DOL Issues Guidance on the Fair Pay and Safe Workplaces Executive Order
On August 24, 2016, the Department of Labor (DOL) issued guidance on Executive Order 13673, Fair Pay and Safe Workplaces. The Executive Order requires federal contractors and subcontractors to report violations of 14 federal laws and as yet unspecified state laws when bidding on service and supply contracts, including construction contracts. It requires federal contractors and subcontractors to provide wage statements to workers covering the workers' hours worked, overtime hours, pay and any additions made to or deductions made from pay. The contractor must supply the wage statement for each pay period. The Executive Order prohibits contractors and subcontractors, with federal contracts of at least $1 million, from requiring employees to enter into pre-dispute arbitration agreements to arbitrate sexual assault or civil rights claims.
Who is covered and when do federal contractors and subcontractors have to start reporting?
The Executive Order covers federal contractors and subcontractors who are bidding on contracts for goods and services, including construction contracts. Ultimately, the Executive Order requires reporting by contractors and subcontractors who seek federal contracts of $500,000 or more. The guidance phases in enforcement of the Executive Order according to the following schedule:
- Beginning October 25, 2016, prime contractors must disclose violations of the 14 federal laws for the previous year when the prime contractor seeks federal contracts of $50 million or more.
- Beginning October 25, 2016, contractors and subcontractors with federal contracts of at least $1 million may not force employees to sign pre-dispute agreements to arbitrate sexual assault or civil rights claims.
- On January 1, 2017, federal contractors, including subcontractors, must begin providing wage statements to employees.
- On April 24, 2017, federal contractors must disclose violations of the 14 federal laws from the previous year when the contractor seeks federal contracts of $500,000 or more.
- On October 25, 2017, subcontractors must disclose violations of the 14 federal laws from the previous year when the contractor seeks federal contracts of $500,000 or more.
- On October 25, 2018, contractors, including subcontractors, must begin disclosing violations of the 14 federal laws for the previous three years.
What is required?
In solicitations for contracts covered by the Executive Order, the federal agency purchasing the goods or services must require that contractors and subcontractors report, to the best of their knowledge and belief, whether there have been any administrative merit determinations, arbitral awards or decisions, or civil judgments, rendered against them within the preceding one or three year period for violations of the laws specified in the Executive Order. The contractor and subcontractor must update this information every six months.
Which laws are covered by this disclosure?
The following federal laws are covered:
- The Fair Labor Standards Act;
- The Occupational Safety and Health Act of 1970;
- The Migrant and Seasonal Agricultural Worker Protection Act;
- The National Labor Relations Act;
- The Davis-Bacon Act;
- The Service Contract Act;
- Executive Order 11246 of September 24, 1965 (Equal Employment Opportunity);
- The Rehabilitation Act of 1973;
- The Vietnam Era Veterans Readjustment Assistance Act of 1974;
- The Family and Medical Leave Act;
- Title VII of the Civil Rights Act of 1964;
- The Americans with Disabilities Act of 1990;
- The Age Discrimination in Employment Act of 1967; and
- Executive Order 13658 dated February 12, 2014 (Establishing a Minimum Wage for Contractors).
Contractors and subcontractors must also disclose administrative merit determinations, arbitral awards or decisions, or civil judgments, rendered against the contractor under as yet unspecified state laws, as defined in guidance that the DOL will issue in the future.
What about independent contractors?
If the contractor is treating individuals as independent contractors, the contractor must provide a document to the individual informing the individual of his status as an independent contractor.
Are there any other restrictions?
Companies with federal contracts of $1 million or more may not require their employees to enter into pre-dispute arbitration agreements for disputes arising out of Title VII of the Civil Rights Act or from torts related to sexual assault or harassment (except when valid contracts already exist).
The Executive Order requires contractors to give their employees information concerning their hours worked, overtime hours, pay, and any additions to or deductions from their pay on each pay stub.
What are the penalties?
If the contractor has a record of violating the enumerated federal laws, the federal contracting officer can refuse to award the contract to the contractor. If during the performance of the contract the contracting officer discovers the contractor violated any of the laws, the contracting officer can require appropriate remedial measures, compliance assistance, and resolve issues to avoid further violations. The contracting officer may also decide not to exercise an option on a contract, terminate the contract, or refer the matter to the agency's official to suspend and debar the contractor or subcontractor. The Executive Order states "provide that, subject to the determination of the agency, in most cases a single violation of law may not necessarily give rise to a determination of lack of responsibility, depending on the nature of the violation."
Contractors and subcontractors should:
- Ensure they begin tracking any administrative merit determinations, arbitral awards or decisions, or civil judgments, rendered against the contractor within the preceding year for violations of the 14 federal laws specified in the Executive Order.
- Review the pay stub information provided to employees to ensure that it contains the information required by the Executive Order.
- If bidding on a federal contract of $1 million or more, ensure that any pre-dispute arbitration agreements entered into after the federal contract is awarded excludes claims arising out of Title VII of the Civil Rights Act or torts related to sexual assault or harassment.
- Provide any worker who is an independent contractor a document informing him of his status as an independent contractor.
For more information on this matter, please contact Thomas P. Brady at (313) 965-8291 | email@example.com, Bret S. Wacker at (202) 772-0906 | firstname.lastname@example.org, or another member of Clark Hill's Labor and Employment or Government and Public Affairs practice groups.
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