Federal contractors were thrilled when Judge Marcia Crone issued a preliminary injunction in late October against President Obama’s Fair Pay and Safe Workplaces Executive Order.
But Judge Crone’s decision did not block the entire rule. Although the preliminary injunction kept the bulk of the rule from going into effect, the portion requiring pay transparency took effect on January 1.
The Fair and Safe Workplaces Executive Order 13673 and its accompanying rules and guidance were released in August of last year and totaled 483 pages. Set to take effect on October 25, 2016, the Executive Order and the rules and guidance addressed three topics: (1) the reporting of “labor law violations,” (2) paycheck transparency, and (3) complaints and dispute transparency.
More details are available here and here, but in general, the Order and rules required federal contractors to disclose to the government their “labor law violations” during the pre-bidding process for certain federal contracts and subcontracts. A “labor law violation” included just about any finding against a contractor by a government agency or court, even if the “violation” was disputed by the contractor or had not reached final adjudication. For example, a “cause” finding by the Equal Employment Opportunity Commission or the issuance of a complaint by a Regional Director of the National Labor Relations Board would be considered a “labor law violation” even though the alleged “violation” might be vigorously disputed in litigation and even ultimately “won” by the contractor.
The E.O. and rules required contractors to explain their “labor law violations” to prove that they were responsible employers. Contractors with contracts valued at $1 million or more were also prohibited from having pre-dispute arbitration agreements with their employees addressing certain Title VII and tort claims.
Judge Crone’s preliminary injunction prevented these sections of the Order from taking effect. However, her injunction did not apply to the pay transparency provisions, which took effect January 1.
The next court filings in the lawsuit challenging the E.O. are due days before Donald Trump is sworn in as President. What effect our new President will have on the E.O. remains to be seen. According to some news reports, he is likely to rescind it.
In any event, unless and until he does so, contractors are required to comply with the pay transparency provisions, which require employers with covered contracts worth at least $500,000 to do the following:
*Provide a wage statement document or pay stub to each non-exempt individual performing work under the contract that includes such information as total hours worked, number of overtime hours, and rate of pay. (If not provided weekly, the statement must break out the total number of hours and overtime hours for the workweek for which overtime is calculated.)
*Advise exempt employees in writing of their exempt status.
*Inform any “independent contractors” in writing of their status as non-employees.