Yesterday, July 31, 2014, the President signed another Executive Order, this one titled “Fair Pay and Safe Workplaces.”  There are three major prongs, expected to begin phasing in during 2016: 1) contractors bidding on a contract over $500,000 will now have to provide information to contracting officers about any labor law violations in the past three years, 2) contractors will be required to provide employees and independent contractors with information about their wages, and 3) contracts over $1 million will not allow contractors to require arbitration of claims under Title VII or regarding sexual assault or harassment.  Specific provisions are included for updating the Federal Acquisition Regulation (FAR) and fairly specific tasking is assigned to relevant parties to prepare for implementation.

Regarding the first prong of the order, contractors bidding on a contract over $500,000 will be required to represent whether there has been any administrative merits determination, arbitral award or decision, or civil judgment rendered against the contractor or any subcontractors with a contract exceeding the threshold in the last three years. The information is to be provided regarding violations of any of the 15 labor laws and executive orders listed and shall be considered when determining the contract award, within guidelines outlined in the updated FAR.  Both the contractor and any covered subcontractors will be required to provide updates every six months throughout the performance of the contract.  The Secretary of Labor is tasked with providing guidance for determining whether serious, repeated, willful, or pervasive violations of the labor laws demonstrate a lack of integrity or business ethics.  The Administrator of General Services is tasked with developing a single website for Federal contractors to use to report the information required under this order.

The second prong of this executive order is more straightforward, requiring contractors who do not already do so, to provide employees with a document outlining hours worked, overtime hours, pay and any additions made to or deductions made from pay. If the employee is exempt or is treated as an independent contractor, they instead need a document informing them of this status.

Finally, the third prong of the order requires that on contracts exceeding $1 million, contractors will not be allowed to require employees or independent contractors to arbitrate claims arising from Title VII or sexual assault or harassment.  Instead, the decision to arbitrate must be voluntary, after a claim arises.  This must also be incorporated in subcontracts that exceed $1 million. However, exemptions include contracts for the acquisition of commercial items or commercially available off-the-shelf items and employees covered under a Collective Bargaining Agreement.

Stay tuned as we keep an eye out for Notices of Proposed Rulemaking associated with this new order.

By Kristen Pryor, M.S., Associate Consultant 

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