Final Rule and Guidance Issued Implementing Fair Pay and Safe Workplaces Executive Order

On August 25, 2016, the Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA) issued a Final Rule amending the Federal Acquisition Regulation (FAR) to implement Executive Order 13673, the Fair Play and Safe Workplaces Executive Order (also known as the “blacklisting rule”).  The Department of Labor (DOL) also issued Final Guidance to assist the FAR Council and federal contracting agencies in the implementation of EO 13673.

Signed on July 31, 2014, and as described here, EO 13673 requires prospective and current federal contractors and subcontractors to disclose all violations of federal labor laws that result in administrative merits determinations, arbitral awards or decisions, or civil judgments. The Order also requires contractors and subcontractors to disclose specific information to workers each pay period regarding their wages and prohibits contractors from requiring that their workers sign arbitration agreements that encompass claims of sexual assault or harassment.

The Final Rule is effective October 25, 2016, which is earlier than had been expected. Fortunately, certain obligations under the Final Rule are now phased in, meaning that contractors and subcontractors have time in which to come up to full compliance. Contracts valued at or under $500,000 are excluded from the Final Rule, as are subcontracts for goods that are “commercially available off-the-shelf” items.

Disclosure. When fully implemented, contractors will be required to disclose violations of fourteen federal workplace laws from the previous three years – including laws addressing wage and hour, safety and health, collective bargaining, family and medical leave, and civil rights protections. The provision of EO 13673 requiring contractors to disclose violations of “equivalent” state laws has been paused, pending the DOL’s release of a comprehensive list of state laws covered by the Order; when released, this list will be subject to notice and comment before becoming effective.

Certain information pertaining to violations contractors disclose will be made public. These include: (1) the law violated; (2) the case number, charge number, docket number, or other unique identifier; (3) the date of the decision finding a violation; and (4) the name of the court, arbitrator, agency, board or commission that rendered the decision. Any other information provided voluntarily or at the request of the contracting officer (including information pertaining to mitigating factors and steps taken to achieve compliance) will not be made public unless the contractor chooses to make it so.

The process by which violations will be assessed is set forth in the Final Rule and Guidance. Initially, a new type of government official – an Agency Labor Compliance Advisor (ALCA) – will review the nature of the violations, to determine if any are serious, willful, repeated, or pervasive. After weighing any such violations against the severity of the violations, the size of the contractor, and any mitigating factors, the ALCA will provide his or her recommendation to the contracting officer.  As before, the decision to award or extend a contract rests with the contracting officer, who must determine whether the contractor is responsible and has a satisfactory record of integrity and business ethics.

Pay Transparency. The Final Rule also requires contractors to provide workers with detailed wage statements every pay period, which must include: (1) total number of hours worked per pay period; (2) any overtime hours worked; (3) rate of pay; (4) gross pay; and (5) itemized additions to or deductions from gross pay. Contractors must also provide employees with written notice of their status as exempt or non-exempt from the overtime compensation requirements of the Fair Labor Standards Act. Workers treated as independent contractors must be notified, in writing, of this status.

Arbitration. In addition, the Final Rule prohibits pre-dispute arbitration agreements that cover claims arising under Title VII of the Civil Rights Act of 1964 or any tort related to or arising out of claims of sexual assault or harassment. These disputes may be arbitrated, but only by voluntary consent given after any such dispute arises.

Implementation Schedule. The Final Rule sets forth a “phased-in” reporting requirement as follows (and as summarized by DOL here):

