Page 20 —
COLORADO REAL ESTATE JOURNAL
— September 21-October 4, 2016
Law & Accounting
T
he final rule and guid-
ance for implementing
the Fair Pay and Safe
Workplaces Executive Order
signed by President Barack
Obama in July 2014 and pub-
lished Aug. 25, 2016, remain
almost as burdensome and prob-
lematic as they were when pro-
posed. Compliance for some will
be required as soon as October.
Often referred to as the “black-
listing” law, the executive order
requires prospective and existing
contractors to disclose violations
of labor laws, requires them to
provide certain information each
pay period to enable workers to
verify the accuracy of their pay
and prohibits certain contractors
from using predispute arbitra-
tion agreements to address sexual
assault and civil rights claims.
The rule from the Federal
Acquisition Regulatory Coun-
cil and guidance from the U.S.
Department of Labor, which
are designed to assist agencies
in implementing the executive
order, remain problematic for
several reasons. They create a
publicly available repository of
contractor violations. Contracting
officers will determine whether
a contractor is a “responsible
source” based on violations that
may not be final or are subject to
appeal. And contracting officers
wield the power to require bid-
ders to commit to a labor compli-
ance agreement for their bids to
be considered.
Disclosure of violations.
The
disclosure requirement applies to
the legal entity whose name and
address is entered on the bid/
offer: the one legally responsible
for performance of the contract
(generally not parent corpora-
tions, subsidiaries or affiliates).
Information to be provided.
Offerors must disclose whether,
in the past three years, any deci-
sion was rendered against them
under 14 federal labor laws and
equivalent state laws. Initially, the
only equivalent state laws at issue
will be Occupational Safety and
Health Administration-approved
state plans. TheUSDOLwill iden-
tify state law equivalents in a later
guidance.
Contractorsmust report admin-
istrative merits determinations,
arbitration awards and civil judg-
ments by identifying the labor
law violated; case number; date
rendered; and name of the court,
arbitrator(s) or agency rendering
the determi-
nation. This
information
will be stored
in a database
available to
the
public.
Contractors
may also sub-
mit informa-
tion on miti-
gating factors
and
reme-
dial measures
taken,
and
that information will not be made
public without the contractor’s
authorization.
Process.
An agency labor com-
pliance adviser will review the
information and make a recom-
mendation to the contracting
officer regarding the contractor’s
labor lawcompliance. Only those
violations considered serious,
repeated, willful or pervasive will
be considered, but the definitions
of these terms are comprehensive.
The contracting officer will
consider the ALCA’s recommen-
dation and make a responsibil-
ity determination. Disclosure of
labor law violations does not
automatically render the prospec-
tive contractor nonresponsible.
The final rule requires prospec-
tive subcontractors to disclose
their labor law violations directly
to the USDOL, rather than to the
prime contractor, for assessment.
The USDOL advises on the sub-
contractor’s labor law compli-
ance, but the prime contractor
determines whether the subcon-
tractor is a responsible source.
The rule covers subcontracts
at any tier estimated to exceed
$500,000 other than for commer-
cially available off-the-shelf items.
Contractors and subcontrac-
tors must submit new or updated
information prior to award and
must update their disclosures in
the database twice a year post-
award. The ALCA will monitor
the database, may receive infor-
mation from other sources (e.g.,
government agencies, the public)
and may recommend a contract
remedy.
Preassessment.
Prior to bid-
ding, a contractor may volun-
tarily request an assessment of
its record of labor law compli-
ance. More information about this
option is to be provided by the
USDOL in the next fewweeks.
Phased implementation.
From
Oct. 25, 2016, through April 24,
2017, only prospective prime
contractors bidding on solicita-
tions issued on or after Oct. 25,
2016, for contracts valued at $50
million or more are required to
make disclosures. Thereafter, the
rule becomes effective for bid-
ders on contracts of $500,000 or
more. Subcontractors will not be
required to begin making disclo-
sures until Oct. 25, 2017.
Contractors must disclose labor
law violation determinations
made during the period begin-
ning Oct. 25, 2016, to the date
of the offer, or for three years
preceding the date of the offer,
whichever period is shorter.
Pay transparency.
Two addi-
tional requirements apply to con-
tractors with contracts of more
than $500,000 or subcontracts that
exceed $500,000 other than for
commercially available off-the-
shelf items.
First, they must provide a wage
statement every pay period to
all individuals performing work
under the contract or subcontract
that includes: 1) the total number
of hours worked in the pay peri-
od, 2) the number of hours that
were overtime, 3) the rate of pay,
4) gross pay, and 5) any additions
to or deductions from gross pay.
Second, such contractors and
subcontractors must provide
notice to workers who are treat-
ed as independent contractors
informing themof that status. The
notice must be provided when
the relationship is established or
before the worker begins to per-
form work on the government
contract or subcontract.
Notices may be provided by
paper format or electronically.
These requirements will be insert-
ed in solicitations beginning Jan.
1, 2017, and in resultant contracts.
Arbitration clauses.
Contracts
and subcontracts for noncommer-
cial items over $1 million will
require contractors to agree that a
decision to arbitrate claims under
Title VII or any tort related to
sexual assault or harassment may
bemade onlywith voluntary con-
sent of employees or independent
contractors obtained after such
disputes arise.
Reassess strategy.
In our liti-
gious society, employers some-
times avoid fighting claims of
labor law violations due to the
administrative and financial cost.
Going forward, federal contrac-
tors may find they cannot afford
to avoid the fight.
s
Susan Schaecher
Partner, Fisher
Phillips, Denver
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