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Business and Policy Areas
Business and Policy Areas

Recent Executive Orders Aimed at Pay Gaps and Overtime Expansion

April 18, 2014

Earlier this month, following up on his State of the Union address this year, President Obama signed two executive orders designed to close the gender wage gap for federal contractors. One order requires the submission of employee compensation data to the Department of Labor; the other prohibits retaliation against employees who discuss their compensation. The White House also directed the agency to update and expand overtime eligibility.

Pay Equity. With passage of the Paycheck Fairness Act stymied in Congress, President Obama addressed gender equity in the more limited realm of federal contractors. According to an April 8 White House directive, the lack of “robust and reliable data on employee compensation” prevents effective enforcement of the existing federal laws and rules mandating equal pay for equal work. The presidential memorandum instructs Labor Secretary Thomas Perez to issue, within 120 days, proposed regulations requiring federal contractors and subcontractors to submit to the Department of Labor (DoL) summary data on employee compensation, including data by gender and race.

A second executive order issued the same day is aimed at striking down discriminatory employer practices related to compensation. According to the order, prohibitions on employees discussing their compensation with colleagues make it difficult to discover and remediate compensation discrimination and further restrict information available to those in the federal contractor labor pool.

The order requires DoL to propose regulations within 160 days that would prohibit contractors from discriminating or retaliating against any employee for asking about, discussing, or sharing information about compensation with another employee or job applicant. This rule would not apply to instances in which an employee has access to compensation information as part of his or her job function and discloses compensation information to individuals who do not otherwise have access to that information.

Expansion of Overtime Eligibility. Last month, the White House directed DoL to update and expand overtime eligibility, with an eye toward outdated exemptions from overtime requirements in regulations implementing the Fair Labor Standards Act.

On March 13, a presidential memorandum sent to Labor Secretary Perez directed him to propose revisions to existing regulations under the Fair Labor Standards Act (FLSA) related to workers’ eligibility for overtime pay.

Existing FLSA rules require that most workers must be paid at least 1.5 times their regular pay rate for hours worked in excess of 40 hours per week. The memorandum states that existing exemptions from FLSA’s overtime requirement, “particularly for executive, administrative, and professional employees have not kept up with our modern economy,” leaving millions of workers without the “protections of overtime.” Though not spelled out in the memorandum, the proposed rules are anticipated to:

  • Raise the minimum pay threshold for employees to qualify as salaried under FLSA (currently $455 per week or $24,000 annually).
  • Modify the primary duties test for determining which employees are exempt from overtime.

NACUBO, CUPA-HR, and other higher education associations are following this issue and will report on proposed rules when published by Labor.


Mary Bachinger
Director, Tax Policy