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Federal Law

President Signs Executive Order Directed at Federal Contractors and Their Employees

Monday, August 4, 2014
On July 31, 2014, President Obama signed an Executive Order entitled "Fair Pay and Safe Workplaces."  The order is one of a series of Executive Orders by the Administration which is aimed at federal contractors seeking to bar contractors with certain Fair Labor Standards Act violations from holding government contracts.  The Order provides that the Federal Acquisition Regulation Council will propose regulations to implement the provisions.  

The first provision in the Executive Order requires that federal agencies ensure that they are not doing business with contractors which habitually violate labor and employment laws.  Any new contracts which exceed $500,000 require that the bidder provide information of any knowledge or belief as to whether there has been "any administrative merits determination, arbitral award or decision, or civil judgment" against the bidder in the previous three years.  The violations could be of any of the following labor and employment laws and Executive Orders:

(A) the Fair Labor Standards Act;
(B) the Occupational Safety and Health Act of
(C) the Migrant and Seasonal Agricultural Worker
Protection Act;
(D) the National Labor Relations Act;
(E) 40 U.S.C. chapter 31, subchapter IV, also known as the Davis-Bacon Act;
(F) 41 U.S.C. chapter 67, also known as the Service Contract Act;
(G) Executive Order 11246 of September 24, 1965
(Equal Employment Opportunity);
(H) section 503 of the Rehabilitation Act of
(I) 38 U.S.C. 3696, 3698, 3699, 4214, 4301-4306, also known as the Vietnam Era Veterans' Readjustment Assistance Act of 1974;
(J) the Family and Medical Leave Act;
(K) title VII of the Civil Rights Act of 1964; 

(L) the Americans with Disabilities Act of 1990;  

(M) the Age Discrimination in Employment Act of
(N) Executive Order 13658 of February 12, 2014
(Establishing a Minimum Wage for Contractors); or
(O) equivalent State laws, as defined in guidance issued by the Department of Labor. 

Each federal agency will be required to have a Labor Compliance Advisor who will determine whether a contractor has a satisfactory record.  Once the contractor is chosen, it will be obligated to update any violations every six months.  These contractors will have to obtain the same assurances from any subcontractors which have subcontracts worth more than $500,000.  

The Department of Labor will develop guidance which will assess whether violations will be determined as pervasive, serious, willful and repeated.

The Order also requires that the contractors have paycheck transparency.  The contractor will be required to provide all individual employees performing work under the federal contract with hours worked, overtime hours, pay, and any additions made to or deductions made from the pay for each pay period.  Those employees who are exempt from the overtime provisions are not required to receive a record of hours worked.  This would also apply to anyone who is considered an independent contractor versus an employee.  

Another important part of the Order states that any contracts or subcontracts which exceed a million dollars (excluding those for off the shelf items) must include a provision that arbitration provisions for claims arising under Title VII or from tort related claims have to be made with the voluntary consent of the employee or independent contractor after the claim arises.  The exception to this provision is a collective bargaining agreement or a valid arbitration agreement agreed to before the federal contract bid.  

While the Executive Order is effective immediately, it will not apply to new solicitations for contracts until there is a Final Rule to implement this Order.  
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