Construction Law Update: Fair Pay and Safe Workplaces Executive Order
On Wednesday, August 24, 2016, a rule requiring firms to report on past labor violations when seeking to do business with the federal government was finalized. The rule in the Fair Pay and Safe Workplaces Executive Order will take effect on October, 25 2016 and will be phased in over time to give contractors time to understand and implement the new requirements.
This will be an important decision for federal contractors and subcontractors. Firms bidding on federal projects over $50 million during the October 2016 – April 2017 grace period must disclose violations. Those seeking to procure contracts worth between $500,000 and $50 million do not have to voluntarily disclose until after April 24, 2017.
Prospective government contractors will be required to disclose any violations of 14 workplace protections which include:
- Wage and Hour
- Safety and Health
- Collective Bargaining
- Family and Medical Leave
- Civil Rights Protections
The United States Department of Labor Executive Order 13673: Fair Pay and Safe Workplaces schedule for phased-in implementation includes the following important dates from their website:
• Week of September 12, 2016: Preassessment begins, through which current or prospective contractors may come to DOL for a voluntary assessment of their labor compliance history, in anticipation of bids on future contracts but independent of any specific acquisition.
• October 25, 2016: The final rule takes effect. Mandatory disclosure and assessment of labor law compliance begins for all prime contractors under consideration for contracts with a total value greater than or equal to $50 million. The reporting disclosure period is initially limited to one (1) year and will gradually increase to three (3) years by October 25, 2018.
• January 1, 2017: The Paycheck Transparency clause takes effect, requiring contractors to provide wage statements and notice of any independent contractor relationship to their covered workers.
• April 25, 2017: The total contract value threshold for prime contracts requiring disclosure and assessment of labor law compliance is reduced to $500,000.
• October 25, 2017: Mandatory assessment begins for all subcontractors under consideration for subcontracts with a total value greater than or equal to $500,000.
AGC of America Reaction
The Associated General Contractors CEO, Stephen Sandherr, and other industry group leaders objected to the rule prior to its implementation. Sandherr noted in an AGC web release that the “new rule gives federal officials broad latitude to impose separate and inconsistent consequences.”