As employment lawyers in South Carolina, we’ve been following the progression of the Fair Pay and Safe Places Executive Order. The FAR (Federal Acquisition Regulation) Council and the Department of Labor (DOL) published final versions of the rule and guidance regarding an executive order (EO) that President Obama issued in 2014. The EO was designed to promote “economy and efficiency in procurement by contracting with responsible sources who comply with labor laws.” This EO is sometimes referred to as the “Blacklisting” or “Bad Actors” EO because the new rules require companies to disclose all allegations of unfair labor practices, regardless of whether the claims were settled or convicted.
“Blacklisting” or “Bad Actors” Executive Order
The regulations aren’t immediately effective, but agencies may already begin using the DOL guidance. The FAR Council’s final rule will be phased in over a two-year period starting October 2016. By the time the regulations are fully implemented on October 25, 2018, all federal contractors and subcontractors will have to report violations of 14 federal laws for the prior three years. The regulations apply to new contracts and subcontracts where the estimated value exceeds $500,000. The EO provides for the following requirements:
Disclosures – contractors must report violations of labor, safety, wage and hour disputes and discrimination laws to the contracting agency before the contract has been granted. This reporting requirement extends to subcontracts exceeding $500,000.
Pay transparency – contractors and subcontractors covered by the rule must provide paystubs to workers giving them information about their hours worked, overtime hours, pay and any deductions taken from their pay. The stub must be provided in a language the worker understands. Contractors and subcontractors must provide workers who are independent contractors a document telling them the same. These requirements take effect January 1, 2017.
Mandatory arbitration – contractors with contracts exceeding $1Million must agree that the decision to arbitrate (rather than a jury or bench trial) claims made under the Civil Rights Act of 1964 or any sexual harassment claim can only be made with the voluntary consent of the employee after the dispute arises. This requirement takes effect on October 25, 2016.
The remainder of the implementation proceeds as follows:
- September 12, 2016: Preassessment – current or prospective contractors may come to the DOL for a voluntary assessment of their labor compliance history before the company bids on future contracts.
- October 25, 2016: final rule – 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 October 25, 2018.
- January 1, 2017: Paycheck Transparency – requires 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.
- October 25, 2017: Mandatory assessment begins for all subcontractors under consideration for subcontracts with a total value greater than or equal to $500,000.