Just last week President Obama signed an executive order which will significantly impact companies with certain federal contracts. Three major provisions of the order (and who has to abide by them) are discussed below.

Disclosure of Labor Law Violations

The order, called the Fair Pay and Safe Workplaces Executive Order, requires any company bidding for a procurement contract more than $500,000.00 in value to disclose labor law violations that occurred in the past three years. Included in the types of violations that must be disclosed are:

  • FLSA violations
  • OSHA violations
  • National Labor Relations Act violations
  • FMLA, ADA, Title VII, ADEA violations

The order also instructs the officer awarding the bid to consider these violations in determining whether the bidder is responsible - meaning a company's record in the areas covered by the order may determine whether they receive the contract.

Employee Pay Stub Requirements

In addition, companies with more than $500,000.00 in government contracts are now required to include on each pay stub the respective employee's:

  • hours worked
  • overtime hours
  • pay
  • any additions to or deductions made from their pay

Restrictions on the Use of Pre-Dispute Arbitration Agreements

Finally, companies with federal contracts of $1 million or more now have strict restrictions on the use of pre-dispute arbitration agreements for disputes arising out of Title VII (discrimination) or from torts related to sexual assault or harassment. Covered federal contractors can now only use these agreements, which had been very popular, in three circumstances:

  • where the employee voluntarily agrees to arbitrate the claims after the dispute arises
  • where the employee is covered by a collective bargaining agreement
  • where the employee or independent contractor entered into the arbitration agreement before the employer bid on the federal contract covered by this order, unless the agreement is subject to renegotiation, replacement, or can be changed by the employer after the federal contract is awarded

The bottom line: Companies with federal contracts should be reviewing their policies and practices to determine if they're in compliance with the new requirements.