President Issues Fair and Safe Workplaces Executive Order – New Obligations for Federal Contractors

            On July 31, 2014, President Obama signed the “Fair Pay and Safe Workplaces Executive Order” (“Executive Order”), which imposes new obligations on employers who contract with the federal government.  Beginning in 2016, prospective contractors subject to the Executive Order will face increased obligations that include being required to (1) self-report and disclose recent violations of various workplace laws before being awarded federal contracts; (2) provide wage notifications to employees, and provide notifications to independent contractors of their non-employee status; and (3) stop requiring employees to sign pre-dispute arbitration agreements.

             According to the White House, the Executive Order is intended to “crack down on federal contractors who put workers’ safety and hard-earned pay at risk.”  The Executive Order contains multiple new obligations that are unprecedented in scope.   The White House also issued a Fact Sheet, which is posted on our website and contains additional details.

             Under the new rules, companies that apply for federal contracts worth more than $500,000 will have to disclose any major labor law violations they or their subcontractors have committed in the previous three (3) years.  The “labor law violations” are described as including any violation of the fourteen (14) enumerated federal statutes and including equivalent state laws concerning wage and hour, safety and health, collective bargaining, family and medical leave, and civil rights protections.  Contractors will also be required to certify that each of their subcontractors whose compensation exceeds $500,000 meets the newly imposed responsibility standards.

    gavel         The reforms will also prohibit federal contractors from requiring employees to agree to arbitration of employment-related claims, including workplace harassment or civil rights complaints, which will permit employees to pursue claims in court for violations of such laws.  The Executive Order also includes new wage and hour transparency components, which requires contractors to give employees information concerning hours worked, overtime hours, pay and deductions from their pay.  Employees will also be required to notify an employee in writing whether they are being treated as an independent contractor or an employee.

 The Executive Order directs the Federal Acquisition Regulation (“FAR”) Council, and the Secretary of Labor, to coordinate and develop guidelines for determining what types of labor law violations will be deemed to adversely impact contractors’ responsibility determinations.  These agencies will have to do things like evaluate the merits of certain administrative determinations, arbitration awards, the outcome of lawsuits, and to determine whether they reflect “serious, repeated, willful or pervasive violations” of the employment laws.  This undoubtedly will involve another set of detailed federal guidelines and will impose additional burdens on federal contractors.

 We will keep you updated each step of the way and encourage companies to proactively review current labor-related compliance practices now to ensure full compliance by the time these laws and their penalties for noncompliance take effect.  If you have any questions regarding the compliance with the Fair Pay and Safe Workplace Order, please contact Matt Stokely  at mstokely@pselaw.com or one of Pickrel, Schaeffer and Ebeling’s Labor and Employment Law Attorneys.

AUTHOR: Matt Stokely
mstokely@pselaw.com