DOL Proposes Guidance for Disclosure Of Federal Contractors' Workplace Violations

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By Gayle Cinquegrani

May 27 — The Labor Department proposed guidance May 27 to implement President Barack Obama's executive order on fair pay and safe workplaces for employees of federal contractors.

The Defense Department, General Services Administration and National Aeronautics and Space Administration also announced the Federal Acquisition Regulatory Council's proposed rule to integrate the order’s requirements and DOL's guidance into federal procurement rules.

Both the DOL's proposed guidance and the proposed FAR Council rule were published in the May 28 Federal Register (80 Fed, reg. 30,573).

“The opportunity to contract with the federal government is a privilege, not an entitlement. Taxpayer dollars should not reward corporations that break the law, and contractors who meet their responsibilities should not have to compete against those who do not,” Labor Secretary Thomas Perez said in a May 27 statement.

“The guidance issued today to implement the Fair Pay and Safe Workplace Executive Order will promote better informed procurement decisions. It will provide contracting officers with the necessary information to ensure accurate, efficient, and consistent compliance with labor laws, and provide a means to help contractors meet their responsibilities.”

In July 2014, President Barack Obama signed Executive Order 13,673, which requires prospective federal contractors to disclose a three-year history of violations of 14 federal laws to agencies they're seeking contracts with. The laws include wage and hour, discrimination, health and safety, family and medical leave, and labor statutes. The executive order applies to new federal contracts worth more than $500,000 starting in 2016.

State Laws Also Considered

In addition, prospective contractors would have to report on their compliance with state laws that the Labor Department defines as equivalent to the federal laws enumerated in the executive order. Once awarded a contract, an employer must update its violations history every six months.

The proposed guidance said the Labor Department “at a future date” will publish in the Federal Register a second proposed guidance addressing which state laws are equivalent to the 14 federal labor laws and executive orders identified in the executive order.

In addition, the executive order requires federal contractors to give their employees the necessary information each pay period to verify the accuracy of their paycheck. It also ends mandatory pre-dispute arbitration agreements that many large federal contractors applied to workers' claims of sexual assault or civil rights violations.

The executive order calls for each agency to appoint a labor compliance adviser who, under DOL guidance, will review disclosures and consult with contracting officers. The Labor Department said in the guidance that it will work with the agencies' labor compliance advisers to minimize the amount of information that contractors must provide and to help ensure efficient and consistent decisions across the government. The DOL also said it will work directly with contractors and subcontractors to help them achieve compliance with federal labor laws.

In its proposed rule, the FAR Council is considering allowing contractors to direct their subcontractors to report their violations directly to the Labor Department.

Public comments, which should be identified by ZRIN 1290-ZA02, are due 60 days after the DOL's guidance is published. They may be submitted electronically to http://www.regulations.gov or mailed to Tiffany Jones, U.S. Labor Department, Room S- 2312, 200 Constitution Ave. NW, Washington, DC 20210.

The FAR Council’s proposed rule also will have a 60-day public comment period.

DOL's Request for Comments Called ‘Unusual.'

Mickey Silberman, a lawyer with Jackson Lewis LLP in Denver, told Bloomberg BNA May 27 that it's “unusual” for the Labor Department to issue its guidance as a proposal with an invitation for public comments even though “procedurally they're not required to do so.” He noted that the executive order instructed the DOL to develop guidance, while it instructed the FAR Council to propose an amendment to the federal acquisition regulation.

“There's a lot of detail in the guidance but also a lack of clarity,” he said. Silberman questioned whether the three-year period would be retroactive to the time before the rule is issued. “That's going to be much more challenging [for employers] than if they can report this on a going-forward basis,” he said, because it could force them to reconstruct data.

Large employers generally have separate departments handling compliance with each type of law, so checking their compliance with 14 federal laws could involve a safety department, an affirmative action department, and several other departments, he said. “For employers, especially large employers, this will create a significant burden,” he said. “Employers have been dreading these regulations.”

Silberman also predicted the proposals will lead to litigation. “This regulation will authorize contracting agencies to deny contracts to otherwise qualified contractors based on their interpretation of these violations,” he said. “There is nothing in the guidance that apparently allows for due process wherein an employer can challenge a determination to deny a contract based on a record of violations.”

Linda Jackson, who co-chairs Littler Mendelson's government contractors industry group, told Bloomberg BNA May 27, “I was a little surprised that they deferred defining what state laws would be at issue.” She said she also was surprised the FAR Council is “considering having the subcontractors report [violations] directly instead of having the prime [contractor] report directly.”

Jackson expressed concern that violations “that have not been through the full adjudicatory process” generally must be reported. She noted, however, that the DOL guidance excludes from the reporting requirement private settlements reached before entry of a judgment.

As for the apparent lack of an appeals process, Jackson said losing bidders are allowed to protest when they are not awarded a federal contract.

Some groups hailed the issuance of the proposals as a welcome increase in protections for a large group of workers.

“Today’s actions from the Labor Department and the FAR Council are good news for workers, taxpayers and the nation—and a major step forward in ensuring only companies that abide by our nation’s labor laws get federal contracts,” Debra L. Ness, president of the National Partnership for Women and Families, said.

“No worker should have her or his rights undermined, especially not at the hands of a company that contracts with the federal government,” Ness said in a May 27 statement. “More than one in five people in this country are employed by a federal contractor, which makes executive actions such as this one very significant.”

But Randy Johnson, senior vice president of labor, immigration, and employee benefits for the U.S. Chamber of Commerce, called the proposals “unnecessary because contracting officers already possess ample authority to prevent contractors who do not have adequate business integrity or ethics from receiving federal contracts and the Nation’s employment laws already impose a matrix of procedures and penalties that punish wrongdoers.”

To contact the reporter on this story: Gayle Cinquegrani in Washington at gcinquegrani@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com

Text of the DOL's proposed guidance is available at http://op.bna.com/dlrcases.nsf/r?Open=gcii-9wwm3r, and of the FAR Council's proposed rule at http://op.bna.com/dlrcases.nsf/r?Open=gcii-9wwmz4.