The Fair Pay and Safe Workplaces executive order is aimed at federal contractors and requires that they disclose labor law infractions, Bloomberg BNA reports. While proponents of the order say it aims to deny companies that endanger their employees from getting federal contracts and instead reward businesses that play by the rules, opponents liken it to being blacklisted and claim that the compliance requirements will be burdensome.
“Various legal strategies are under active consideration, especially in light of the announcement by the administration…,” Roger King, senior labor and employment counsel for the HR Policy Association, told Bloomberg BNA. King’s group represents chief human resources officers from the biggest US employers. The Society For Human Resource Management (SHRM) criticized the new order as duplicative since the U.S. Department of Labor (DOL) already has a process for determining whether federal contractors are adhering to requirements and allowing the DOL to bar them from contracts if they are failing.
SHRM has lobbied against the order to Congress over the last two years. “The regulations add significant new reporting burdens on federal contractors, expose them to unclear standards, and improperly add debarment as a new penalty to existing federal labor and employment statutes,” SHRM notes.
Obama signed the executive order July 2014. A little over two years later, the DOL and the Federal Acquisition Regulatory Council released the final rules and guidance for the order on Aug. 25. It takes effect Oct. 25 and will require mandatory disclosure of labor law violations from all federal contractors with contracts equal or greater than $50 million.
By April 25, 2017, those with contracts that are at least $500,000 will be required to report violations. Contractors also will need to report violations that occurred in a one-year span and by Oct. 25, 2018, report violations that occurred over a three year period.
“While the vast majority of federal contractors play by the rules, every year tens of thousands of American workers are unlawfully denied overtime wages, discriminated against in hiring or pay, put in physical danger on the job, or otherwise denied basic workplace protections by the federal contractors who employ them using taxpayer dollars,” the new law notes. “Taxpayer dollars should not reward companies that break the law, and contractors who meet their legal responsibilities should not have to compete with those who do not.”
A 2013 report from Senate Democrats on the Health, Education, Labor and Pensions Committee noted that workplace violators were also big recipients of federal contracts, The Washington Post reports. The report found that “49 federal contractors responsible for large violations of federal labor laws were cited for 1,776 separate violations of these laws and paid $196 million in penalties and assessments.”
“In fiscal year 2012, these same companies were awarded $81 billion in taxpayer dollars,” according to the report. Jeff Belkin, a partner at the Alston & Bird law firm, told The Washington Post that the new rules were akin to a “blacklisting rule” and would lead to excluding “many highly capable, ethical and responsible government contractors.”
“The contracting community has legitimate concerns that contracting officers may overreact to reported labor issues and penalize companies with any violation at all — especially when the rule is new,” Belkin noted in an email response. “While placing more information in the decision-makers’ hands is a laudable effort in theory, in practice the fear is that contracting officers will simply write off any [potential contractor] who lists any past labor issue, regardless of the time, location, specific facts, context, or remedial efforts or mitigation. That would be wrong, and unfair, and cause more harm than good.”
The executive order also ensures “that workers who are victims of sexual assault or sexual harassment get their day in court and are not forced to arbitrate these claims if they work for companies with very large federal contracts,” the DOL notes on its website.