President Obama issued Executive Order (“E.O.”) 13673, “Fair Pay and Safe Workplaces,” on July 31, 2014 to improve compliance with labors laws and increase efficiency in Federal Contracting. E.O. 13673 was amended by E.O. 13683 to correct a statutory citation. The E.O. requires federal contractors to disclose certain labor when applying for contracts and on a semiannual basis. Reportable violations include administrative merits determinations, civil judgements, and arbitral awards or decisions rendered in the preceding three-year period. To improve transparency for workers, the E.O. also requires contractors to provide workers with payment information each pay period, including hours worked, overtime hours, base pay, additions or subtractions from pay, and exemption status under the Fair Labor Standards Act.
On May 28, 2015, the FAR Council and the Department of Labor (“DOL”) published a proposed amendment to the Federal Acquisition Regulation (“FAR”) and corresponding Guidance to implement the E.O. The proposal provides for a phased-in implementation which will begin with 14 federal labor laws and subsequently address state labor laws. The DOL Guidance defines key terms from the E.O. to clarify how agencies evaluate the severity of violations and make determinations on disclosures and required reporting. The proposed rule directs contractors to collect violation information from subcontractors. Contractors have flexibility to develop a system for subcontractor evaluation which best fits the size and nature of their individual contracts. The rule clarifies that the Contracting Officer is responsible for evaluating contractor disclosures, but contractors may seek DOL assistance in evaluating subcontractor violations to make appropriate determinations of responsibility. Contractors are afforded the opportunity to provide information of mitigating factors and remedial efforts to supplement the Contracting Officer’s determination of responsibility.
The proposed rule includes penalties for serious labor violations. Though the rule notes that most minor violations can be corrected by contractors, serious violations can result in termination of existing contracts, rejection of contract options, implementation of new compliance agreements, or referral to agency officials for suspension or debarment. The reporting requirements under the proposed rule would require contractors to report various types of administrative determinations which may not have reached final decisions. In this respect, the proposed rule may implicate contractors’ due process rights. The proposed rule seeks comments on several aspects of the regulation, including whether subcontractors should report labor violations to prime contractors or directly to the DOL. Comments to the proposed rule and DOL guidance are due by July 27, 2015.
Executive Order 13673:
Executive Order 13683: