- Key Components of the Fair Pay and Safe Workplaces Final Rules and Guidance
- October 6, 2016
- Law Firm: Duane Morris LLP - Philadelphia Office
Government contracts business capture and compliance folks, meet the human resources department. HR, please meet the govcon business development and compliance units. As long as you want to become or remain federal contractors or subcontractors, you are going to be spending lots of time working together from now on.
As anticipated and discussed in a recent post on the Duane Morris Government Contracts and Litigation Blog, on August 25, 2016, the Federal Acquisition Regulatory Council (“FAR Council”) and the U.S. Department of Labor published a Final Rule (81 Fed. Reg. 58562) and Final Guidance (81 Fed. Reg. 58654) implementing Executive Order 13673, Fair Pay and Safe Workplaces. The 203 pages of Final Rules and Guidance, which become effective on October 25, 2016, fundamentally alter the way federal contractors and subcontractors will need to handle and resolve employment and labor claims and compliance issues involving their entire workforce. The Final Rules and Guidance could also result in otherwise-capable companies being “blacklisted” and effectively barred from federal contracts and subcontracts based on labor or employment law violations related or unrelated to prior or current federal contract performance.
The Final Rules and Final Guidance flesh out the mandates of Executive Order 13673, Fair Pay and Safe Workplaces (the “Order”) and are organized into three separate, but equally impactful, components: (1) Disclosure Requirements and Responsibility Determinations; (2) Paycheck Transparency; and (3) Arbitration of Title VII Claims and Tort Claims Related to Sexual Assault or Harassment.
Disclosure Requirements and Responsibility Determinations
The centerpiece of the new regulatory scheme is the new disclosure and responsibility determination requirement. 48 C.F.R. (or “FAR”) Part 22.20, and §§ 52.222-57, 52.222-58 and 52.222-59. The Final Rule is being phased in over time as follows:
- October 25, 2016 - Prime contractors on all federal contract solicitations issued on or after October 25, 2016, and valued in excess of $50 million;
- April 24, 2017 - Prime contractors on all federal contract solicitations issued on or after April 24, 2017, and valued in excess of $500,000; and
- October 25, 2017 - Subcontractors at any tier with subcontracts valued in excess of $500,000 (but not for Commercial-Off-The-Shelf items).
What constitutes a “labor law decision” and how Contracting Officers and their associated Agency Labor Compliance Advisors or the U.S. Department of Labor will use the information disclosed by contractors to make responsibility determinations is complicated and allows for a great deal of government discretion. Simply stated, if a contractor or subcontractor has too many “labor law decisions” to report or they are too severe, pervasive, repeated or willful, the company could be deemed not “responsible” and denied a federal contract or subcontract. In other words, an OSHA citation, a Service Contract Act violation and/or an adverse single-plaintiff employment discrimination case could effectively bar your company from competing for a government contract or subcontract. That’s a lot to take in and oversimplifies 203 pages of regulations and guidance. For further details, please see “Fair Pay and Safe Workplaces Final Rules and Guidance Will Lead to Big Changes in How Federal Contractors Handle Employment and Labor Claims,” which addresses this topic in greater depth.
The second major section of the Final Rule and Guidance concerns “Paycheck Transparency.” See FAR 22.2005, 52.222-60. The new Paycheck Transparency provisions:
- become effective on January 1, 2017;
- apply to contractors and subcontractors covered by the Fair Labor Standards Act, the Service Contract Act or the Davis-Bacon Act;
- apply to all federal contracts valued at more than $500,000;
- apply to all subcontracts valued at more than $500,000 other than for COTS items; and
- apply to all employees and independent contractors.
Arbitration of Title VII Claims and Tort Claims Related to Sexual Assault or Harassment
The last major section of the new regulations concerns “Arbitration of Contractor Employees Claims.” See FAR 22.2006, 52.222-61. The new arbitration provisions:
- become effective October 25, 2016;
- apply to all contracts and subcontracts valued at more than $1,000,000 (excluding COTS items); and
- do not apply to employees covered by a collective bargaining agreement.
Employment Law for Federal Contractors: Game Changers-New Regulations and Executive Orders
In the waning days of the Obama administration, there have been a slew of new Executive Orders and regulations placing compliance requirements on all companies doing business with the federal government. These include the new Fair Pay and Safe Workplaces, Paid Sick Leave, $10.15 minimum wages for federal contractors, gender identity and sexual orientation additions to OFCCP requirements and many others. Failure to comply with some of these new regulatory schemes could result in suspension, debarment, non-responsibility determinations and other issues affecting a company’s overall ability to do business with the federal government. This webinar will address the new regulatory and compliance requirements facing virtually all employers doing business with the federal government and how to potentially avoid or mitigate the draconian penalties that could result from non-compliance.