Biden Announces Potential Salary History Ban for Federal Contractors

Author: Emily Scace, XpertHR Legal Editor

March 22, 2022

An Executive Order from President Biden announced forthcoming proposed regulations that could limit or prohibit inquiries into the salary history of applicants and employees of federal contractors and subcontractors.

Titled "Advancing Economy, Efficiency, and Effectiveness in Federal Contracting by Promoting Pay Equity and Transparency," the Executive Order aims to eliminate discriminatory pay practices among employers that contract with the federal government. While a growing number of states and localities have implemented salary history bans and pay transparency laws, the forthcoming regulations would be the first such restrictions with national applicability.

Restrictions on an employer's ability to inquire about an applicant's salary history aim to enhance pay equity by preventing employers from tying a new hire's compensation to what the individual earned in previous jobs - rather than basing a salary offer on the employee's experience, the demands of the role, and conditions in the job market. Because of persistent wage gaps that disfavor women and other protected groups, the use of salary history can function to entrench pay discrimination on both an individual and societal level.

Pay transparency laws take the concept a step further, requiring employers to divulge a pay range for a position to applicants during the hiring process and, in some cases, to existing employees. Some of these laws require the employer to provide salary information to an applicant or employee upon request, while others, such as Colorado's Equal Pay for Equal Work Act, require salary ranges to be included in job postings.

Specifics of the proposed regulations are not yet known, as the Executive Order merely provides a broad directive for the Federal Acquisition Regulatory Council to consider whether rules that limit or prohibit salary history inquiries would further the goals of pay equity and transparency. Also unknown is the threshold, or contract amount, at which any issued regulations would trigger compliance obligations for employers.