The Department of Labor has long defined financial institutions as “government contractors” by virtue of their access to deposit insurance. Consequently, we believe financial institutions are bound by the pay transparency requirements first introduced by executive order and later implemented through federal regulation. The pay transparency rule prohibits government contractors from requiring their employees to keep their compensation confidential.
We recommend consulting with your bank counsel to review your sales incentive program’s confidentiality requirement, which could violate the federal pay transparency rule.
For resources related to our guidance, please see:
- Office of Federal Contract Compliance Programs FAQs (“Is a financial institution that is covered by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Association (NCUA) with deposit insurance subject to the Affirmative Actions Program (AAP) requirements under Executive Order 11246 . . .? [Answer:] Yes. Financial institutions with federal share and deposit insurance are considered to be government contractors . . . .”)
- Executive Order 13665, Non-Retaliation for Disclosure of Compensation Information (April 8, 2014) (Establishes the pay transparency requirements.)
- DOL Pay Transparency Regulations, 41 CFR 60-1.4(a)(3) (“[E]ach contracting agency shall include the following equal opportunity clause . . . in each of its Government contracts . . . . 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.”)
- DOL Pay Transparency Regulations, 41 CFR 60-1.4(a)(3) (“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.”)
- Office of Federal Contract Compliance Programs FAQs (“Do the pay transparency regulations prohibit contractors from having formal and informal pay secrecy policies? Yes. Contractors are prohibited from having [policies] that prohibit or tend to restrict employees or applicants from discussing or disclosing their compensation or the compensation of others. Therefore, if a contractor has a policy that prohibits employees from talking to each other about end–of–the–year bonuses, it would be considered a discriminatory action, as it prohibits employees from discussing their compensation.”)