Q&A: Some Thoughts on the Fair Pay, Safe Workplaces and Sex Discrimination Regs

DOL Building

Some federal contractors may think that their lazy, hazy days of summer have become a little too crazy.

On Aug. 24, the Department of Labor issued final regulations implementing President Obama’s “Fair Pay and Safe Workplaces” Executive Order 13,673 requiring federal contractors and subcontractors to disclose violations of 14 federal labor laws and state law equivalents, when bidding on a government contract.

DOL’s Rationale for Rules

“Contracting with the government is a privilege, not an entitlement; and we want to make sure that the companies enjoying that privilege comply with our nation’s laws and the values that underpin them,” Labor Secretary Thomas Perez said in a blog post discussing the regulations.

On Aug. 15, the revised sex discrimination regulations enforced by the Office of Federal Contract Compliance Programs went into effect. The OFCCP said the new regulations under Executive Order 11,264 mainly reflect amendments to Title VII of the 1964 Civil Rights Act and case law interpreting the statute on discrimination on the basis of sex. The agency enforces the executive order, which adheres to the legal principles of Title VII.

Bloomberg BNA interviewed H. Juanita Beecher, a management attorney with Fortney & Scott, LLC in Washington, D.C., at the annual conference of the National Industry Liaison Group (NILG) held in Charlotte, N.C., in early August. During the interview, she discussed how certain provisions under the sex discrimination regulations may affect federal contractors’ workplace policies.

Beecher also responded to a follow-up e-mail regarding the “Fair Pay and Safe Workplace” final rules, which some have called the “blacklisting” rules.  

Below are edited excerpts from the Aug. 3 interview and the Aug. 25 e-mail response. 

Bloomberg BNA: In what significant ways will the “Fair Pay and Safe Workplaces” regulations affect federal contractors who have to comply with the OFCCP's regulations? 

Beecher: The Fair Pay and Safe Workplaces final rule and accompanying DOL guidance will change how federal contractors look at labor law violations. 

Although the final rule phases in implementation with prime contractors having contracts $50 million or greater covered on Oct. 25, 2016, and primes with contracts $500,000 or more on April 25, 2017, contractors should immediately begin keeping track of all federal and state labor law activity within the corporate entity that contracts with the federal government.

Some Basic Provisions to Consider 

By the effective date, prime contractors and subcontractors need to be prepared to report their labor law “violations” as far back as Oct. 25, 2016. What are considered labor law violations that must be reported are “administrative merits determinations” involving the 14 federal agencies, as well as state OSHA [Occupational Safety and Health Administration] agencies which are defined in the DOL guidance, and arbitral awards or decisions and civil judgments determining the contractor violated labor law. 

Contractors can submit additional information, such as mitigating circumstances, remedial measures and other compliance steps, and must update their information semi-annually. The information required to be submitted will be made public.  

Based on the information submitted and a report from the contracting agency’s new Agency Labor Compliance Advisor (ALCA) determining whether the violations are “serious,” “repeated,” “willful” or “pervasive,” the contracting officer will make a “responsibility determination.” 

Subcontractors with contracts of $500,000 or more will be required to have a labor law assessment by the DOL beginning Oct. 25, 2017, and to submit their labor law violations to the DOL for evaluation. 

In addition, federal contractors will be required to provide wage statements and notice of any independent contractor status to their covered workers by Jan. 1, 2017, and those with contracts of $1 million will have to revise their pre-dispute arbitration clauses to eliminate coverage of Title VII and torts related to sexual assault or harassment.

Best Practices on Disclosure Regs 

While it is expected that the final rule will be litigated, contractors shouldn’t wait to begin compliance efforts. At the very least, contractors should immediately begin to:

  • Establish a multi-discipline team including at a minimum—compliance, law, health and safety, and management;
  • Determine what corporate entity or entities contract with the federal government;
  • Set up a process to collect data from the corporate entities on all activity with the 14 federal agencies and any state OSHA agencies, as well as any arbitration or litigation on labor and employment law;
  • Review all such activities back to Oct. 25, 2016, to determine if any would be currently reportable and at what level;
  • Centralize decision making on any activity that might be reportable, including settlement discussions; and
  • Determine how data will be collected and assessed moving forward.

Bloomberg BNA: The OFCCP says its new sex discrimination regulations incorporate legal principles that many contractors have already adopted in their workplace practices and policies. Do you agree? 

Beecher: Generally, the agency is correct, but it has expanded the definition of what is sex to include gender identity and pregnancy.

On the issue of gender identity and sexual orientation, the agency’s interpretation is different from the Equal Employment Opportunity Commission’s as the OFCCP doesn’t cover sexual orientation as a protected class under Title VII.  

The OFCCP’s expressed concern in the final regulations that the case law on whether Title VII covered sexual orientation was unsettled proved correct when the U.S. Court of Appeals for the Seventh Circuit in Hively v. Ivy Tech Community College recently rejected the EEOC’s position that Title VII covered sexual orientation. Still, I agree with the OFCCP that the case law is much clearer that gender identity is covered by Title VII going back to the U.S. Supreme Court’s decision in Price Waterhouse v. Hopkins

Pregnancy Accommodation Broadly Interpreted 

The OFCCP regulations’ pregnancy accommodation section is trickier. Normal pregnancy isn’t a covered disability under the Americans with Disabilities Act. 

Last year, the U.S Supreme Court in Young v. United Parcel Service held that employers have to accommodate pregnant workers with light duty if the employers had workers’ compensation or other policies that offered light-duty assignments to individuals with similar limitations to pregnant workers. 

The decision in Young didn’t accept the EEOC’s regulations that required employers to provide accommodations for pregnant workers.

Under the OFCCP’s sex bias regulations, the agency is defining the failure of a federal contractor to provide a reasonable accommodation to workers unable to perform their duties because of pregnancy, childbirth or other related medical conditions as a violation of E.O. 11,264 if the employer either has denied those accommodations only to workers affected by pregnancy, childbirth or related medical conditions or provides accommodations to other employees whose job duties are similarly affected by their medical conditions. 

The regulations go on to require federal contractors to provide job guaranteed medical leave on the same basis to pregnant workers as to workers with medical conditions that have a similar effect on the employees’ ability to work.  

Will Maternity Leave Diminish?  

Some have raised concerns that federal contractors may eliminate their workers’ compensation light duty or medical leave to avoid complying with the pregnancy accommodation requirements. 

One interesting conversation that we have been having within my firm has to do with the new requirement that there be equal paid family leave policies for men and women. The question becomes whether contractors will reduce the amount of paid maternity leave because they now have to give the same amount of leave to men and women. 

Employers had been moving towards offering a generous pregnancy paid-leave policy to women but traditionally have provided less for men. Because that disparity would now violate E.O. 11,264, will employers cut the benefits for women?

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