  1. September 12, 2016: Preassessmentbegins, through which current or prospective contractors may come to DOL for a voluntary assessment of their labor compliance history, in anticipation of bids on future contracts but independent of any specific acquisition.
  2. October 25, 2016: Mandatory disclosure and assessment of labor law compliance begins for all prime contractors under consideration for contracts with a total value greater than or equal to $50 million. At first, the reporting disclosure period is limited to one (1) year and will gradually increase each year to a maximum disclosure period of three (3) years by October 25, 2018. Also, contractors and subcontractors whose contracts are valued at more than $1,000,000 are prohibited from requiring employees to sign pre-dispute arbitration clauses covering claims arising out of Title VII or claims for sexual assault or harassment.
  3. January 1, 2017: The Paycheck Transparency clause takes effect, requiring contractors to provide wage statements, notice of overtime status, and notice of any independent contractor relationship to their covered workers.
  4. April 25, 2017: The total contract value threshold for prime contracts requiring disclosure and assessment of labor law compliance drops to $500,000.
  5. October 25, 2017: Mandatory assessment begins for all subcontractors under consideration for subcontracts with a total value greater than or equal to $500,000 (other than subcontracts for commercially available off-the-shelf items).

Action Items. Even with a phased-in implementation schedule, there is much to be done.  For example:

  1. Current or prospective contractors should decide whether to participate in the DOL’s preassessment process. According to information provided by DOL (here), using the published Final Guidance, if a contractor that has been assessed by the DOL as responsible subsequently submits a bid, the contracting officer and the ALCA may use the DOL’s assessment that the contractor has a satisfactory record of labor law compliance unless additional labor law violations have been disclosed.
  2. Contractors (and subcontractors) should begin developing and implementing processes for capturing information required by the Final Rule.
  3. Existing arbitration agreements should be reviewed for compliance.
  4. Existing training and compliance programs should be reviewed and revised, as appropriate, or new programs developed. A well-educated workforce can help minimize the risk of violations that must be reported

EEOC Proposes Changes to EEO-1 Reporting to Include Pay Data

By Martha J. Zackin

Today, the U.S. Equal Employment Opportunity Commission (EEOC) issued a proposed revision to the Employer Information Report (EEO-1) to include the annual collection and reporting of pay data.  Currently, federal law requires federal contractors with 50 or more employees, and all other employers with 100 or more employees, to file an annual EEO-1 report, which reports employees’ ethnicity, race, and sex by job category.  The revised EEO-1 would require all employers with 100 or more employees to continue to collect and report this demographic data and, in addition, pay data.  Federal contractors with between 50 and 99 employees would not be required to report pay data, but would continue to report ethnicity, race, and sex.

According to the press release published announcing this new requirement, the data collected will be used by both the EEOC and the Office of Federal Contract Compliance Programs (OFCCP) “to assess complaints of discrimination, focus agency investigations, and identify existing pay disparities that may warrant further examination.”  In addition, as described in an EEOC- published “Questions and Answer” document, the data will be aggregated and published, to “help employers evaluate their own pay practices to prevent pay discrimination in their workplaces.”

A “Small Business Fact Sheet” provides a detailed description of the data that would be collected if the proposal becomes law.  In summary, using W-2 wage data employers would tally and report the number of employees within each EEO-1 job category whose W-2 pay for twelve months was in one of twelve “pay bands.”  These pay bands, which would track the twelve pay bands used by the Bureau of Labor Statistics in the Occupation Employment Statistics survey, are:

    1. $19,239 and under;
    2. $19,240 – $24,439;
    3. $24,440 – $30,679;
    4. $30,680 – $38,999;
    5. $39,000 – $49,919;
    6. $49,920 – $62,919;
    7. $62,920 – $80,079;
    8. $80,080 – $101,919;
    9. $101,920 – $128,959;
    10. $128,960 – $163,799;
    11. $163,800 – $207,999; and
    12. $208,000 and over.

In addition to reporting (by ethnicity, race and sex) the number of employees whose total W-2 pay fell into each pay band, employers would also tally and report the total number of hours worked by the employees counted in each pay band over the prior twelve months. This would accounts for part-time or partial-year employment.

Members of the public may submit comments through April 1, 2016.  Barring revision or withdrawal of the proposal, employers will be required to comply with the new EEO-1 obligations by submit ting pay data as of the September 30, 2017 EEO-1 filing deadline.

The EEOC also The proposed revised EEO-1 may be viewed here.

Federal Contractors and Subcontractors Must Comply with New Pay Transparency Rules

By Martha J. Zackin

As is often reported, there is a pay gap in many of today’s workplaces between men and women, and between wages earned amongst various racial groups.   Many commentators believe that employer policies forbidding employees from discussing pay with co-workers perpetuate these wage gaps, by preventing workers from finding out if they are being discriminated against in time to act.

