by Employers with contracts or subcontracts with the federal government may need to change some recruiting practices in 2024. A proposal by the Office of Federal Contract Compliance Programs (OFCCP) that would limit or prohibit federal contractors from seeking or considering job applicant compensation history is in the final stages of approval. The new rule, if finalized, would also require federal contractors to disclose compensation information in job announcements. The Final Rule has cleared administrative hurdles and will be formally published in the Federal Register for comment next month.
There is no federal law currently either prohibiting salary history inquiries or requiring the inclusion of salary information in job ads. The states, however, have been active in passing laws addressing both topics.
More than 20 states have laws or regulations that address employers’ use of an applicant’s salary history. The limitations placed on employer inquiries vary significantly from jurisdiction to jurisdiction. As of January 1, 2024, Minnesota joined states like Colorado and California in prohibiting employers from asking about or considering an applicant’s past or current pay during the hiring process. On the other hand, some states like Delaware prohibit screening candidates based on salary history but allow inquiry before or following a job offer as part of salary negotiations. For a list of states limiting salary inquiries, see https://www.hrdive.com/news/salary-history-ban-states-list/.
Fewer jurisdictions require including salary or salary ranges in job announcements. Often referred to as ‘pay transparency’ laws, less than a dozen states mandate that employers include compensation information in job postings. California, Colorado, and Washington are among the states requiring employers to include salary ranges or more detailed descriptions of proposed compensation and benefits in job ads.
It isn’t possible at this point to say how the OFCCP rule will compare to state laws on salary inquiries and pay transparency. Some questions need to be answered by the final OFCCP proposal to assess how the new requirements will impact a company’s recruiting practices. Will the rule cover all of the contractor’s job openings or only jobs that provide the services or goods covered by federal contracts? Will the contractor need to detail the proposed compensation package to be offered to successful candidates, or will a salary range satisfy regulatory requirements?
Federal contractors and subcontractors should monitor the Federal Register (http://www.federalregister.gov) and other sources of information about pending federal regulations during upcoming months to get the earliest alert on new requirements. Updated information on OFCCP regulations is also available at https://www.dol.gov/agencies/ofccp/RegulatoryActions.
