On August 25, 2016, the Department of Labor (DOL) and Federal Acquisition Regulatory Council (FAR Council) published the final rule implementing Executive Order 13673 Fair Pay and Safe Workplaces in the Federal Register.

Although the final rule officially takes effect October 25, 2016, full implementation will be phased-in as detailed below.

 

Contractor Disclosures:  Phased-In

Once fully implemented, federal contractors will be required to disclose information related to labor law compliance over the most recent three years period when bidding on federal contracts.  Specifically, contractors will need to report the (1) labor law violated, (2) relevant unique identification number (such as a case number), (3) date rendered, and (4) name of the court/arbitrator/agency responsible for the decision.

Disclosure requirements include administrative merits determinations, civil judgments, and arbitral awards or decisions related to the following covered labor laws:

  • Fair Labor Standards Act
  • Occupational Safety and Health Act
  • Migrant and Seasonal Agricultural Workers Protection Act
  • National Labor Relations Act
  • Davis-Bacon Act
  • Service Contract Act
  • EO 11246 Equal Employment Opportunity
  • Section 503 of the Rehabilitation Act of 1973
  • Vietnam Era Veterans’ Readjustment Assistance Act
  • Family and Medical Leave Act
  • Title VII of the Civil Rights Act of 1964
  • Americans with Disabilities Act of 1990
  • Age Discrimination in Employment Act of 1967
  • EO 13658 Minimum Wage for Contractors

Violations deemed “serious, repeated, willful, or pervasive” will be taken into consideration during the awards process.  Such determinations may require additional labor compliance agreements, while contractors with “unsatisfactory integrity and business ethics” will be removed from consideration.

Implementation of this section of the final rule will be phased-in over a period of two years as follows:

Effective Date Covered Contractors Contract Value Requirement
October 25, 2016 Prime Only $50 million 1 year disclosure
April 25, 2017 Prime Only $500 thousand 1 year disclosure
October 1, 2017 Prime & Subcontractors $500 thousand 1 year disclosure
October 1, 2018 Prime & Subcontractors $500 thousand 3 years disclosure

 

Mandatory Arbitration — Complaint and Dispute Transparency:  Effective October 25, 2016

Beginning October 25, 2016, relevant contractors can no longer require employees/independent contractors consent to arbitrate claims related to Title VII of the Civil Rights Act and/or sexual assault and harassment claims before any dispute or incident.  That is, arbitration of these claims may only occur with the voluntary consent of the individual after such conflicts arise.  Exceptions include individuals covered by a collective bargaining agreement and those covered by valid employee/independent contractor contracts that pre-date the federal prime or subcontract.

This section includes all prime and subcontractors with contracts of $1 million or more.

 

Paycheck Transparency:  Effective January 1, 2017

Beginning January 1, 2017, contractors must provide covered employees with pay stubs/wage statements that include (1) hours worked, (2) overtime hours, (3) rate of pay, (4) gross pay, and (5) an itemization of each addition to and deduction from gross pay.

In lieu of hours worked, contractors may note an employee’s FLSA exempt status, where relevant.

In addition, federal contractors will be required to inform independent contractors of their status as independent contractors.

Wage statement requirements in Alaska, California, Connecticut, District of Columbia, Hawaii, New York, or Oregon are considered substantially similar and so are compliant with this section of the final rule.  Because State and local regulations may change, this list is subject to change.

 

Preassessment:  Starting the Week of September 12, 2016

Contractors with concerns related to violations may want to participate in Preassessment.  This process may include developing a labor compliance agreement to address identified issues.  Successful participation will be considered a “mitigating factor” when evaluating a contractor’s compliance history.

 

What This Means for Your Affirmative Action Program

Covered labor laws include the Executive Order, laws, and implementing regulations administered by the Office of Federal Contract Compliance Programs (OFCCP).  As such, contractors will be required to disclose Show Cause Notices from the Agency.  At a minimum, contractors with reportable violations should expect increased scrutiny during the awards process, with a “limited number of situations” requiring labor compliance agreements or removal from the awards process.

 

The DOL’s Guidance for Executive Order 13673, “Fair Pay and Safe Workplaces” can be found here.

 

Because of the complexity of the new rule, and because much of it is unrelated to OFCCP compliance, please be sure to connect with subject matter experts and/or your labor law attorney as necessary.

If you would like to discuss this Compliance Alert further, call (888) 789-3978 to speak with a consultant.

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