Audit, Compliance and Risk Blog

In July 2014, 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. Some requirements are specific in the EO, while others were left for clarification by revisions to the Federal Acquisition Regulation (FAR), for contracts subject to these requirements. (I blogged about the EO here). None became effective in 2014, but instead they have awaited the FAR revisions. The revised FAR has been issued effective October 25, 2016, for appropriate contracts issued by the Department of Defense (DoD), General Services Administration (GSA) and National Aeronautics and Space Administration (NASA). The new requirements will be phased in, covering contracts and subcontracts for goods and services greater than $50 million immediately, and those greater than $500,000 effective April 25, 2017.

If your organization has or is pursuing such federal contracts, it must be ready to respond to the requirements created by the EO and implementing FAR. 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 include 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.

How Are These Requirements Being Phased In?

The requirements are being phased in beginning with federal contract solicitations issued after the following dates:

• October 25, 2016

  • Prime contractors for contracts greater than $50 million provide information – including compliance certification from October 25, 2015 (or 3 years if shorter, which means the look-back period will reach 3 years as of October 25, 2018).

  • Contracts must not allow contractors (or subcontractors contracted for more than $1 million) to require employees to arbitrate employment discrimination or harassment claims.

• January 1, 2017 - paycheck transparency requirements effective.

• April 25, 2017 - prime contractors for contracts greater than $500,000 provide information – including compliance certification from October 25, 2015 (or 3 years if shorter).

• October 25, 2017 – subcontractors seeking greater than $500,000 provide information – including compliance certification from October 25, 2015 (or 3 years if shorter).

What Will Federal Agencies Do With This Information?

Each agency must ensure that agency contracting officials follow these requirements and associated agency policies, and determine whether “serious, repeated, willful, or pervasive violations” indicate that the applicant may not have a “satisfactory record of integrity and business ethics.” The EO required each federal agency to designate a Labor Compliance Advisor, to work with agency administrators and contracting agents to ensure that the agency develops and implements policies to implement these requirements, to provide training and information to contracting officials and potential contractors, to prepare annual public reports of the agency’s actions, and to collaborate with peers from other agencies.

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 the 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?

• EO No. 13673 (as published in the Federal Register on 8/5/14) [amended august 23, 2016; Federal Register version  

• Revised Federal Acquisition Rules (Federal Register version) 

• DOL guidance

  • Full guidance (Federal Register version)

  • Webpage 

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:

• OSHA Compliance: A Simplified National Guide

• Directors' and Officers' Liability

•  Employment Law: Solutions for the Canadian Workplace

• Directors' and Officers' Liability

• Workplace Violence Prevention: A Practical Guide to Security on the Job

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