Late last month, the U.S. Department of Labor (“DOL”) and the Federal Acquisition Regulator Council issued their long-awaited final rules (“Rules”) and guidance (“Guidance”) regarding Executive Order 13673−Fair Pay and Safe Workplaces. Executive Order 13673, which President Barack Obama signed into law on July 31, 2014 and amended on August 23, 2016, generally requires federal contractors and subcontractors to disclose certain labor law violations and worker wage information when bidding on and performing federal contracts. Any organization that is party to or aids in the performance of a large contract with the federal government would be wise to pay careful attention to the new Rules and Guidance, as they will be expected to comply therewith beginning on October 25, 2016. The Rules and Guidance require contractors to stay abreast of labor law developments and thus have added yet another layer of complexity to the contract compliance process.

The scope of Executive Order 13673 and its implementing Rules and Guidance is exceptionally broad, such that both Congress and industry participants have already raised concerns about the new law. If not struck down or amended, the Rules and Guidance detail an intricate process through which prospective contractors must publicly disclose whether any civil, arbitral, or administrative determinations have been issued against the contractor for violation(s) of 14 federal labor laws, state occupational safety and health plans approved by OSHA, and a number of yet-to-be-determined other state laws. New “labor compliance advisors” will then analyze the disclosures and advise the appropriate contracting officer as to the contractor’s eligibility for federal contract awards.

The stakes of self-reporting labor violations are very high, given that a labor compliance advisor may recommend that a contracting officer terminate a contract, condition award or continued performance of a contract on a contractor’s agreement to enter into a labor compliance agreement with a third party, or even seek to suspend or debar the contractor. Once a federal contract is awarded, Executive Order 13673 further requires that language regarding subcontractor labor violations, worker classification and wage information, and pre-dispute arbitration limitations may be included in appropriate contracts.

Given the complexity of Executive Order 13673, the Rules and Guidance provide for a gradual phasing in of contractors’ obligations thereunder. Beginning this week, current or prospective contractors may voluntarily request that the DOL assess the contractor’s labor law compliance history. If such an assessment is requested, the DOL will provide the contractor with advice as to whether any of the contractor’s violations are potentially problematic, as well as an opportunity to remedy such problems before bidding on a specific acquisition.

If a contractor participates in the preassessment process and receives a satisfactory record of labor law compliance, the contracting officer is permitted to rely on the DOL’s preassessment (provided no new violations are disclosed) if said contractor subsequently submits a bid on a contract. Moreover, the DOL has identified participation in the preassessment process as a mitigating factor that the labor compliance advisor should consider in future bids. The preassessment phase is on-going and will not close when the Rules and Guidance take effect on October 25, 2016.

In order to comply with Executive Order 13673, any contractor that intends to bid on future federal contracts (or subcontractors who intend to work on such contracts), should be prepared to identify whether:

  • The relevant contract falls within Executive Order 13673’s scope;
  • A civil, arbitral, or administrative determination has been issued against the contractor for violation of any one of the specific labor laws identified in Executive Order 13673;
  • Such a determination was issued within the appropriate time period for which disclosure is required; and
  • Private disclosure of any additional information surrounding the labor law violation is warranted.