Salary History Ban Proposed To Advance Pay Equity For Federal Employees
New proposed regulations from the U.S. Office of Personnel Management prohibit using an applicant's salary history in federal employment offers. Read more about how these changes can promote pay equity for federal employees.
This article was first published in Forbes on May 10, 2023.
The U.S. Office of Personnel Management (OPM) has proposed new regulations prohibiting using an applicant’s salary history in federal employment offers. The move would prevent the nation’s largest employer, the federal government, from considering previous compensation when setting pay for new federal employees in several pay systems. The proposed regulations aim to promote pay equity and eliminate the disproportionate impact on women and underserved communities caused by reliance on salary history.
“A Model Employer”
If finalized as currently proposed, the regulations would support OPM’s strategic goal to position the Federal Government as a model employer in advancing diversity, equity, inclusion, and accessibility within the Federal workforce. Currently, 21 states in the U.S. have laws or executive orders that regulate whether employers can seek, use, or discuss an applicant’s salary history. The proposed regulations place the Federal Government in a competitive position against other employers by helping ensure a job candidate is paid based on their skills or merit rather than their former compensation.
“These proposed regulations are a major step forward that will help make the federal government a national leader in pay equity,” said OPM Director Kiran Ahuja. “Relying on a candidate’s previous salary history can exacerbate preexisting inequality and disproportionally impact women and workers of color. With these proposed regulations, the Biden-Harris Administration is setting the standard and demonstrating to the nation that we mean business when it comes to equality, fairness, and attracting the best talent.”
If adopted, the proposed rule on federal pay equity would affect over 80 federal agencies and require updates to agency policies and procedures for pay flexibility. Impacted systems include the federal government’s General Schedule (G.S.) pay system, Prevailing Rate Systems, Administrative Appeals Judge (AAJ) pay system, and Administrative Law Judge (ALJ) pay system.
G.S. Pay System
The G.S. classification and pay system covers most civilian Federal employees and has standardized rules for setting pay within a grade’s rate range for employees. While the G.S. system is intended to promote equitable treatment among employees, federal agencies may use discretion to set pay above the minimum rate range. Agencies must apply such flexibilities in neutral ways to not disadvantage any individual based on protected characteristics. OPM has proposed revisions to the regulations to provide additional guidance to agencies on using discretionary authorities to mitigate potential pay inequities, including prohibiting an agency from considering a job candidate’s salary history and requiring agencies to establish a policy concerning the use of the G.S. maximum payable rate rule.
Prevailing Rate System
The federal government currently uses a prevailing rate system to set pay for hourly employees. OPM is proposing revisions to regulations governing how compensation is set on appointment, transfer, promotion, demotion, and other changes in employment status. Specifically, OPM proposes prohibiting agencies from considering an appointee’s pay history when determining the rate at which to set pay. Instead, they must consider how compensation has been established for employees with similar qualifications and positions. Additionally, OPM proposes requiring agencies to develop policies governing the use of their authority to fix pay for employees being reemployed, reassigned, transferred, promoted, or changed to a lower grade. The proposed revisions aim to encourage pay equity by reducing the influence of an individual’s previous pay on their current pay and ensuring consistency in pay-setting practices across federal agencies.
AAJ & ALG Pay System
OPM has also proposed revisions to the pay rules for administrative appeals judges (AAJs) and administrative law judges (ALJs) appointed under federal law. The proposed revisions include requirements for agencies to establish policies for setting pay rates based on prior service or superior qualifications and to document the factors used to justify the rate at which pay is set. The proposed revisions also prohibit agencies from considering an applicant’s or former judge’s salary history when setting pay rates.
OPM is requesting feedback on its proposed regulations related to federal pay equity, RIN number ‘‘3206-AO39.’’ Specifically, OPM wants the public’s input on various topics, including the impact of a salary history ban, factors to consider for positions of high occupational segregation, the effects of pay policies that allow organizations to set pay above the minimum rate, and how agencies should inform applicants about pay-setting flexibilities. OPM also asks for information on research or evidence that supports limiting reliance on salary history to advance pay equity and whether there are additional ways for the federal government to be a model employer for pay equity. OPM states that feedback on these topics will them better understand the potential effects of the proposed regulations on pay-setting by federal agencies as it strives to “attract a workforce drawn from the full diversity of America.”
Release Date: May 15, 2023
Alonzo Martinez is Associate General Counsel at HireRight. Mr. Martinez is responsible for monitoring and advising on key legislative and regulatory developments globally affecting HireRight’s service delivery. His work is focused on ensuring HireRight’s performance as a consumer reporting agency and data processor complies with relevant legal, regulatory, and data furnisher requirements. Mr. Martinez obtained his Juris Doctorate from the University of Colorado, and is licensed by the Supreme Court of the State of Colorado. He is a member of the Colorado Bar Association Employment Law Division, the Association of Corporate Counsel, and the Professional Background Screening Association.