Circa Named a Winner of the Southeast Wisconsin Top Workplace 2023 Award. Read Press Release+
On July 31, 2014, President Obama released Executive Order 13673, known as the Fair Pay and Safe Workplaces Executive Order. The theme of the Executive Order is that when the U.S. federal government is going to use taxpayer dollars to buy goods and services from government contractor companies, the taxpayers’ dollars should not be used to buy from companies that engage in repeated, pervasive, serious or willful violations of our employment laws.
This Executive Order has not been implemented yet, but proposed rules are due out imminently, which is why LocalJobNetwork.com wanted to put this on government contractors’ radar.
There are three components to the Executive Order: (1) a certification obligation; (2) pay transparency; and (3) a prohibition against the use of pre-hire arbitration agreements for certain types of causes of action.
Certification (Sections 2, 3 and 4 of the Executive Order)
(B) the Occupational Safety and Health Act of 1970;
(C) the Migrant and Seasonal Agricultural Worker Protection Act;
(D) the National Labor Relations Act;
(E) 40 U.S.C. chapter 31, subchapter IV, also known as the Davis-Bacon Act;
(F) 41 U.S.C. chapter 67, also known as the Service Contract Act;
(G) Executive Order 11246 of September 24, 1965 (Equal Employment Opportunity);
(H) section 503 of the Rehabilitation Act of 1973;
(I) 38 U.S.C. 3696, 3698, 3699, 4214, 4301-4306, also known as the Vietnam Era Veterans' Readjustment Assistance Act of 1974;
(J) the Family and Medical Leave Act;
(K) title VII of the Civil Rights Act of 1964;
(L) the Americans with Disabilities Act of 1990;
(M) the Age discrimination in Employment Act of 1967;
(N) Executive Order 13658 of February 12, 2014 (Establishing a Minimum Wage for Contractors); or
(O) equivalent State laws, as defined in guidance issued by the Department of Labor.”
Section 5 of the Executive Order dealing with pay transparency also applies to contracts at the $500,000 level. It requires the government contractor or subcontractor to provide to each person performing work under the contract a document containing information concerning that individual’s hours worked, overtime pay, pay, and any additions made to or deductions made from pay.
Presumably, as to the last point, the government contractor has already set out in the terms of its agreement with the independent contractor the basis for the government contractor’s conclusion that the individual is not an employee.
Section 6 of the Executive Order addresses complaint and dispute transparency. For contracts of $1 million and higher, government contractors and subcontractors are not going to be able to negotiate pre-hire arbitration clauses that cover claims arising under Title VII of the Civil Rights Act of 1964 or any tort related to, or arising out of, sexual assault or harassment, until after the dispute arises. (“Now that we have disc;riminated against you or harassed you, will you waive your right to a bench or jury trial and come to arbitration with us?”)
There are three exceptions to this prohibition, which would allow the employer to continue using arbitration to resolve disputes. The three exceptions are: (1) contractors whose employees are covered by any type of collective bargaining agreement negotiated between the contractor and a labor organization representing them; (2) contracts for the acquisition of commercial items or commercially available off-the-shelf items; or (3) employees or independent contractors who entered into a valid contract to arbitrate prior to that contractor or subcontractor bidding on a contract subject to this Executive Order.
That third exception is limited, though. A contractor will be required to obtain post-dispute consent if “the contractor or subcontractor is permitted to change the terms of the contract with the employee or independent contractor, or when the contract is renegotiated or replaced.” It is ambiguous whether “the contract” in the last clause is the independent contract or the procurement contract.
What Should Contractors Be Doing Now
Under the theory that the law could take effect in 2016, begin with January 1, 2013 and identify:
There is little doubt, given the breadth and scope of this Executive Order, that it will be challenged in the courts once the regulations are final. But there is an interim step between now and then that is critical. It is likely that we will see proposed rules from the FAR Council and guidance from the Department of Labor published in the Federal Register soon. Please consider commenting on the effect that this Executive Order, the Proposed Regulations, and DOL Guidance will have on your company’s continued ability to provide goods and services to the federal government. We cannot over-emphasize the importance of such comments to the regulators. (Yes, Littler will be drafting comments, and we would welcome this type of information once the regulations have been published). Please also begin to think about the type of pressure this Executive Order may exert on your company to settle claims rather than risk an adverse judgment in court, by an arbitrator, or by an administrative law judge.