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Federal Contractors and Labor Law Violations

Fair Pay and Safe Workplaces Executive Order

(Official White House Photo by Pete Souza)

On Aug. 25, 2016, the Department of Labor (DOL) and the Federal Acquisition Regulatory Council (FAR Council) issued a final rule and guidance implementing an executive order affecting federal contractors.

 

The Fair Pay and Safe Workplaces Executive Order (Order) was signed by President Barack Obama in 2014. Under the terms of the Order, federal agencies will require prospective contractors to disclose previous labor law violations when submitting bids for federal contracts. The Order also requires more wage payment transparency and prohibits pre-dispute arbitration agreements.

The Order is intended to ensure that federal contracts are awarded to compliant contractors. Contractors that fail to provide complete and accurate information may be subject to sanctions under the False Statements and the False Claims Acts.

ACTION STEPS

  1. Federal contractors and subcontractors should review the federal guidance to understand their upcoming disclosure obligations.
  2. Federal contractors may also apply for a voluntary pre-assessment of their compliance history with the DOL to increase their chances of receiving a federal contract award.

The Fair Pay and Safe Workplaces Executive Order (Executive Order 13673)

Existing law requires federal agencies to contract with “responsible sources.” This means, among other things, that contracting officers have an obligation to award federal contracts to contractors that have “a satisfactory record of integrity and business ethics.”

The Order was issued to improve the ability of contracting officers to act as good stewards of federal resources and to ensure that contractors that comply with federal labor laws, rather than non-compliant contractors, are allowed to provide services and products for the federal government.

The Order contains three main provisions:

  1. A mandate to disclose certain labor law violations;
  2. A requirement to adopt transparent payment practices; and
  3. A prohibition on pre-dispute mandatory arbitration provisions.

Implementation Timeline

Implementation of the Order will be phased in during the next few years, as shown in the table below:

Sept. 12, 2016 Pre-assessment begins. Federal c

ontractors may request a voluntary DOL assessment of their labor compliance history, in anticipation of bids on future contracts but independent of any specific acquisition.

Oct. 25, 2016 The final rule takes effect. Mandatory disclosure and assessment of labor law compliance begins for all prime contractors under consideration for contracts with a total value greater than or equal to $50 million. The reporting disclosure period is initially limited to one year and will gradually increase to three years by Oct. 25, 2018.
Jan. 1, 2017 The Paycheck Transparency clause takes effect, requiring contractors to provide wage statements and notice of any independent contractor relationship to their covered workers.
April 25, 2017 The total contract value threshold for prime contracts requiring disclosure and assessment of labor law compliance is reduced to $500,000.
Oct. 25, 2017 Mandatory assessment begins for all subcontractors under consideration for subcontracts with a total value greater than or equal to $500,000.
Oct. 25, 2018 The reporting period, initially one year, will be gradually increased to three years.

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