Amending Contracts and Handbooks1. Equal Opportunity ClauseThe Final Rules revise the equal opportunity clause codified at 41 C.F.R. § 60-1.4(a) and § 60-1.4(b) to include a new paragraph 3 describing this new nondiscrimination obligation. As previously mandated under OFCCP regulations, contractors must incorporate the equal opportunity clause into their nonexempt contracts and subcontracts, either in its entirety or by including it by reference.[12]While contractors must technically revise the equal opportunity clause that is currently included in their contracts, the Final Rules do not alter the way the clause may be included by reference, which is the most common method of satisfying this obligation among contractors.

This provision shall not apply to instances in which an employee who has access to the compensation information of other employees or applicants as a part of such employee’s essential job functions discloses the compensation of such other employees or applicants to individuals who do not otherwise have access to such information, unless such disclosure is in response to a formal complaint or charge, in furtherance of an investigation, proceeding, hearing, or action, including an investigation conducted by the employer, or is consistent with the contractor’s legal duty to furnish information.The EEO Clause can still be incorporated by reference into federal contracts and subcontracts by citing to the 41 C.F.R. § 60-1.4(a) for supply and service contracts or 41 C.F.R. § 60-1.4(b) for federally assisted construction contracts.Dissemination of Nondiscrimination ProvisionThe Proposed Rule requires contractors and subcontractors to disseminate the nondiscrimination provision to employees and applicants by the following two methods:Incorporating the nondiscrimination provision prescribed by OFCCP into existing employee manuals and handbooks; andElectronically or physically posting the nondiscrimination provision in conspicuous places available to applicants and employees (e.g., intranet and the company website).The nondiscrimination provision will be similar to the new language in the EEO Clause and will be posted by OFCCP on its website after the final rule is issued.

such as race (as opposed to being a determinative factor). OFCCP’s FAQ page explains the difference as follows:[Q.] Are the affirmative action obligations OFCCP enforces similar to the affirmative action steps taken by some educational institutions to increase the racial diversity of their student bodies?[A.] No. While OFCCP seeks to increase the diversity of the federal contractor workforce through the variety of affirmative action obligations described above, the obligations it enforces are wholly distinct from the concept of affirmative action as implemented by some post-secondary educational institutions in their admissions processes. In contrast to the affirmative action implemented by many post-secondary institutions, OFCCP does not permit the use of race to be weighed as one factor among many in an individual’s application when rendering hiring, employment, or personnel decisions, as racial preferences of any kind are prohibited under the authorities administered by OFCCP. See 41 CFR 60-1.4(a), 60-300.5(a) and 60-741.5(a). OFCCP, therefore, does not permit the use of race as a factor in contractors’ employment practices to achieve diversity in the workforce, either by using race as one factor among many to achieve a “critical mass” of representation for underrepresented minorities or through direct numerical quotas or set-asides. See, e.g., Fisher v. University of Texas, 136 S. Ct. 2198, 2214-15 (2016); Grutter v. Bollinger, 539 U.S. 306, 330-31 (2003); Regents of University of California v. Bakke, 438 U.S. 265, 324 (1978). OFCCP’s affirmative action regulations expressly forbid the use of quotas or set asides, provide no legal justification for a contractor to extend preferences on the basis of a protected status, and do not supersede merit selection principles. See 41 CFR 2.16(e).1Voluntary DEI Efforts As for voluntarily adopted DEI programs, many of them are based on OFCCP guidelines, and thus do not permit quotas or preferential determinations of the kind which met with

t of 1974, related to affirmative action and non-discrimination as to protected veterans.3See OFCCP Directive 2022-01 Revision 1, available at https://www.dol.gov/agencies/ofccp/directives/2022-01-Revision1 (“As part of their affirmative action obligations, supply and service contractors are required to perform an in-depth analysis of their total employment processes, including their compensation systems, to determine whether and where impediments to equal employment opportunity exist.”)4See OFCCP Affirmative Action Frequently Asked Questions, available at Affirmative Action Frequently Asked Questions | U.S. Department of Labor (dol.gov) (“In contrast to the affirmative action implemented by many post-secondary institutions, OFCCP does not permit the use of race to be weighed as one factor among many in an individual’s application when rendering hiring, employment, or personnel decisions, as racial preferences of any kind are prohibited under the authorities administered by OFCCP. See 41 C.F.R. §§ 60-1.4(a), 60-300.5(a), and 60-741.5(a).”)5See, e.g., Illinois Tool Works, Inc. v. Marshall, 601 F.2d 943, 945 (7th Cir. 1979) (“As a government contractor, ITW must comply with the terms of Executive Order 11246. This Order … requires affirmative action by government contractors to ensure equal employment opportunities.”) and Legal Aid Soc'y v. Brennan, 608 F.2d 1319, 1325 (9th Cir. 1979) (“As a condition of doing business with the federal government, larger federal contractors are required to develop “written affirmative action compliance programs” designed to further equal employment opportunity.”)6See, e.g., Johnson v. Transp. Agency, Santa Clara Cnty., Cal., 480 U.S. 616, 632 (1987) (“[W]e do not regard as identical the constraints of Title VII and the Federal Constitution on voluntarily adopted affirmative action plans.”; upholding state transportation affirmative action plan because it “represents a moderate, flexible, case-by-case approach to effecting a gradual improvement in the repre

