In July 2014, President Barack Obama signed the Fair Pay and Safe Workplaces Executive Order (“Executive Order No. 13673”), which imposes additional obligations, including the obligation to report violations of various employment laws to contracting agencies. The reporting provision set forth in Executive Order No. 13673 has recently been subject to challenges by groups concerned that it is not only burdensome, but also that decisions based on such reports may result in a loss of work for contractors without due process.

Application & Obligations

One of the major obligations imposed on federal contractors under Executive Order No. 13673 is the disclosure of labor law violations from the past three years to contracting agencies. This obligation will apply to federal procurement contracts valued at more than $500,000. Labor law violations include violations of the 14 covered federal statutes (e.g. FMLA, Title VII, FLSA, etc.) and executive orders, as well as equivalent state laws.  Pursuant to the Executive Order, the General Services Administration will develop a single website where contractors can report labor law violations, as well as meet other reporting requirements to which they may be subject.

Executive Order No. 13673 imposes the following requirements and prohibitions:

  • Contracting agencies must consider labor law violations for purposes of awarding federal contracts and will provide guidance to those agencies on how to evaluate violations.
  • Federal contractors must give employees “Paycheck Transparency” information, including hours worked, overtime hours, pay, and additions or deductions, so employees are better able to ensure they receive what they are owed.
  • Companies with federal contracts of $1 million or more are prohibited from requiring that new employees enter into pre-dispute arbitration agreements for disputes arising out of Title VII of the Civil Rights Act or from torts related to sexual assault or harassment.  This prohibition does not apply to already existing valid contracts.

While Executive Order No. 13673 is in effect immediately, it will not be implemented until 2016. The Federal Acquisition Regulation Council has been tasked with proposing and implementing rules and regulations to execute its provisions.

Impact on Federal Contractors

While the Executive Order has not yet been implemented, federal contractors should work to become familiar with their obligations under federal and state labor laws in order to avoid violations.  Additionally, to the extent a federal contractor has been deemed to have violated any such law, it  should establish a system to record violations in anticipation of the need to disclose them to contracting agencies in the future. Federal Contractors should also review the requirements regarding “Paycheck Transparency” in order to ensure the information they currently provide to employees fulfills their obligations thereunder.