May 27, 2015

By Marina Blickley

President Obama’s Fair Pay & Safe Workplaces Executive Order was signed and became effective on July 31, 2014. The Order provides that federal government contractors must understand and comply with labor laws including various Federal laws (e.g., FLSA, NLRA, OSHA, etc.) and equivalent state laws. The Order seeks to ensure compliance through required reporting of violations by offerors and contractors and instructing agencies to consider labor violations when awarding federal contracts.

Earlier today the Department of Labor announced the publication of guidance to federal agencies and rules implementing the Order available here –

The 106-page guidance and 131-page rules are a bit more than light bedtime reading. Together they interpret the offeror/contractor reporting requirements and agency review of labor violations established under the Executive Order. Here is the quick read for those short on time.

  • Solicitations for procurement contracts for goods and services, including construction, that exceed $500,000, require that the offeror report violations of covered labor laws for the past three years.
  • The three-year period will be measured from the date of the decision or award and not when the underlying conduct occurred. Thus, for example, a decision by the DOL in 2013 that a contractor improperly classified a worker as exempt and failed to pay overtime wages will be required to be disclosed through 2016 (i.e., three years after the date of the DOL’s decision) even if the improper payments were in 2010.
  • Successful bidders are required to provide post-award updates semi-annually of any additional violations, and there are flow down requirements to subcontractors and reporting obligations.

The next steps in the rule appear more problematic in that they require subjective determinations. If labor law violations are reported, the contracting officer is required to review the violations and request an Agency Labor Compliance Advisor (“ALCA”) provide written advice and recommendations, which may include a finding that the contractor (a) has a “satisfactory record of integrity and business ethics,” (b) could have a satisfactory record “if the process to enter into or enhance a labor compliance agreement is initiated;” or (c) does not have a satisfactory record and the agency Suspending and Debarring Official should be notified. The ALCA’s recommendation will also include an assessment of the violation and, pursuant to the DOL guidance, will be based on a case-by-case assessment including a review of the severity of the violation, the size of the contractor, and any mitigating factors.

The rules also require, for contracts exceeding one million dollars, that contractor employees may only be required to arbitrate Title VII or any tort claims arising out of sexual assault or harassment if the employee voluntary consents to arbitration after such dispute arose. Thus, arbitration agreements entered into upon hire would not validly cover allegations of sexual harassment under these rules.

There is a 60-day public comment period that begins running today in which contractors may submit comments to the agencies regarding the proposed guidance and/or rules. If you would like to know more about the labor violation reporting requirements or participate in the comment process, you should contact us directly. For additional information, you can also attend our class on Federal Labor Law Compliance on September 23 in Tysons. We hope to see you there.

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