Back in July, 2014, President Obama signed Executive Order 13673, also known as the Fair and Safe Workplaces Executive Order. It is a comprehensive Order aimed at ensuring federal contractors’ compliance with fourteen—yes fourteen–federal labor laws, along with their state counterparts. Now, two years later, the Federal Acquisition Regulatory (FAR) Council and the United States Department of Labor have published final rules implementing the EO 13673. The stated objective of the Executive Order and the implementing rules is to ensure that federal government agencies contract with “responsible” contractors. In other words, contractors subject to the Executive Order can face serious consequences, including loss of federal government contracts if they do not comply with the fourteen labor laws. (See below).  The new rules are quite comprehensive. While we cannot possibly explore all of them here, we can at least get an overview. Let’s start with 4 of the 5 W’s (who, what, when and how):

Who is affected by the new rules? Federal contractors (and sub-contractors) with contracts valued in excess of $500,000.

What are the new rules? In a nutshell, the new rules, you must self-report any violations with the following fourteen federal labor laws and their state counterparts:

  1. Fair Labor Standards Act
  2. Occupational Safety and Health Act (and state law equivalents)
  3. Migrant and Seasonal Agricultural Worker Protection Act
  4. National Labor Relations Act
  5. Family and Medical Leave Act
  6. Davis-Bacon Act
  7. Service Contract Act
  8. Title VII of the Civil Rights Act
  9. Americans with Disabilities Act
  10. Age Discrimination in Employment Act
  11. Executive Order 11246 (affirmative action and equal employment opportunity)
  12. Vietnam Era Veterans’ Readjustment Assistance Act
  13. Section 503 of the Rehabilitation Act
  14. Executive Order 13658 (federal contractor minimum wage)

When do the new rules take effect?  Agencies can use the DOL guidance immediately. The DOL guidance is supposed to assist agencies in complying with the Executive Order.  The FAR Council’s rules are phased in over a two-year period, beginning October 25, 2016. Here are some of the key facets:

  • Starting September 12, 2016 you may request from the DOL a voluntary assessment of your labor compliance history. While the request would implicitly be in anticipation of bids on future contracts, it would not be tied to any specific bids or contracts. This type of voluntary assessment, also known as a pre-assessment, would be seen as a mitigating factor with respect to future acquisitions. This option is available to you as of September 12, 2016, on an ongoing basis. In other words, you can always do a voluntary pre-assessment independent of any specific bid/acquisition.
  • As of October 25, 2016, federal prime contractors with contracts valued at or above $50 million must disclose any violations of the above-cited 14 federal labor laws in the previous year. Contractors and sub-contractors with federal contractors of $1 million or more may not require employees to arbitrate sexual assault, harassment or Title VII, though the parties may agree to binding arbitration after the dispute arises. In other words, covered contractors will no longer be able to require employees to sign an arbitration agreement as a condition of employment.
  • As of January 1, 2017 all federal contractors and sub-contractors must start providing their employees wage statements.
  • As of April 24, 2017 all federal contractors must disclose violations in the previous year of the 14 above-cited labor laws in when seeking contracts valued at $500,000 or more, and sub-contractors must begin doing so as of October 25, 2017; all federal contractors and sub-contractors must begin doing so as of October 25, 2018.

How will the new rules be implemented? In a nutshell, contracting officers are supposed to consider your compliance record in the previous year before awarding bids on contracts for $500,000 or more.   If your company is a subsidiary, parent or affiliate Company, the contracting officer under FAR Council rules evaluates the compliance history of the entity whose name is on the bid. What else can you expect? First and foremost, just because you have a finding of a compliance violation doesn’t mean that your company will be rendered “non-responsible”. In other words, that alone will not automatically cause you to lose the contract.  Information you provide about mitigating factors is considered –and is kept confidential, unless you, the contractor decide you want that information disclosed. Each contractor under EO 13673 designate an Agency Labor Compliance Advisor (ALCA), who assists your contract officer in evaluating the information. The ALCA must provide a written analysis of the compliance issues/history, and the contracting officer must include in the contract file how it weighed the analysis in arriving at the “non-responsibility” determination, if any. Even successful bidders are not entirely off the hook, however. If you secure a federal contract of $500,000 or more, you will still have to provide updates as to your labor law compliance twice each year during the contract term.

Note that most of the requirements discussed will only apply to those with federal contracts of at least $500,000. What if your contracts are valued at less than $500,000? Don’t get excited. You’re not entirely off the hook either. You still have to provide wage statements to your employees, starting January 1, 2017. What information must those statements include? The statements must show hours worked, overtime hours worked, pay rate and total pay for the pay period, and any additions to or deductions from pay. If a significant portion of your workforce’s primary language is other than English, the statements must be printed in that language. Exempt employees’ statements if they indicate the employee’s exempt status need not indicate the hours worked.  What if your workforce consists solely or primarily of independent contractors? You still have to provide a statement. In this case the statement would indicate their independent contractor status. (Remember also, that if you have any contracts valued at $1 million or more, the aforementioned limitations on arbitration apply to you as well.)

Is that everything? Frankly no. There is much more, but there is simply not enough time – or room—to cover it in one post.  We may, as we often do, follow up as appropriate with additional information.

For more information, contact Ahmed Younies at (714) 426-2918, x. 1, or [email protected].