As part of the Biden administration’s effort to tackle pay equity issues, the FAR Council issued a proposed rule featuring three main requirements: (1) pay disclosure in job postings; (2) a prohibition on salary history inquiries; and (3) notice requirements.
HRPA’s response to the proposed rule, informed by member company input, highlighted several major issues, including:
- Overly broad disclosures: The required compensation disclosures – which include non-salary compensation such as bonuses, equity awards, and paid leave – are overly broad. It will be exceedingly difficult for employers to provide specific figures or ranges for non-salary compensation for individual job postings, let alone to do so on a nationwide uniform basis.
- Potential for competitive disadvantage: The extensive compensation disclosures required by the proposed rule could create competitive disadvantages by revealing confidential and proprietary compensation structures that are an integral part of a company’s talent strategy.
- Unclear application: The scope of which jobs are covered under the proposed rule is extremely broad and vague, leaving employers in the dark for compliance.
- Expansion of salary history ban: The rule’s salary history ban should not apply to current employees, as employers obviously have access to this information and cannot pretend otherwise. Further, employers should not be prevented from verifying an applicant’s stated equity or bonus forfeitures, which is standard marketplace practice.
- Impossible compliance: The rule’s notice provisions, requiring employers to disclose which contracting agency is associated with a particular job in each job posting, present impossible compliance challenges.
What’s next: A final rule is expected before the end of the year, at which time employers will likely have between 60 and 120 days to comply. A legal challenge to any final rule is expected.
