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Consent to Disclose Overview
Military contractor companies may force their employees to sign consent to disclose agreements that allow them to seek tax information from the IRS.
A consent to disclose agreement is a clause that is written into an employment contract which allows the IRS to give employers tax information. This practice may violate employee rights to protect their tax information from access by their employer.
Specifically, employees of military contractor companies may be at risk for exploitation under these clauses.
Why Do Employers Need Tax Information?
An employer may request a W-2 or other tax information from job applicants for a variety of reasons. They may want to verify work and salary history through this method if former employers cannot be reached. This may also be a way for HR professionals to verify information if previous employers are out of business or if a job applicant previously received large bonuses or employed them self. In other situations, accessing tax information may protect job applicants from consequences by their current employer.
Although these are valid reasons to request tax information, the process may not be the best option for reviewing job applicants. Simply looking at income tax information can provide an incomplete picture when examining job applicants.
“Rather than looking at an applicant’s past compensation history, employers are better served by evaluating the requirements of the job, conducting market research to determine what range of compensation the industry supports for that position, and paying an appropriate amount based on the job, the market and company performance,” an experienced attorney told the Society for Human Resource Management (SHRM).
Laws Against Consent to Disclose Agreements
In addition to providing an incomplete employment assessment, consent to disclose agreements are slowly becoming prohibited by state and local laws. Although there are no federal laws against these agreements, employees may be protected in other ways.
In 2016, the Massachusetts Pay Equality Act was passed to prevent employers from inquiring about job applicants’ salary history. The law was scheduled to take effect in 2018, requiring Massachusetts companies to revise their current applications to comply with the new legislation.
In 2017, Philadelphia passed local laws to prevent private-sector employers from requesting salary history from job applicants. Like the broad Massachusetts law, this law protects from consent to disclose agreements that allow employers to access detailed tax information about applicant income.
Both of these laws were passed to address the gender wage gap plaguing the country, but also provide unexpected protection to employees from potentially harmful consent to disclose agreements written into employment contracts.
Defense Contractor Consent to Disclose Issues
Defense contract companies may have had their rights violated if they were forced to disclose income taxes to their employers. The issue has reportedly affected employees of the Pine Gap military facility in Australia.
Military contractor companies who are being privately investigated for this issue include AECOM, Boeing, E&M Technologies, General Dynamics, HP, IBM, Leidos, Northrop Grumman, Raytheon, SAIC, and Stellar Solutions. These employers may have infringed upon employee rights, entitling these individuals to compensation.
