On August 25, 2016, the U.S. Department of Labor (DOL) and the Federal Acquisition Regulatory Council (FAR Council) issued the final rules and guidance implementing Executive Order 13673, entitled "Fair Pay and Safe Workplaces" (FPSW). FPSW impacts federal contractors and subcontractors in several ways: (1) mandates paycheck transparency through certain notices to employees and independent contractors; (2) limits the use of pre-dispute arbitration clauses in employment agreements on covered federal contracts; and (3) requires disclosure violations of 14 federal labor and employment laws and executive orders (and state law equivalents)1. Violations of the following laws are subject to the reporting obligations:
- Fair Labor Standards Act
- Occupational Safety and Health Act
- Migrant and Seasonal Agricultural Workers Protection Act
- National Labor Relations Act
- Davis-Bacon Act
- Service Contract Act
- Executive Order 11246 of September 24, 1965 (Equal Employment Opportunity)
- Section 503 of the Rehabilitation Act of 1973
- Vietnam Era Veterans' Readjustment Assistance Act
- Family and Medical Leave Act
- Title VII of the Civil Rights Act of 1964
- Americans with Disabilities Act of 1990
- Age Discrimination in Employment Act of 1967
- Executive Order 13658 of February 12, 2014 (Establishing a Minimum Wage for Contractors).
The rule becomes effective on October 25, 2016 but implementation will be phased in as indicated by the following timeline:
- Week of September 12, 2016: Voluntary preassessment begins. Preassessment allows contractors to voluntarily request the DOL to assess their history of labor law compliance. Participation in the preassessment program will be considered as a mitigating factor in future acquisitions. Preassessment will be ongoing and will not cease once the rules become effective on October 25, 2016. The DOL will publish more information about the preassessment process during the week of September 12, 2016.
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October 25, 2016
- Prime contractors with a total contract value of $50 million will be required to disclose their labor law violations. The reporting disclosure period is initially limited to one (1) year and will gradually increase to three (3) years by October 25, 2018. More information about prime contractor disclosure requirements and process is available on the DOL's Contractor Disclosure webpage.
- Prime contractors and subcontractors with contracts exceeding $1 million will be prohibited from entering into arbitration agreements with employees or independent contractors concerning claims arising under Title VII of the Civil Rights Act of 1964, or any tort related to or arising out of sexual assault or harassment, before such dispute arises, subject to certain exceptions (e.g., collective bargaining contracts or arbitration agreements entered into prior to bids subject to EO 13673).
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January 1, 2017: The Paycheck Transparency clause will become effective. This provision requires contractors/subcontractors to provide the following notices:
- Wage statements to employees containing the following information: (1) hours worked; (2) overtime hours; (3) rate of pay; (4) gross pay; and (5) an itemization of each addition to and deduction from gross pay. (Note: The DOL has determined that Hawaii is among the states/localities that have substantially similar wage statement requirements, and therefore contractors/subcontractors already in compliance with Hawaii's disclosure requirements need not revise their wage statements.)
- Notice to independent contractors of their independent contractor status.
- April 25, 2017: Prime contractors with a total contract value of $500,000 must comply with the disclosure and assessment of labor law requirements.
- October 25, 2017: Subcontractors under consideration for subcontracts with a total value of $500,000 will become subject to mandatory assessments. Subcontractors must report violations directly to the DOL (not the prime contractor, as previously proposed). Subcontractors will also be responsible for reporting to the prime contractors the DOL's findings.
More information about FPSW's requirements can be found on the DOL's FAQ.
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1While the FPSW also covers equivalent state laws, with the exception of occupational safety and health "State Plans" that have been formally approved by OSHA, equivalent state laws are not covered in the current guidance and rule. Coverage for equivalent state laws will be subject to another rulemaking process.