• Fair Pay and Safe Workplaces Rule

Weekly Compliance Digest – Fair Pay and Safe Workplaces Rule

September 9, 2016 By
In this edition of the Weekly Compliance Digest, we cover the implementation of an Executive Order in the U.S. requiring federal contractors to disclose labor law violations.

Federal Acquisition Regulation; Fair Pay and Safe Workplaces

What is it?

On August 24, 2016, the U.S. Department of Labor (DOL) and the Federal Acquisition Regulatory Council announced final regulations and guidance implementing the Fair Pay and Safe Workplaces Executive Order. The final rule aims to ensure that federal contractors better comply with laws that protect their workers’ safety, wages and civil rights. It is based on the Executive Order signed by President Obama in July 2014, and which requires prospective federal contractors to disclose labor law violations and gives agencies more guidance on how to consider labor violations when awarding federal contracts.

The regulations and guidance are designed to increase efficiency and cost savings by ensuring that federal contractors are responsible and provide basic workplace protections. The guidance also creates a process for agencies and the department to help contractors comply with labor laws.

Contractors are already required to disclose findings of fault and liability made in administrative or civil proceedings, but current disclosures do not give a full picture of the contractor’s labor compliance track record and leave agencies vulnerable to making awards to contractors that cheat their workers, competitors and the taxpayers, DOL says.

As part of the new rule, prospective contractors will be required to disclose violations of 14 basic workplace protections from the previous three years. The final rule will make sure that federal agencies have the information they need to determine which contractors are meeting their responsibilities to workers, DOL says.

To help contractors, the regulations and guidance build on the existing procurement system. Most federal contractors will only have to attest that they comply with laws providing basic workplace protections.

Who is affected?

The final rule affects all companies, contractors and subcontractors seeking U.S. federal contracts with a total value greater than or equal to $500,000.

What are the requirements?

The final rule requires companies bidding for a federal contract to disclose violations of any of the following 14 federal labor laws during the previous three years:

  • Fair Labor Standards Act
  • Occupational Safety and Health Act (and state law equivalents)
  • Migrant and Seasonal Agricultural Worker Protection Act
  • National Labor Relations Act
  • Family and Medical Leave Act
  • Davis-Bacon Act
  • Service Contract Act
  • Title VII of the Civil Rights Act
  • Americans with Disabilities Act
  • Age Discrimination in Employment Act
  • Executive Order 11246 (affirmative action and equal employment opportunity)
  • Vietnam Era Veterans’ Readjustment Assistance Act
  • Section 503 of the Rehabilitation Act
  • Executive Order 13658 (federal contractor minimum wage)

What is next?

The final rule will be implemented in phases. Here are the key dates:

September 12, 2016: Pre-assessment begins. Current or prospective contractors can receive from DOL a voluntary assessment of their labor compliance history, in anticipation of bids on future contracts but independent of any specific acquisition.

October 25, 2016: The final rule takes effect. 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. The reporting disclosure period is initially limited to one year and will gradually increase to three years by October 25, 2018.

January 1, 2017: The Paycheck Transparency clause takes effect, requiring contractors to provide wage statements and notice of any independent contractor relationship to their covered workers.

April 25, 2017: The total contract value threshold for prime contracts requiring disclosure and assessment of labor law compliance is reduced to $500,000.

October 25, 2017: Mandatory assessment begins for all subcontractors under consideration for subcontracts with a total value greater than or equal to $500,000.

UPDATE: On March 27, 2017, President Trump revoked and officially invalidated the Fair Pay and Safe Workplaces Rule.

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