The Department of Labor (DOL) is expected to announce changes to the way it investigates pay disparities at companies that do business with the federal government — making it easier for federal contractors to hide pay discrimination against women and people of color.
The move, first reported by Bloomberg Law, would scale back a 2013 Obama-era policy, known as Directive 307, which had expanded the DOL’s ability to investigate and sanction federal contractors that showed a pattern of paying female workers and employees of color less than their white male colleagues. The directive had also allowed the DOL’s auditors, for the first time, to analyze whether white employees and male employees at a business were more likely to get promoted, receive bonuses, and get job assignments that had more opportunities for advancement.
The Obama administration directive gave regulators at the Labor Department’s Office of Federal Contract Compliance Programs more tools to determine if companies with federal contracts were violating equal pay law. The office randomly audits about 2 percent of the 200,000 contractors who do business with the federal government each year.
The expected change by the Trump DOL would stop the agency’s auditors from picking which workers and job categories to compare for potential pay gaps. Instead, the companies under audit would decide which comparisons they could make. With the latest change, companies could go back to the narrower comparisons they did in the past.
“It sounds like another effort by this administration to really empower employers to hide pay discrimination under the rug,” Emily Martin, an attorney at the National Women’s Law Center, told Bloomberg Law.
The Trump rule change reverses an Obama-era effort to crack down on pay discrimination
The Department of Labor had used its authority under Directive 307 to crack down on some of the country’s largest corporations.
In October, the agency announced a $5 million settlement with the financial services firm State Street Corp. over allegations that the company discriminated against more than 300 female executives by paying them less than male colleagues in similar positions. The women reportedly got paid lower salaries and smaller bonuses than their male peers, even after weighing differences in education, experience, and other factors that could explain the pay gaps. They found similar disparities between 15 black executives and their white peers at the firm.
In March, the agency brokered a $2.5 million settlement with Humana, the Kentucky-based health care giant. An audit of their pay data concluded that the company had shortchanged 753 female consultants and managers, paying them less than their male colleagues in similar positions. Humana has a $58 billion contract to provide health insurance to millions of military service members and veterans.
Many companies have pushed back against DOL’s expanded powers, including the US Chamber of Commerce. In 2016, the department sued Google for refusing to turn over 15 years of pay data for auditors to examine. In July 2017, a federal judge in California sided with Google, saying the agency was requesting far more information than it needed to do the audit, and told auditors to narrow their request.
The agency’s investigation of Google is still ongoing, and it’s unclear whether changes to the rule will affect the audit.
The change would be the latest example of the Trump administration’s efforts to loosen worker protections by deregulating businesses. Since taking office, the Department of Labor has delayed the fiduciary rule, which would have required financial advisers to always act in the interest of their clients when giving retirement investment advice. It has also delayed or canceled other labor rules, including one that restricts how employers can distribute a worker’s tips and another that required businesses to keep track of work-related injuries and illnesses.
A spokesperson for the Labor Department’s Office of Federal Contract Compliance Programs did not respond to Vox’s request for more information about the potential rule change.