Affirmative Action Alert Oh, No! Another Executive Order For Federal Contractors

by Constangy, Brooks, Smith & Prophete, LLP

For the fifth time in seven months, President Obama has signed an Executive Order directed solely toward federal contractors and their employees. Yesterday, he signed the "Fair Play and Safe Workplaces" Executive Order to "crack[] down on federal contractors who put workers' safety and hard-earned pay at risk." Although the Federal Acquisition Regulation Council will propose regulations to implement it, the Executive Order contains detailed substantive provisions that add to the already heavy burdens on companies that do business with the federal government.

Most notably, the latest EO requires contractors to periodically disclose their labor-related violations, as well as those of their subcontractors, and says that "repeat offenders" may be suspended or debarred. The EO also places stringent restrictions on arbitration agreements with employees.

Mandatory Disclosure of Labor Law Violations

The first provision in the Executive Order requires federal agencies to ensure that they are not doing business with companies that repeatedly violate employment and labor laws. Solicitations for new contracts worth more than $500,000 must include a provision requiring the bidder to represent whether there has been "any administrative merits determination, arbitral award or decision, or civil judgment" rendered against the bidder during the prior three years for violations of any of the following:

• Fair Labor Standards Act
• Occupational Safety and Health Act
• Migrant and Seasonal Agricultural Worker Protection Act
• National Labor Relations Act
• Davis-Bacon Act
• Service Contract Act
• Executive Order 11246
• Section 503 of the Rehabilitation Act
• Vietnam Era Veterans' Readjustment Assistance Act
• Family and Medical Leave Act
• Title VII of the Civil Rights Act
• Americans with Disabilities Act
• Age Discrimination in Employment Act
• Executive Order 13658 (Establishing Minimum Wage for Contractors)
• Equivalent state laws (as defined in guidance to be issued by DOL)

Each federal agency will be required to designate a Labor Compliance Advisor, who will be responsible for assessing whether the bidder "is a reliable source that has a satisfactory record of integrity and business ethics. . . ." The Labor Compliance Advisor will also consult regarding whether it is appropriate to refer a contractor to the agency's "suspending and debarring official."

After being awarded a contract, federal contractors will be obligated to update the information on their labor law violations every six months. Based on this information, the contracting agency will determine whether any action is necessary, including "agreements requiring appropriate remedial measures, compliance assistance, and resolving issues to avoid further violations, as well as remedies such as decisions not to exercise an option on a contract, contract termination, or referral to the agency suspending and debarring official."

In addition, federal contractors will be responsible for obtaining similar assurances from their subcontractors. For each subcontract worth more than $500,000 that is not for commercially available off-the-shelf items, contractors must require that their subcontractors disclose the same type of labor law violations and update the information every six months. Before awarding a subcontract, contractors must determine whether the subcontractor "is a responsible source that has a satisfactory record of integrity and business ethics. . . ." Contractors may consult with their contracting officer, the Labor Compliance Advisor, or the DOL for assistance in making this determination. The agency itself may also decide to take action regarding subcontractors.

Based on the language in the Executive Order, it is unlikely that "violations" will include voluntary settlements. Indeed, according to the White House's Fact Sheet on the Executive Order, one purpose of the President's action is "to encourage companies to settle existing disputes, like paying back wages." Thus, federal contractors may feel more pressure than other companies to resolve lawsuits and administrative actions, due to concerns that an adverse result might place their federal contracts in jeopardy. For the same reason, individual employment disputes will potentially have greater significance for federal contractors.

The Executive Order also provides specific criteria "for determining whether serious, repeated, willful, or pervasive violations of the labor laws . . . demonstrate a lack of integrity or business ethics." For example, "in most cases," a single violation "may not necessarily" be sufficient, "depending on the nature of the violation." (That's what we call wiggle room, folks!) Agencies should also consider remedial measures or mitigating factors to address violations.

The DOL will also develop guidance to assess whether violations are serious, repeated, willful, or pervasive. Where no relevant statutory standards exist, the Executive Order directs the DOL to develop standards that take into account such items as

• the number of employees affected;
• the degree of risk posed or actual harm done;
• the amount of damages incurred or fines or penalties assessed;
• whether the contractor has had one or more additional violations of the same or a substantially similar requirement in the past three years;
• whether the contractor knew of, showed reckless disregard for, or acted with plain indifference; and
• the number of violations in relation to the size of the contractor.

Paycheck Transparency

Contracts worth more than $500,000 must also include a provision requiring contractors to provide employees covered by the Fair Labor Standards Act, the Davis-Bacon Act, the Service Contract Act, or similar state laws, with a document each pay period showing hours worked, overtime hours, pay, and any additions or deductions made to pay. This provision must also be included in subcontracts worth more than $500,000 that are not for commercially available off-the-shelf items. The Order states that individuals exempt from the overtime provisions of the FLSA do not have to receive a record of hours worked if the contractor informs the employees of their exempt status. Similarly, contractors must advise independent contractors of their status as such.

Prohibition on Arbitration Agreements

This one is big, especially in light of recent court decisions taking a very liberal view of arbitration agreements in the employment context. Contracts and subcontracts that exceed $1 million (except those for commercial items or commercially available off-the-shelf items) must include a provision requiring contractors to "agree that the decision to arbitrate 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 may only be made with the voluntary consent of employees or independent contractors after such dispute arises." (Emphasis added). This provision will not apply to employees covered by a collective bargaining agreement or to valid arbitration agreements entered into prior to the contractor's bid on a covered contract.

Effective Date

The Executive Order is effective immediately, but it will not apply to new solicitations until after the FAR Council issues a Final Rule to implement the Order. This is not expected to occur until 2016.

Impact on Federal Contractors

Although the White House touts this Executive Order as a means to promote "efficient federal contracting" and to save taxpayer money, the additional administrative burdens this places on federal contractors may drive away those very reliable and ethical businesses the government seeks to attract. The obligation to survey an entire company and all of its subcontractors on a six-month basis is extremely onerous – especially for larger organizations that may have hundreds of subcontractors. It is unclear how such a task can be effectively carried out. Moreover, the Executive Order creates yet another government worker, the Labor Compliance Advisor, in every federal agency, adding even more bureaucracy to a process already overburdened with red tape.

As soon as a Notice of Proposed Rulemaking on this Executive Order is issued, we will provide an update on this topic.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Constangy, Brooks, Smith & Prophete, LLP | Attorney Advertising

Written by:

Constangy, Brooks, Smith & Prophete, LLP

Constangy, Brooks, Smith & Prophete, LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.