executive Order amends President Lyndon B. Johnson’s 1965 Executive Order 11246, which prohibited federal contractors from discriminating based on race, creed, color, or national origin.  As Professor Estlund notes to NPR, “‘[e]ven a very remote threat that you’ll lose your federal contract is a very big worry.’”