On July 31, 2014, President Barack Obama signed the Fair Pay and Safe Workplace Executive Order which will require prospective federal contractors report violations of 14 Federal laws and as yet unspecified state laws when bidding on service and supply contracts.
Who is covered?
Federal contractors who are bidding on contracts for goods and services, including construction, where the estimated value of the supplies acquired and services required exceeds $500,000.
What is required?
In solicitations for contracts covered by the Executive Order, the Federal agency purchasing the goods or services must require contractors represent, to the best of the contractor's knowledge and belief, whether there has been any administrative merit determinations, arbitral awards or decisions, or civil judgments, rendered against the contractor within the preceding three year period for violations the laws specified in the Executive Order. The contractor must update this information every six months.
Which laws are covered by this disclose?
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 of February 12, 2014 (Establishing a Minimum Wage for Contractors).
Contractors 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 to be issued by the Department of Labor.
What about subcontractors?
For any subcontract where the estimated value of the supplies acquired and services required exceeds $500,000 and that is not for commercially available off-the-shelf items, the subcontractor must report the same information required above to the contractor.
What about independent contractors?
If the contractor is treating individuals as independent contractors, the contractor must provide a document to the individual informing him of his status as an independent contractor.
Are there any other restrictions?
Companies with federal contracts of one million dollars 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 in each pay stub information concerning their hours worked, overtime hours, pay, and any additions to or deductions made from their pay.
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 agent discovers the contractor violates the laws, the contracting officer can requiring 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 suspending and debarring official. 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."
The Executive Order is effective immediately but applies to all solicitations for contracts as set forth in any final rule issued by the FAR Council. Contractors should ensure that they are tracking any administrative merit determinations, arbitral awards or decisions, or civil judgments, rendered against the contractor within the preceding three year period for violations the laws specified in the Executive Order. We must await the issuance of the final rules to provide more guidance.
For more information on this matter, please contact Thomas P. Brady, (313) 965-8291, eat0@eau0eav0eaw0; Bret S. Wacker, (202) 772-0906, eat1@eau1eav1eaw1; or another member of Clark Hill's Labor and Employment or Government and Public Affairs practice groups.