FAR Council Withdraws “Pay Equity and Transparency” Proposed Rule

On January 8, 2025, the Office of Federal Procurement Policy (OFPP) and the Federal Acquisition Regulation (FAR) Council withdrew a proposed rule that would have banned federal contractors and subcontractors from seeking or considering compensation history when making employment decisions and required contractors to disclose compensation being offered in job postings.

As we previously reported, the proposed rule would have applied broadly to all solicitations, with mandatory flow-downs to all federal subcontracts performed in the United States, at every tier, including contracts and subcontracts for commercial and commercially available off-the-shelf products and services, of any value. Beyond banning use of salary history information and requiring contractors to include salary, wage, and benefit information in all job postings for positions working on or in connection with a covered contract, the proposed rule would have required covered contractors to provide all applicants applying for roles on covered contracts with a cumbersome mandatory notice of the requirements.

In its notice of withdrawal, the FAR Council said it was withdrawing the proposed rule "[i]n light of the limited time remaining in the current Administration." The FAR Council and OFPP decided it was better for them to "focus their attention on other priorities, including directives in recent National Defense Authorization Acts" before the new administration is sworn in. It seems safe to bet that the "Pay Equity and Transparency" rule will not reappear, at least not during the next four years.

Although federal efforts for pay transparency and salary history may have stalled for now, over 15 jurisdictions already have laws in place prohibiting using salary history to make employment decisions or requiring employers to provide pay information in their job postings. These jurisdictions include California, Connecticut, New York, New York City, Maryland, Washington State, and Washington, D.C. More states will have pay transparency laws going into effect this year, including Illinois (January 1, 2025), Minnesota (January 1, 2025), New Jersey (June 1, 2025), Vermont (July 1, 2025), and Massachusetts (October 29, 2025). This growing patchwork of pay transparency laws is becoming increasingly cumbersome for contractors to navigate and create coordinated strategies for compliance. So, contractors should consider reviewing their pay equity and transparency practices in light of these laws.