On July 31, 2014, President Obama signed an executive order requiring businesses to disclose labor law violations for the preceding three years before they can obtain a federal contract. The order—The Fair Pay and Safe Workplaces Executive Order—will cover federal and state laws governing civil rights, family and medical leave, collective bargaining, workplace health and safety, and wage and hour requirements. Each federal agency will be required to designate a labor compliance advisor, who will review the disclosures and consult with the Department of Labor.

The order also requires federal contractors to provide their employees with information necessary to verify the accuracy of their paycheck, including their hours worked, overtime, and paycheck deductions. Finally, it prohibits contractors from requiring their employees to enter into mandatory arbitration agreements for discrimination and harassment suits. 

According to the Obama administration, the goal of the executive order is to help contractors come into compliance with workplace protections. However, the White House also emphasized that the order is meant to protect contractors that comply with the law from competing with those who violate it. Businesses that repeatedly violate labor laws will not be awarded federal contracts. “Taxpayer dollars should not reward corporations that break the law,” the White House stated in a press release, “so today President Obama is cracking down on federal contractors who put workers’ safety and hard-earned pay at risk.”

The order will cover new federal contracts valued at more than $500,000 and will be implemented beginning in 2016. The ban on arbitration agreements for discrimination and harassment suits will only apply to federal contracts of $1 million or more, however. According to the Department of Labor, there are approximately 24,000 federal contractors employing 28 million workers.

The latest order comes on the heels of executive orders requiring federal contractors to pay their workers a minimum wage of $10.10 an hour, and most recently, barring contractors from discriminating against gay and transsexual workers. Frustrated with his attempts to pass legislation through Congress, President Obama has increasingly relied on executive orders to accomplish his agenda. House Republicans recently voted to sue President Obama for allegedly exceeding his presidential powers.