What Federal Contractors Need to Know to Comply With Fair Pay & Safe Workplaces Rule

What Federal Contractors Need to Know to Comply With Fair Pay & Safe Workplaces Rule
By Susan McGreevy

On August 25, 2016, the federal government implemented Executive Order 13673, first put forth by the Obama Administration in 2014.Officially known as the Fair Pay & Safe Workplaces rule, and more commonly referred to as the "Blacklisting Executive Order," the rule imposes new requirements upon some (not all) federal government contractors and subcontractors. Note that these requirements apply only to actual federal contracts, and not contracts that only receive federal financial assistance.

The various requirements of the rule will be phased in over the next two years. The first tier of regulations will take effect between September 12, 2016 and October 25, 2016. If it ever becomes fully effective, the executive order will affect a lot of people, require more paperwork and create more risk.

·        The rule's focus is to require the reporting of any "administrative merits determination, arbitral ward or decision, or civil judgment" concerning labor and employment laws by contractors and subcontractors bidding on federal contracts within the last year. In 2018, the look-back for reporting is extended to three years.

·        The report has to be updated every six months for the duration of the contract.

·        Beginning October 25, 2016, contractors with contracts of $50 million or more will have to make such disclosures. Next April, that threshold drops to contracts of $500,000 or more. The rule kicks in for subcontractors in October 2017.

·        These violations will be taken into account by the federal contracting agencies in determining whether the bidder has a "satisfactory record of integrity and business ethics." A bidder may also submit any remedial or otherwise mitigating circumstances.

·        The rule gives the contracting officer significant discretion in making a final determination, allowing them to reject the bid on the basis of a single violation. The officer may, however, chose to award the bid, either unreservedly or with requirements, for remedial action to prevent future violations.

Also effective October 25, 2016, contractors with federal contracts valued at $1 million or more will be prohibited from requiring employees not covered by a collective bargaining agreement to submit to arbitration agreements dealing with violations of the Civil Rights Act, or any tort arising out of sexual assault or harassment.

Because this is an executive order and not a law passed by Congress, the next president could undo this. In the meantime, many trade associations such as the AGC are actively working to severely cut it back.