Obama Issues Executive Order to Boost Workplace Standards of Federal Contractors

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By Ben Penn  

July 31 — In his latest effort to improve workplace standards for the employees of federal contractors, President Barack Obama signed an executive order July 31 requiring prospective contractors to disclose to agencies violations of federal wage and hour, discrimination, health and safety, family and medical leave, labor and other workplace laws.

The Fair Pay and Safe Workplaces executive order, applying to new federal contracts of more than $500,000 starting in 2016, will require companies to reveal all such workplace violations—including any administrative merits determination, arbitral award or decision, or civil judgment—in the past three years before becoming eligible for a contract, according to a White House fact sheet.

The rule will ensure that firms with the most egregious track records are denied contracts, the administration said. “Contractors that consistently adhere to labor laws are more likely to have workplace practices that enhance productivity and increase the likelihood of timely, predictable, and satisfactory delivery of goods and services to the Federal Government,” the executive order said.

Each agency will appoint a labor compliance adviser who, under Labor Department guidance, will review disclosures and consult with contracting officers to weed out the worst actors from contract consideration.

The executive order also requires contractors to provide their employees with accurate pay documents showing hours worked, overtime hours, pay, and any additions or deductions made from pay.

“If the contractor is treating an individual performing work under a contract or subcontract … as an independent contractor, and not an employee, the contractor must provide a document informing the individual of this status,” the order says.

“The president believes that taxpayer dollars should not reward employers that break the law,” an administration official said during a press call.

Obama's action followed a February executive order, which is currently in the Labor Department rulemaking process, to raise the minimum wage of federal contractors' employees to $10.10 per hour.

Laws in the Order

The new directive, applying to all contracts for goods and services including construction, will track contract applicants' recent violations of:

  •  the Fair Labor Standards Act;
  •  the Occupational Safety and Health Act;
  •  the Migrant and Seasonal Agricultural Worker Protection Act;
  •  the National Labor Relations Act;
  •  the Davis-Bacon Act;
  •  the Service Contract Act;
  •  EO 11,246 on equal employment opportunity;
  •  Section 503 of the Rehabilitation Act;
  •  the Vietnam Era Veterans' Readjustment Assistance Act;
  •  the Family and Medical Leave Act;
  •  Title VII of the 1964 Civil Rights Act;
  •  the Americans with Disabilities Act;
  •  the Age Discrimination in Employment Act;
  •  EO 13,658, the Feb. 2 executive order on the minimum wage for contractors' employees; and
  •  equivalent state laws as defined by the DOL.

    Once awarded a contract, employers must update their violations history once every six months.

    Employers with subcontracts valued at $500,000 or more will face similar reporting requirements of past transgressions.

    The White House officials speaking on the press call emphasized that nearly all federal contractors are not bad actors, and the new process will allow them to simply click on a checkbox affirming that they have a clean record in complying with workplace laws.

    While not specifying how many violations would trigger disqualification, an official said one offense would certainly not disqualify a company.

    Industry groups responded with skepticism that the executive order would be implemented in such a way as to avoid excluding deserving companies from contracts.

    “Effectively, the president is sanctioning a practice known as `blacklisting' companies from federal contracts due to even minor infractions of complex labor laws,” Joe Trauger, vice president of human resources policy for the National Association of Manufacturers, said in a July 31 statement.

    To contact the reporter on this story: Ben Penn in Washington at bpenn@bna.com

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

    Text of the executive order is available at http://op.bna.com/dlrcases.nsf/r?Open=scrm-9mjt2p and the White House fact sheet at http://op.bna.com/dlrcases.nsf/r?Open=scrm-9mjsev.

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