Fair Pay and Safe Workplaces Rule Blocked

Federal contractors given reprieve on eve of when the rule was to take effect

In an update to our post on September 8, 2016 on the Executive Order Fair Pay and Safe Workplaces, a federal court blocked most of the rule on October 24, 2016.  A day before the "backlisting rule" was to take effect, the court determined that the regulation likely violated a host of federal labor laws as well as the First Amendment and due process rights. However, the court left in place the rule's pay transparency provisions.

The Eastern District of Texas granted a preliminary injunction against implementation of major and contentious provisions of the Fair Pay and Safe Workplaces Executive Order, to temporarily block implementation and enforcement of: (1) disclosure and disqualification requirements and (2) prohibition on pre-dispute arbitration agreements.  This means means that employers may enter into contracts on or after October 25, 2016, even large contracts of $50 million or more, which were the first level for the phased-in requirements. But employers still must comply with the pay transparency provisions.

Preliminary, Not Permanent, Injunction

Federal contractors who have taken steps to identify what might be reportable under the rule should hang onto those documents, in case the court upholds the rule when it decides on a motion for a permanent injunction. If the injunction is vacated or reversed and the blacklisting rule goes into effect, government contractors will have to collect and report violations, including those that occurred after the injunction date.

Pay Transparency

The decision leaves in place the paycheck transparency requirements, which require contractors to include information regarding overtime pay and exempt status with each paycheck and to provide certain notices to independent contractors, have not been enjoined and are still scheduled to go into effect in connection with solicitations or contract amendments made on or after January 1, 2017.

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Executive Order 13673: Fair Pay and Safe Workplaces

On July 31, 2014, President Obama signed the Fair Pay and Safe Workplaces Executive Order to require prospective federal contractors to disclose labor law violations and give agencies guidance on how to consider labor violations when awarding federal contracts.

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. 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.

The Executive Order also ensures that contractors' employees are given the necessary information each pay period to make sure that they are getting paid what they are owed, and 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.

Bringing the Executive Order to Action

On August 25, 2016, after extensive input from the public, the Department of Labor (DOL) and the Federal Acquisition Regulatory Council (FAR Council) issued the final rules and guidance implementing the Executive Order. These regulations and guidance make sure that agencies have the information they need to determine which contractors are providing their workers with basic protections. Using this information, agencies can ensure that taxpayer dollars only go to contractors that are willing to meet their responsibilities to their employees. They also create a process for agencies and DOL to help contractors come into compliance with labor laws and to ensure that contractors who get federal contracts continue to comply with labor laws while they are receiving federal funds.

Phased-In Implementation Schedule

Week of September 12, 2016: Pre-assessment begins, through which current or prospective contractors may come to DOL for a voluntary assessment of their labor compliance history, in anticipation of bids on future contracts but independent of any specific acquisition.

October 25, 2016: The final rule takes effect. Mandatory disclosure and assessment of labor law compliance begins for all prime contractors under consideration for contracts with a total value greater than or equal to $50 million. The reporting disclosure period is initially limited to one (1) year and will gradually increase to three (3) years by October 25, 2018.

January 1, 2017: The Paycheck Transparency clause takes effect, requiring contractors to provide wage statements and notice of any independent contractor relationship to their covered workers.

April 25, 2017: The total contract value threshold for prime contracts requiring disclosure and assessment of labor law compliance is reduced to $500,000.

October 25, 2017: Mandatory assessment begins for all subcontractors under consideration for subcontracts with a total value greater than or equal to $500,000.

Source: United State Department of Labor - https://www.dol.gov/asp/fairpayandsafeworkplaces/

Please contact us at info@thomashouston.com so we can further assist you on such questions as:

• What workplace violations must be disclosed?
• Will contractors disclosures regarding workplace violations be made public?
• Will contractors labor violations be able to present information on their remediation steps?