On April 8, 2014, President Obama signed Executive Order 13665: “Non-Retaliation for Disclosure of Compensation Information”, introducing new obligations regarding pay equity and compensation management, and banks must get ready for the resulting rules.
Unfortunately, this Executive Order does extend to “a depository of federal funds” or “an issuing or paying agent for U.S. Savings Bonds and notes in any amount”. Therefore, this new obligation covers banks.
The Department of Labor’s Office of Federal Contract Compliance Programs issued final regulations defining these obligations further, late last week.
Requirements effective early next year
First, the new obligations will go into effect on Jan. 11, 2016. From that date forward, banks will need to implement some additional measures.
The new rule requires that banks allow employees and applicants to discuss their compensation and the compensation of others. So banks will need to review their employee handbooks and policy manuals. The executive order expects that policies will be updated to remove any prohibitions against individuals having these discussions.
Second, from a discipline perspective, banks will need to carefully manage if and when employees are disciplined for engaging in these discussions or related potentially disruptive activity.
This Executive Order changes once again the Equal Opportunity clause. As many will remember, that clause changed when regulations were implemented regarding protected veterans and individuals with disabilities. Then the clause changed again to address sexual orientation gender identity. Now we have a third change.
The Executive Order envisions a requirement that community banks will include a compensation nondiscrimination provision as prepared by OFCCP, into employee handbooks.
Poster requirement pending
And then finally, this new rule will require updates to the “EEO Is The Law Poster”. That “EEO is The Law Poster” has not yet been updated to address prior rounds of regulatory changes which went into effect in March 2014, or December 2014. When that new poster is completed by the agencies, banks will be required to utilize that format.