Disclosure Requirements for Federal Contractors will soon become more Complex under the Fair Pay and Safe Workplaces Executive Order
Before an offeror may be awarded a federal contract by any agency, the procuring agency must perform a “responsibility” determination pursuant to Part 9 of the FAR. Under the Fair Pay and Safe Workplaces Executive Order, a company’s record of compliance with 14 different federal labor statutes (and state-law “equivalents”) will now be considered by agencies and their prime contractors before awarding a federal contract or subcontract worth over $500,000. The Executive Order followed a GAO report finding that almost two-thirds of the 50 largest wage-and-hour violations and almost 40 percent of the 50 largest workplace health-and-safety penalties issued between FY 2005 and FY 2009 were made against companies that went on to receive new Government contracts.
On May 28, 2015, the Federal Acquisition Regulation (FAR) Council issued a Proposed Rule to amend the FAR to implement Executive Order 13673 (“Fair Pay and Safe Workplaces” ) and adopt the Department of Labor’s proposed guidance on the Executive Order.
The Proposed Rule would create FAR Subpart 22.20 (entitled “Fair Pay and Safe Workplaces”) to impose new disclosure requirements for federal contractors and subcontractors. Its proposed provisions also include several new mandatory contract clauses for certain contracts and new provisions for a procuring agency to incorporate into solicitations for offers covered by the Executive Order. The Rule establishes new paycheck transparency requirements for government contractors and imposes limitations on the Government for exercising options on contracts with entities that make disclosures during the prior term of the contract. The Proposed Rule also outlines the method by which a contracting officer is to evaluate and investigate the disclosures made by contractors or offerors.
Specifically, the new disclosure requirements will require an offeror (whether a contractor or subcontractor) to state whether it has any administrative merits determinations, arbitral awards or decisions, or civil judgments rendered against it, within the three years preceding the date of the offer or bid, for violations of any of the following labor laws:
(1) The Fair Labor Standards Act (“FLSA”), 29 U.S.C. chapter 8;
(2) The Occupational Safety and Health Act of 1970;
(3) The Migrant and Seasonal Agricultural Worker Protection Act;
(4) The National Labor Relations Act;
(5) 40 U.S.C. chapter 31, subchapter IV, formerly known as the Davis-Bacon Act (“DBA”);
(6) 41 U.S.C. chapter 67, formerly known as the Service Contract Act (“SCA”);
(7) Executive Order 11246 of September 24, 1965 (Equal Employment Opportunity);
(8) Section 503 of the Rehabilitation Act of 1973;
(9) The Vietnam Era Veterans’ Readjustment Assistance Act of 1972 and the Vietnam Era Veterans’ Readjustment Assistance Act of 1974;
(10) The Family and Medical Leave Act (“FMLA”);
(11) Title VII of the Civil Rights Act of 1964;
(12) The Americans with Disabilities Act of 1990;
(13) The Age Discrimination in Employment Act of 1967;
(14) Executive Order 13658 of February 12, 2014 (Establishing a Minimum Wage for Contractors); and
(15) Equivalent State laws as defined in guidance issued by the Department of Labor.
The DOL Guidance defines “administrative merits determinations” as decisions or issuances of notices including, but not limited to:
(1) a WH-56 “Summary of Unpaid Wages” Form or a “letter indicating that an investigation disclosed a violation of sections six or seven of the FLSA or a violation of the FMLA, SCA, DBA or Executive Order 13658” issued by the DOL’s Wage and Hour Division;
(2) an OSHA citation or notice of imminent danger or notice of failure to abate or any State equivalent;
(3) a “show cause” notice issued by the Department’s Office of Federal Contract Compliance Programs;
(4) a letter of determination that reasonable cause exists to believe that an unlawful employment practice has occurred or is occurring; or a civil action filed on behalf of the Equal Employment Opportunity Commission;
(5) a complaint issued by any Regional Director of the National Labor Relations Board; or
(6) a complaint filed on or behalf of any enforcement agency with a federal or State court.
An “administrative merits determination” must be disclosed regardless of whether it was final or subject to further review. Furthermore, contractors and subcontractors will also be required to semi-annually disclose any violations (including receipt of any of the above merits determinations) during the life of the contract.
Finally, the Proposed Rule implements Section 5 of the Executive Order, addressing paycheck transparency. The Rule will require contractors – performing contracts to which the FLSA, DBA, or SCA apply – to provide workers with specific disclosures about their hours and wages in their paychecks. In addition, for any independent contractors on the project, the government contractor must provide them with a document specifically notifying the individual of his or her status as an independent contractor.
Although the requirements of the Proposed Rule will not go into effect until after adoption of a final rule, contractors and subcontractors interested in federal projects would do well to perform an internal investigation now to prepare for any disclosures it will have to make in pursuit of those projects.