New “Fair Pay and Safe Workplace” Mandates Directed By President Obama

08/05/2014

CONSTRUCTION AND GOVERNMENT CONTRACT GROUP ALERT

Fair Pay and Safe Workplaces Executive Order Signed by President Obama On July 31, 2014

On July 31, 2014, President Obama issued Executive Order 13673, entitled “Fair Pay and Safe Workplaces.” It is applicable to those contracting with the Federal Government and its stated purpose is to insure those contractors “understand and comply with labor laws.”

The Executive Order requires new pre- and post-contract award actions by both agencies and contractors (and subcontractors), creates at least one new senior agency official position, and requires regulatory amendment consideration, including regarding consequences. Federal contractor will need to develop implementation strategies to comply with this new EO.

Key aspects of EO 13673:

1. Pre-Award: For offers exceeding $500,000, solicitations must include offer representations regarding labor law violations within the preceding 3-year period. Consideration of those representations will be part of responsibility determinations. Contractors must similarly incorporate into their subcontracts similar subcontractor disclosures.

2. Post-Award: Contractors must update their labor law representations every 6 months during contract performance. Contracting officers must then consider whether action is necessary because of any changes to the representations (such as requiring remedial measures, providing assistance, resolving issues, or in appropriate instances termination or referral for suspension or debarment). Contractors must similarly obtain updates from subcontractors, and then determine whether action is necessary against their subcontractors based on those updates.

3. Labor Compliance Advisors: Each agency is required to designate a senior agency official as its Labor Compliance Advisor (LCA). The LCA have various duties, including best practices interfaces, agency and contractor coordination, and assistance to contracting officers regarding appropriate actions associated with EO’s requirements.

4. Government-wide Consistency: To help facilitate agency consistency regarding implementation, the EO directs FAR Council consultation with the Department of Labor and other key agencies to propose FAR amendments to implement the EO, including regarding violation consequences. The EO further directs the Secretary of Labor to develop guidance regarding EO implementation, including also regarding violation consequences.

5. Paycheck Transparency: This aspect of the EO requires contractors whose contracts are subject to the pre- and post-award requirements discussed above to provide all individuals performing work under their contracts and for whom they are required to maintain wage records under applicable law (such as the Davis-Bacon Act, the Service Contract Act or equivalent state law) with documented information concerning that individual’s hours worked, overtime hours, pay, and any additions made to or deductions from pay. Contractors much incorporate those same requirements into their subcontracts for subcontractors to provide the same information to their workers.

6. Complaint and Dispute Transparency: This aspect of the EO limits contractor ability to mandate arbitration of disputes. For all federal contracts that exceed $1 million, contractors must agree that the decision to arbitrate claims under Title VII of the Civil Rights Act of 1964 or any tort related to or arising out of sexual assault or harassment may only be made with the voluntary consent of employees or independent contractors after such disputes arise.

This same requirement must be incorporated into subcontracts. Limited exceptions are: a) contracts or subcontracts for the acquisition of commercial items or commercially available off-the-shelf items; b) contractor or subcontractor agreements covered by collective bargaining agreements; or c) contractor or subcontractor agreements with valid arbitration provisions prior to bidding upon a contract covered by the EO (but if such contracts allow for the changing of terms, renegotiation or replacement, then the EO does apply).

Whether these terms are truly fair or will have any true impact upon workplace safety will be in the eyes of affected persons and companies. Regardless, the changes are significant, will required detailed planning, and – unfortunately – are likely to be a significant source of future litigation, and potentially detrimental administrative action for the unwary.

Click Here to view a copy of EO 13673.

For more information about EO 13673 or other construction or government contracts related matters, please contact Neil Lowenstein, or any other member of the Vandeventer Black Construction and Government Contracts Group – VanBlackLaw.com.

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