New Executive Order Imposes Requirements to Promote Fair Pay and Safe Workplaces

On July 31, 2014, President Obama signed the Fair Pay and Safe Workplaces Executive Order (“EO”), which requires prospective federal contractors to disclose labor law violations and provides additional guidance to government agencies on how to consider labor violations when awarding contracts. The EO also encourages employers to settle existing disputes, ensures that workers are given necessary information each pay period to verify the accuracy of their paycheck, and prohibits mandatory arbitration agreements for sexual assault or civil rights violation claims at corporations with large federal contracts.

Specifically, the EO governs new federal procurement contracts valued over $500,000 and will be implemented in stages during 2016 on a prioritized basis. Under the terms of the EO, agencies will require prospective contractors to disclose labor violations from the previous three years before issuing a contract. Agencies will also require contractors to disclose similar information for many of their subcontractors. Contracting officers are directed to take into account only the most egregious violations, and each agency is required to designate a senior official as a Labor Compliance Advisor to provide consistent guidance on whether contractor actions indicate a sufficient lack of integrity or business ethics. Companies with reported or existing labor law violations will be offered the opportunity to receive early guidance on whether such violations are problematic and to remedy the violations.

In addition to placing new requirements on federal contractors regarding labor law violations, the EO also directs companies with federal contracts of $1 million or more to end the practice of requiring their employees to enter into arbitration agreements for disputes arising out of Title VII or from torts related to sexual assault or harassment. Contractors are also directed to provide employees with information concerning their hours worked, overtime hours, pay, and any additions or deductions from pay, so that workers can be sure they are paid accurately.

In order to promote efficiency in the reporting process, the EO directs the General Services Administration to develop a single website for contractors to meet their reporting requirements for disclosures related to this EO and other contractor reporting.