‘Blacklisting’ Rules for Government Contractors Proposed by Federal Agencies under Executive Order

  • May 29, 2015

Implementing President Barack Obama’s “Fair Pay and Safe Workplaces” Executive Order (E.O. 13673), often called the “Blacklisting” or “Bad Actors” executive order, the U.S. Department of Labor has issued proposed guidance (“DOL Guidance”) and the Federal Acquisition Regulatory (“FAR”) Council has issued proposed regulations (“FAR Proposed Rule”) requiring government contractors and subcontractors to report regularly on workplace law violations found by administrative agencies, the courts, and arbitrators. The government would take an employer’s record of violations into account when deciding whether to award future contracts, cancel existing contracts, and potentially demand remedial action to address a pattern of violations. The DOL Guidance and the FAR Rule proposals both have 60-day public comment periods closing on July 27, 2015. 

Signed by President Obama in July 2014, the Executive Order’s stated goal is to promote efficiency in government procurement by ensuring federal agencies contract only with “responsible” contractors who comply with federal and state workplace laws. The FAR regulations historically defined a responsible contractor as one having the means to perform the contract successfully and a satisfactory record of integrity and business ethics. Once final, the new regulations will add an employer’s workplace law compliance record as a criterion to determine whether an employer should be awarded, or be allowed to retain, federal contracts. 

The DOL proposed Guidance, which is a companion document to the FAR Council’s proposed regulations, seeks to define a “violation” and to explain how federal contracting agencies should analyze the violations data to determine whether to award or deny contracts. 

New Reporting Obligation 

Under the Executive Order, employers bidding on new contract solicitations with an estimated value greater than $500,000, after the effective date of the regulations, must report violations of 14 federal laws (and the equivalent state laws) as part of the competitive bid process and, if awarded the contract, at six-month intervals thereafter for the duration of the contract. 

The laws include:

  • Fair Labor Standards Act
  • Occupational Safety and Health Act 
  • National Labor Relations Act 
  • Family and Medical Leave Act 
  • Davis-Bacon Act 
  • Service Contract Act 
  • Title VII of the Civil Rights Act 
  • Americans with Disabilities Act 
  • Age Discrimination in Employment Act 
  • Executive Order 11246 (affirmative action and equal employment opportunity) 
  • Vietnam Era Veterans’ Readjustment Assistance Act 
  • Section 503 of the Rehabilitation Act 
  • Executive Order 13658 (federal contractor minimum wage) 
  • The state law equivalents of these laws and executive orders

“Violation” is defined to include agency determinations (including reasonable cause and interim determinations that may be appealed and reversed), arbitral awards, and civil judgments. 

Under the Executive Order, the contracting officer and a designated “Labor Compliance Advisor” (“LCA”) will review the employer’s violations data to determine whether the contractor has committed violations that are of a serious, willful, repeated, and/or pervasive nature. 

The DOL Guidance, in exhaustive detail, seeks to explain the meaning and application of these terms. The Guidance on this is complex and, at times, unclear. 

Paycheck Transparency, Pre-Dispute Arbitration Limitations

As an additional element, the proposed guidance and regulations implement the Executive Order’s requirements that contractors inform workers of their classification as an employee or independent contractor, exempt or non-exempt status under the FLSA, and detailed information and disclosures about employees’ pay. 

Finally, in one of the more controversial parts of the Executive Order and proposed regulations, employers with a contract exceeding $1 million are prohibited from requiring employees to enter into mandatory pre-dispute arbitration agreements for disputes arising out of Title VII of the Civil Rights Act or torts related to sexual assault or harassment. 

This is only a summary of the proposed guidance and regulations. Jackson Lewis will continue to analyze each document and provide additional insights in the coming weeks. For more information or questions about the Executive Order and the proposed implementing documents, please contact the attorneys listed or the Jackson Lewis attorney with whom you regularly work.

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