Audit, Compliance and Risk Blog

New Executive Order Pursues Labor Law Compliance By Federal Contractors

Posted by Jon Elliott on Tue, Aug 19, 2014 July 31, President Obama issued Executive Order (EO) Number 13673, establishing a series of reporting and procedural requirements for federal contractors, inducing them to provide “Fair Pay and Safe Workplaces” to their employees. Beginning in 2016, these new requirements will apply to contracts and subcontracts to provide more than $500,000 in services and/or non-standard goods to federal agencies. Some requirements are specific in the EO, while others will become clearer after revisions to the contracting standards codified as the Federal Acquisition Regulation (FAR).

If your organization is subject to this new EO, it must prepare to respond to these requirements. Even if it is not, it’s worth considering whether its compliance with labor laws meets these “best practices.”

What Requirements Apply to Covered Contractors?

The EO sets forth the following requirements, which will become conditions for covered federal procurement contracts:

  • Disclose administrative and judicial findings of labor law violations within the past 3 years under 14 federal statutes and equivalent state laws including those addressing wages and hours (e.g., Fair Labor Standards Act (FLSA)), safety and health (Occupational Safety and Health Act), collective bargaining (e.g., National Labor Relations Act), Family and Medical Leave Act, and civil rights and anti-discrimination laws (e.g., Title VII of the Civil Rights Act of 1964). These are listed below in the Self-Assessment Checklist.

  • Upon request, describe remedial and preventive measures taken to address such violations.

  • Ensure that each paycheck for each employee working on the contract clearly discloses the individual’s hours worked, overtime hours, pay, and any additions made to or deductions made from pay, in full compliance with FLSA and/or other applicable laws.

  • Do not require employees to sign blanket pre-dispute agreements to arbitrate Title VII and sexual harassment and assault claims, rather than pursue claims in court (for contracts exceeding $1 million); voluntary agreements and those reached after disputes arise are still allowed.

  • Require any sub-contractors responsible for more than the applicable threshold ($500,000 or $1 million) in goods and services to meet these standards.

What Requirements Apply to Federal Agencies?

Purchasing agents in federal agencies must take steps to ensure contractor compliance, including the following:

  • Designate an agency Labor Compliance Advisor, to work with agency administrators and contracting agents to ensure that policies to implement this EO (and subsequent FAR revisions) are developed and implemented, provide training and information to contracting officials and potential contractors, prepare annual public reports of the agency’s actions, and to collaborate with peers from other agencies.

  • Ensure that agency contracting officials follow these requirements and associated agency policies, to determine whether “serious, repeated, willful, or pervasive violations” indicate that the applicant may not have a “satisfactory record of integrity and business ethics”.

In addition to these agency-specific activities, the EO directs the US Department of Labor to prepare guidance, and the interagency “FAR Council” to revise the FAR, and provide guidelines and informational materials to support government-wide consistency and ongoing improvement to contracting procedures and contractor performance.

Self-Evaluation Checklist

Although this EO applies only to federal agencies and qualifying federal contractors, it reflects the latest trends toward expansive interpretation of employees’ rights and opportunities. If your organization is not subject to this EO, it’s probably subject to Title VII and/or state laws.

Consider the following questions.

  • Does my organization comply with the following labor laws, as applicable?

    • Fair Labor Standards Act

    • Occupational Safety and Health Act of 1970

    • Migrant and Seasonal Agricultural Worker Protection Act

    • National Labor Relations Act

    • Davis-Bacon Act

    • Service Contract Act

    • Executive Order 11246 of September 24, 1965 (Equal Employment Opportunity)

    • Section 503 of the Rehabilitation Act of 1973

    • Vietnam Era Veterans' Readjustment Assistance Act of 1974

    • Family and Medical Leave Act

    • Title VII of the Civil Rights Act of 1964

    • Americans with Disabilities Act

    • Age Discrimination in Employment Act

    • Executive Order 13658 of February 12, 2014 (Establishing a Minimum Wage for Contractors)

    • Equivalent state laws

  • For each of the applicable laws, does the organization maintain records of violations subject to administrative or judicial enforcement, and of remedial and preventive measures implemented to minimize such violations?

  • Does the organization require employees to sign pre-dispute agreements to arbitrated disputes under anti-discrimination and sexual assault laws?

  • Does the organization provide each employee with clear and complete information about hours worked, overtime hours, pay, and any additions made to or deductions made from pay?

  • Does the organization seek contracts to provide goods and/or services to the federal government?

Where Can I Go For More Information?

Specialty Technical Publishers (STP) provides a variety of single-law and multi-law services, intended to facilitate clients’ understanding of and compliance with requirements. These include:


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Tags: Corporate Governance, Business & Legal, Employer Best Practices, Health & Safety, Employee Rights, Training, Environmental risks, EHS, EEOC, Disability benefits