Notably, the Final Rule also requires that federal contractors take certain steps to notify their employees and job applicants about their right to permissibly discuss and inquire about pay: Subject to certain narrow exemptions, federal contractors must adopt and incorporate the Final Rule's non-retaliation provision into contracts entered into or modified after January 11, 2016. 41 C.F.R. 60-1.4. Federal contractors must include an OFCCP-approved nondiscrimination provision on pay transparency in their employee handbooks and manuals.

ransparency. These state law requirements vary, but may be broader than the final rule.Recommendations Employers that are or plan to become a federal contractor or subcontractor, with contracts to be effective or modified on or after January 11, 2016, should: Evaluate whether the employer is subject to any state law or regulation that overlaps with the final rule and, if so, determine how best integrate compliance; Update existing employee handbooks or manuals to ensure they contain the required pay transparency policy statement; Conspicuously post the prescribed language in a place that can be seen by both existing employees and applicants who visit the employer's property; and Distribute guidance to managers and employment decision-makers regarding the final rule and their obligation to refrain from retaliating against or punishing an employee or applicant who inquires about or discusses compensation.1All amendments are to regulations contained within 41 CFR § 60-1.241 CFR § 60-1.4(a)(3), (b)(3).341 CFR § 60-1.35(a).4Id.541 CFR § 60-1.35(c).6Seehttp://www.dol.gov/ofccp/pdf/PayTransparencyNotice_JRFQA508c.pdf(accessed Dec. 7, 2015).

If covered by the law, employers must:Disseminate the Pay Transparency Statement, as prescribed and made available by the OFCCP on its website, by either electronic posting OR by posting a copy of the provision in conspicuous places available to employees and applicants for employment; andIncorporate the Pay Transparency Statement into existing employee manuals or handbooks; andUpdate your equal employment opportunity clause in covered federal contracts/subcontracts and purchase orders to include a prohibition from discharging, or in any manner discriminating against any employee or applicant for employment because the employee or applicant inquired about, discussed, or disclosed the compensation of the employee or applicant or another employee or applicant. If you are currently only incorporating the nondiscrimination obligation by reference to 41 CFR 60-1.4, you may continue to do so.It is important to note that the pay transparency nondiscrimination provision is required to be posted in addition to the required “EEO is the Law” posting. Once the “EEO is the Law” poster is updated to reflect the new pay transparency nondiscrimination provision, it will be made available on the OFCCP’s and EEOC’s website.

The EO was amended to include the following nondiscrimination protections:The contractor will not discharge or in any other manner discriminate against any employee or applicant for employment because such employee or applicant has inquired about, discussed, or disclosed the compensation of the employee or applicant or another employee or applicant. 41 CFR 60-1.4(a)(3). Consistent with OFCCP’s Compensation Directive 307, “compensation” is defined as “salary, wages, overtime pay, shift differentials, bonuses, commissions, vacation and holiday pay, allowances, insurance and other benefits, stock options and awards, profit sharing, and retirement.”

There may also be references in drawings belonging to the customer or specifications the company receives from its customers that the documents are export-controlled or subject to an ITAR classification. Requirements to comply with Executive Order 11246, contained in 41 C.F.R. §§ 60-1.4(a), 60-300.5(a) and 60-741.5(a), which may be accompanied by the following statement: “These regulations prohibit discrimination against qualified individuals based on their status as protected veterans or individuals with disabilities, and prohibit discrimination against all individuals based on their race, color, religion, sex, or national origin. Moreover, these regulations require that covered prime contractors and subcontractors take affirmative action to employ and advance in employment individuals without regard to race, color, religion, sex, national origin, protected veteran status or disability.”

There may also be references in drawings belonging to the customer or specifications the company receives from its customers that the documents are export-controlled or subject to an ITAR classification. • Requirements to comply with Executive Order 11246, contained in 41 C.F.R. §§ 60-1.4(a), 60-300.5(a) and 60-741.5(a), which may be accompanied by the following statement: “These regulations prohibit discrimination against qualified individuals based on their status as protected veterans or individuals with disabilities, and prohibit discrimination against all individuals based on their race, color, religion, sex, or national origin. Moreover, these regulations require that covered prime contractors and subcontractors take affirmative action to employ and advance in employment individuals without regard to race, color, religion, sex, national origin, protected veteran status or disability.”