On July 31, 2014, the Obama Administration issued a new Executive Order targeting contractor compliance with Federal labor laws. While the order, dubbed the “Fair Pay and Safe Workplaces Executive Order,” aims to create several new obligations for contractors and subcontractors doing business with the Federal government. In the coming months, the FAR Council and several other agencies will be preparing and issuing guidance and regulations to implement the substantive provisions of the Executive Order, which are summarized below. Notably, while the Executive Order itself does not create any substantive obligations now — i.e., in advance of issuance of regulations and guidance — it does set the stage for the FAR Council and agencies to issue guidance and regulations implementing the Order’s provisions.
Prior to Award. Contractors bidding on procurement contracts in excess of $500,000 would be required to “represent, to the best of the [their] knowledge and belief, whether there has been any administrative merits determination, arbitral award or decision, or civil judgment” rendered against the contractor within the preceding 3-year period for violations of a slew of labor laws (including the FLSA, Service Contract Act, Davis-Bacon, ADA, ADEA, FMLA, NLRA, OSHA, Title VII of the Civil Rights Act and others, as well as equivalent State laws). This information would be factored into the Contracting Officer’s (“CO’s”) responsibility determination (i.e., “whether an offeror is a responsible source that has a satisfactory record of integrity and business ethics”). In addition, contractors would be required to disclose similar information for subcontractors on subcontracts (other than commercially available off-the-shelf items) valued over $500,000, and would be required to include provisions in their subcontracts requiring subcontractors to disclose and update such information.
Post Award. During contract performance, contractors performing work on covered contracts and subcontracts would be required to provide updated information every 6 months. Information brought to the attention of the CO or the Labor Compliance Advisor (described below) may result in Government action, which the Executive Order describes as “includ[ing] agreements requiring appropriate remedial measures, compliance assistance, and resolving issues to avoid further violations, as well as remedies such as decisions not to exercise an option on a contract, contract termination, or referral to the agency suspending and debarring official.”
Labor Compliance Advisors. Federal agencies would be required to designate a senior agency official to be a “Labor Compliance Advisor,” tasked with facilitating contractor compliance with labor laws, which includes “helping agency officials determine the appropriate response to address violations of the requirements of the labor laws” and “coordinat[ing] assistance for agency contractors seeking help in addressing and preventing labor violations” but also includes “as appropriate” sending information to agency suspending and debarring officials.
Paycheck Transparency. Contractors performing work on covered contracts and subcontracts would be required to provide employees covered by the FLSA, the Davis Bacon Act, the Service Contract Act, or “equivalent” state laws, with information concerning the individual’s pay, hours worked, overtime hours, if applicable, and any additions made to or deductions made from the individual’s pay.
Dispute Resolution. Contractors performing work on contracts valued over $1 million would be required to “agree that the decision to arbitrate claims arising under title VII of the Civil Rights Act of 1964 or any tort related to or arising out of sexual assault or harassment may only be made with the voluntary consent of employees or independent contractors after such disputes arise.” This requirement, like the requirements noted above, would also apply to subcontracts where the estimated value of the subcontract meets the dollar threshold. This element is essentially an expansion of the “Franken Amendment” to contractors other than DoD contractors and subcontractors that meet the dollar threshold.
Effective Dates. The effective dates of these new requirements will be driven by regulations and guidance issued by the FAR Council and several other agencies (primarily the Department of Labor). A White House Fact Sheet on this Executive Order indicates an expectation that the implementation will occur “on new contracts in stages, on a prioritized basis, during 2016.”