Fair Pay and Safe Workplace Executive Order
By: Eric Poppe, Manager
After over two years of waiting, guidance was published on August 25, 2016, to enact the Fair Pay and Safe Workplace, Executive Order 13673. Signed by President Barack Obama on July 31, 2014, the Order went into effect October 25, 2016 and has three distinct parts that impact Federal contractors:
Part 1- Discusses and provides guidance on how an agency should consider any labor violations by the contractor when making contracting decisions, and requires the contractor to disclose certain labor violations.
Part 2- Requires new paycheck transparency provisions for workers on Federal contracts that provide employees the necessary information for each pay period to make sure they are paid what they are entitled to.
Part 3- Ensures employees who are victims of sexual harassment or assault get their day in court and are not forced to go to arbitration if they work for companies with large federal contracts.
In a moment, we will walk through each part; however, the main takeaway for contractors doing work with the U.S. Government is an increased administrative burden to report violations and the potential impact on the bidding process, as this could have an adverse effect on contractors as they try to compete for new work.
Now, we will go into a little more detail on each part and how it affects your company.
The order discusses how prospective Federal contractors interested in competing for Federal work will be required to disclose in the General Services Administration’s System for Award Management (“SAM”) whether they “have been” or “have not been” in violation of the less than short list of federal labor laws, which are depicted in the chart at the end of this article. The good news is most contractors will have policies and process already to comply with these laws. We suggest contractors be aware of the basic requirements of each law and reach out if you have any questions.
The contractor may be asked to provide more information about the violation, if a contractor indicates that it has violated any of the labor laws during the reporting period. The contractor will be provided an opportunity to provide any mitigating factors and corrective actions taken to remediate and confront each violation. This could, however, have an adverse effect on the bidding process.
For subcontractors, the subcontractor will communicate any violations directly with Department of Labor. The subcontractor should also provide any explanatory factors and corrective actions taken to address the violation.
All contractors and subcontractors will now be required to provide a more detailed view, or snap shot, of an employees pay statement to each employee. This detailed view could include information regarding, but is not limited to, hours worked, overtime hours worked, gross pay, tax rate, pay rate, and any other deductions or benefits provided that affects the employee’s pay. If the employee is exempt from overtime pay, that also must be provided in writing. Additionally, if you have any 1099 employees whom are considered independent contractors, the contractor is required to inform the employee of the independent contractor status.
To help implement these new administrative tasks, we suggest notifying employees of the items noted above on an annual basis as part of the annual performance review process.
The last part of the Executive Order prohibits contractors from limiting an employee’s rights to go to court as a result of a dispute arising out of Title VII of the Civil Rights Act, or from suits related to sexual assault or harassment. This is only a requirement if the contractor has federal awards of over $1 million or more contracts.
Overall, the new Executive Order works to provide employees more tools to understand their benefits and pay. New administrative and disclosure requirements could impact a contractor’s ability to be competitive. For more information, please reach out to our GovCon team.