To narrow and, ultimately eliminate that gap, in April 2014, President Obama issued Executive Order 13665, which prohibits federal contractors and subcontractors from firing, failing to hire, or otherwise disciplining employees or job applicants who inquire about, discuss, or disclose their compensation or the compensation of other employees or applicants.   Read more

OFCCP Issues Notice of Proposed Rulemaking, Seeking to Update its Sex Discrimination Guidelines

By Martha J. Zackin

On January 28, 2015, the Office of Federal Contract Compliance Programs announced a Notice of Proposed Rulemaking, seeking to update its sex discrimination guidelines applicable to federal contractors and subcontractors covered by Executive Order 11246.

According to the press release published to announce its proposal, OFCCP’s “sex discrimination guidelines are woefully out of date and don’t reflect established law or the reality of modern workplaces.”  The proposed rule would rescind existing guidance, and align OFCCP’s regulations with those regulations applicable to Title VII of the Civil Rights Act of 1964. Read more

OFCCP Issues Final Rule to Protect LGBT Workers in the Federal Contracting Workforce

On July 21, 2014, President Obama issued Executive Order 13672, amending Executive Order 11246, applicable to federal contractors and subcontractors, to add gender identity and sexual orientation to the categories protected by E.O. 11246.  On August 19, 2014, the Department of Labor, Office of Federal Contract Compliance Programs, issued a Directive to “clarify that OFCCP interprets federal contractor and subcontractor nondiscrimination obligations to include the protection of individuals on the bases of gender identity and transgender status.  Today, OFCCP published its final rule implementing E.O. 13672.  The rule will be effective on April 4, 2015, 120 days following the rule’s publication in the Federal Register, and will apply to federal contracts entered into or modified after the effective date.

Read more

DOL Publishes Proposed Rule Requiring Submission of Compensation Data to OFCCP

On August 6, the Department of Labor announced a proposed rule that would require government contractors and subcontractors to submit an annual report on employee compensation to the Office of Federal Contract Compliance Programs.   Under the terms of the proposed rule, which will be published on August 8 in the Federal Register, companies that file EEO-1 reports, have more than 100 employees and hold federal contracts or subcontracts worth $50,000 or more for at least 30 days will be required to submit  summary employee pay and demographic data on an annual basis.  If the rule is implemented in its current form, contractors and subcontractors that meet the referenced criteria will be required to submit information on W-2 compensation paid to employees categorized by sex, race, ethnicity and specified job categories, along with other information such as hours worked.

Comments to the proposed rule must be submitted by November 6, 2014.

New Executive Order Signed Requiring Federal Contractors to Disclose Employment and Labor Law Violations

By Martha J. Zackin

On Thursday July 31, Obama signed a new Executive Order requiring contractors to disclose whether there has been any administrative merits determination, arbitral award or decision, or civil judgment rendered against the contractor  within the preceding 3 years for violations of any of the following laws:

  1.  the Fair Labor Standards Act;
  2. the Occupational Safety and Health Act;
  3. the Migrant and Seasonal Agricultural Worker Protection Act;
  4. the National Labor Relations Act;
  5. he Davis-Bacon Act;
  6. the Service Contract Act;
  7. Executive Order 11246 (pertaining to affirmative action);
  8. section 503 of the Rehabilitation Act;
  9. the Vietnam Era Veterans’ Readjustment Assistance Act;
  10. the Family and Medical Leave Act;
  11. Title VII;
  12. The ADA
  13. The ADEA
  14. Executive Order 13658 (new E.O. dated February 12, 2014, establishing a minimum wage for contractors); or
  15. equivalent State laws, as defined in guidance issued by the Department of Labor.

This requirement applies to contractors bidding on a new contracts for goods or services with a value of $500,000 or above.  Contractors working under existing covered contracts are required to provide updates every 6 months.  Click here for the associated Fact Sheet, which provides a good summary of the new Executive Order.