By Pamela Wolf, J.D. The much anticipated final Federal Acquisition Rule and Labor Department guidance implementing President Obama’s Fair Pay and Safe Workplaces Executive Order have been released and will be published in the Federal Register on August 25. Since Obama signed it in July 2014, EO 13673 has spawned considerable controversy; it was quickly dubbed the “blacklisting” initiative by opponents, who questioned whether it was necessary or even would produce positive results in light of its impact on employers. Democratic lawmakers pushed the administration to issue proposed regulations that would implement the EO. When issued in May 2015, however, the proposed rule and guidance only seemed to add momentum to the controversy, prompting Republican lawmakers and others to press the Labor Department and Office of Federal Procurement Policy to withdraw the proposals. Most recently, provisions that would block or limit application of the EO were written into drafts of the 2017 Defense Authorization Act; the administration responded with a veto threat. What’s behind the executive order? The White House has said that EO 13673 would protect both workers and taxpayers by making sure that government contracts are not going to companies that violate federal labor laws. The EO is designed to:
- Hold corporations accountable by requiring potential contractors to disclose labor law violations from the past three years before they can receive a contract.
- Give workers better and clearer information on their paychecks, so they can be sure they’re getting paid what they’re owed.
- Give more workers who may have been sexually assaulted or had their civil rights violated their day in court.
- Ease compliance burdens for business owners around the country by streamlining all types of reporting requirements across the federal government, the first step in a series of actions to make it easier for companies, including small businesses, to do business with the government.
- For companies that have violations, rather than emphasizing punishment, give them a chance to follow good workplace practices and come into compliance with the law.
- Effective Date. The final rules will take effect on a phased-in schedule starting on October 25, 2016.
- Pre-Dispute Arbitration Agreements. Prohibitions against requiring employees to enter into pre-dispute agreements to arbitrate claims brought under Title VII of the Civil Rights Act of 1964 or tort claims arising from sexual assaults or harassment will take effect on October 25, 2016. The White House indicates that this prohibition will not apply “where valid contracts already exist and remain unmodified.”
- Paycheck Transparency. Paycheck transparency provisions of the final rules will become effective on January 1, 2017.
- One-Year Delay for Subcontractor Disclosures. For the one-year period beginning October 25, 2016, disclosures of labor law violations will be required only for prime contractors. Subcontractor disclosures will not be required until October 25, 2017.
- Contract Thresholds. For the first six months after October 25, 2016, the requirement for prime contractors to disclose labor law violations will apply only on solicitations valued at $50 million or more. Starting on April 25, 2017, solicitations valued at or above $500,000 will be covered.
- Three-Year Lookback Window. The three-year lookback period for disclosures will be phased in gradually. Initially, the period of time covered by the disclosure obligation will be limited to one year preceding the date on which a contractor submits a bid on a covered solicitation. Presumably, that window will increase from one to two years as of October 25, 2017, and then to the full three-year window as of October 25, 2018.
- DOL to Handle Subcontractor Disclosures. Once subcontractor disclosures are required, the DOL will be responsible for determining whether and how labor law violations will affect subcontractor access to work on covered federal contracts. Subcontractors will make their disclosures directly to the DOL, rather than to prime contractors; and prime contractors will be able to rely on the DOL’s review.
- Equivalent State Laws. The final rules do not contain any timeframe for rulemaking concerning labor law violations involving “equivalent” state laws. The White House indicates that this requirement will be “phased in at a later time” (with the exception for OSHA-approved state plans, which will take effect in accordance with the above schedule).
- Early Assessment Opportunities. Starting September 12, 2016, the DOL will offer a pre-assessment” process, which will allow contractors to come forward to the DOL “to discuss their history of compliance with labor laws” and secure guidance on whether “additional compliance measures are necessary.”
- Helpful Citizens. The White House fact sheet highlights the opportunity for the public to make reports to contracting agencies, a point that largely has escaped notice until now. According to the White House, Agency Labor Compliance Advisors “will also be available to members of the public who have information they feel that prospective contractors should have disclosed about their labor violations.”
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