New Executive Order Targets Federal Contractors

President Obama has issued yet another executive order that will impose additional labor compliance requirements on companies that choose to do business with the federal government.  Entitled “Fair Pay and Safe Workplaces,” the new Order requires contractors and subcontractors to disclose their own labor law violations and requires federal agencies to exclude from federal contracting those companies with a history of poor labor law compliance.   This new Order revives the Administration’s long intended push for a so-called “High Road Contracting” system, wherein contractors must guarantee strict and ongoing adherence to a broad spectrum of labor laws or face potential termination of contract — or even debarment.

The Order, which also seems to follow on a report issued by the Senate HELP Committee last December, targets the following areas:

  • Disclosure of Labor Law Violations: The Order requires that contractors seeking to procure a contract valued in excess of $500,000 must disclose whether whether an administrative merits determination, arbitral award, or civil judgment was rendered against it in the previous three year period.  This new disclosure requirement applies to violations of many different labor laws and Executive Orders, including the National Labor Relations Act.
  • “Paycheck Transparency”: Contractors must provide their employees with information regarding that employee’s hours worked, overtime hours, pay, and any additions or deductions to that employee’s paycheck.  Contractors must also include in their contracts with subcontractors a requirement that the subcontractor make the same paycheck disclosures.
  • Limiting arbitration agreements: While D.R. Horton has already severely limited an employer’s ability to make use of mandatory arbitration agreements (at least according to the NLRB), the Order limits the ability of certain contractors to arbitrate claims brought by employees pursuant to Title VII.  Covered contractors are now also prohibited from compelling an employee to arbitrate claims arising from a sexual harassment or assault unless the employee agrees to arbitration after the dispute arises.  However, the limits placed on mandatory arbitration agreements do not apply to employees covered by a collective bargaining agreement.

It is likely that it will take some time before employers and labor watchers get a clear picture as to an employer’s actual obligations stemming from the President’s Order.  Nevertheless, in conjunction with the President’s other recent executive orders establishing a $10.10 minimum wage for employees of contractors and addressing discrimination against LGBT employees of contractors, federal contractors will have significant new compliance obligations to digest as new regulations are issued over the next year.

Dentons Government Contracts Group

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