Executive Order 13673 – Fair Pay and Safe Workplaces
Federal Contractors: Are you ready for your Assessment?
On August 25, 2016, the Department of Labor (DOL) and the Federal Acquisition Regulatory Council (FAR Council) issued the final rules and guidance documents related to Executive Order 13673, also known as the “Fair Pay and Safe Workplaces” or “Bad Actor” order. (See links below.) The two documents will be utilized by DOL and federal contracting agencies to determine which covered contractors provide basic protections to their workers. They also create a process established to help contractors remain compliant with labor laws. Thankfully, the DOL will be offering a pre-assessment service to those seeking it.
Structurally, the mandate has the following three main parts. First, covered Federal contractors must report any violations of the 14 identified labor laws or executive orders and/or their equivalent state laws, except for (as defined in guidance issued by the Department of Labor). Though requirement becomes effective this year on October 25, 2016, the government has established a phased-in approach for the hefty reporting requirements. Second, pertaining to pay transparency, each covered contractor must issue federally prescribed wage statements to their employees. Third, covered contractors must adhere to pre-dispute arbitration agreement requirements.
As always with contractual obligations matters, please work closely with your legal counsel in structuring a reporting system that satisfies both the contract requirements as well as ensures that your organization has limited as much legal exposure as possible. The DOL has issued the following important dates announcements related to the executive order.
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.
Pre-assessment: Starting the Week of September 12, 2016
Independent of a specific acquisition, any current or prospective government contractor may voluntarily contact the Department of Labor to request an assessment of their record of labor law compliance. Using DOL Guidance, the Department will assess whether any of the prospective contractor’s violations are serious, repeated, willful, or pervasive; and whether a labor compliance agreement may be warranted. If a contractor that has been assessed by the Department of Labor subsequently submits a bid, and the contracting officer initiates a responsibility determination of the contractor, the contracting officer and the Agency Labor Compliance Advisor (ALCA) may use the Department’s assessment that the contractor has a satisfactory record of labor law compliance unless additional labor law violations have been disclosed.
Benefits of Participating in Pre-assessment
As Pre-assessment is not associated with a specific acquisition, it is a proactive and voluntary way for current and prospective government contractors to be reviewed on labor compliance history. Participating in Pre-assessment:
- Provides current and prospective contractors the opportunity to be assessed on their labor law compliance history, and how it would be reviewed as part of the acquisition process
- Serves as a proactive and voluntary measure if there are labor law compliance history concerns, because the contractor can develop a labor compliance agreement and start taking steps to mitigate issues before there is a specific acquisition
- Will be considered in future acquisitions as a mitigating factor when submitted by the contractor
The Pre-assessment phase is an ongoing period, which means it does not end when the FAR Rule takes effect on October 25, 2016.
More information regarding the actual Pre-assessment process will be published on the pre-assessments page during the week of September 12, 2016. The link regarding the pre-assessments can be found below.