Obama signed the “Fair Pay and Safe Workplaces” Executive Order (EO 13673) into law on July 31, 2014. This Executive Order requires companies hoping to secure contracts greater than $500,000 to disclose labor law violations from the preceding three years. Labor violations is defined broadly to include many state and federal violations, including wage and hour, collective bargaining, family and medical leave, civil rights, and workplace safety infractions. Contractors must gather similar information regarding labor law violations from their subcontractors.

The “Fair Pay and Safe Workplaces” Executive Order allows the federal government to refuse to award contracts to companies with a history of violating employees’ rights. It also encourages compliance with labor laws by making such violations more transparent. The Executive Order also imposes a “paycheck transparency” requirement, which requires contractors to provide detailed information to their employees each pay period so employees can verify the accuracy of their paychecks.

Finally, Executive Order 13673 prohibits contractors with contracts exceeding $1 million from mandating arbitration of Title VII claims and tort claims arising out of sexual assault or harassment allegations.

The Executive Order went into effect immediately and applies to all solicitations for contracts based on the Federal Acquisition Regulation Council (FARC) guidelines.

ACTION ITEM

Federal contractors must be more transparent if they plan to secure and maintain high-dollar government contracts. While contractors cannot erase past violations, they should make every effort to disclose prior infractions and to abide by the Executive Order guidelines going forward.

Federal contractors must also review their arbitration agreements with employees working on federal contracts, to ensure they carve out claims related to Title VII claims and tort claims arising out of sexual assault or harassment allegations which must be permitted to be brought in court.