Proposed Rule and Proposed Guidance implementing the “Fair Pay and Safe Workplaces”

The Obama Administration published its Proposed Rule and Proposed Guidance implementing the “Fair Pay and Safe Workplaces” Executive Order, (E.O.) which President Obama issued on July 31, 2014. This Federal register Notice was issued on May 28, 2015.

1. The 60 day comment period

   . The 60-day comment period began on May 28, 2015 when the proposed rulemaking was published in the Federal Register. The proposed rule and guidance provide 60 days for public comment--the comment period is scheduled to close on July 27, 2015. After the close of the public comment period, the FAR Council and DOL will make final changes and resubmit the rule and guidance to the Office of Information and Regulatory Affairs for another round of regulatory review before issuing the final rule and guidance in the Federal Register. The Administration has stated that its goal is to implement the EO in stages during 2016.

2. Pre-Award Provisions of the Proposed Regulation

   Under ?2004 of the new proposed Far Provision, contractors bidding on contracts valued over $500,000 would be required to disclose whether there has been any "administrative merits determinations," "arbitral award or decisions," or "civil judgments" rendered against the contractor within the preceding three-year period for violations of enumerated labor laws. In addition this obligation extends to requiring contractors to report similar information for subcontractors on subcontracts (other than (COTS) commercially available off-the-shelf items) valued over $500,000. In addition the Government is developing yet another website to keep track of that will be a single website for contractors to use for reporting these requirements. The reward for disclosure is that basic information about the labor violations will be made publicly available in the Federal Awardee Performance and Integrity Information System (FAPIIS). This is a heavy area for which the administration is seeking comment.

3. Post-Award Provisions of the Proposed Regulation

   A Proposed FAR Clause ? 52.222-BB requires contracting officers to again perform a responsibility analysis for qualifying contracts (from above) during contract performance. Contractors are expected to self-disclose, semi-annually, whether there have been any administrative merits determinations, arbitral awards or decisions, or civil judgments rendered against them--or their subcontractors--for violations of labor laws. The contracting officer then may exercise various options for addressing the violations such as: deciding not to exercise an option, terminating the contract, or making a referral for a suspension or debarment action.

4. There is a section that alters current Wage reporting (e.g. Davis Bacon Act)

   The proposed FAR ?22.2005 requires contractors to provide employees covered by the FLSA, the Davis Bacon Act, the Service Contract Act, or "equivalent" state laws more detailed information concerning the individual's pay, hours worked, overtime hours, if applicable, and any additions made to or deductions made from the individual's pay. There is also a provision requiring contractors to notify independent contractors performing work on the contract in writing of their status as independent contractors.

5. Mandatory referral to Arbitration provisions in employment contracts partially removed by the proposed law!

   On contracts over $1 million, the proposed FAR 22.2006 requires contractors to agree that any 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 any such incidences.

6. Phase in Period for the Proposed Legislation

   In order to give contractors "time to acclimate themselves to their new responsibilities" the FAR Council suggested introducing the subcontracting requirements in phases. During the phase-in period, "Fair Pay Safe Workplaces" would apply only to prime contractors for solicitations issued and resultant contracts awarded.

7. Determination of subcontractor responsibility

   The proposed rule (Possibly as an underestimation of the potential), requires contractors obtain from subcontractors the same labor compliance history that they must themselves disclose. While this seems to be a great labor saving mechanism for the Government and places the onus on the rime for compliance, it also fails to recognize the disclosure of possible CBI (Confidential Business Information) among competitors who happen to be teaming on a specific procurement. The FAR Council suggests it will reconsider an alternative approach in which subcontractors would disclose details regarding their violations directly to DOL instead of to the prime contractor.

8. Contractor Performance Evaluation (Muddying the waters?)

   The FAR Council is also considering a supplemental FAR clause in which the Contracting Officer pursuant to the proposed FAR Part 42.15 performance evaluation--would consider if and whether DOL has raised concerns about a contractor failing to enter into a labor compliance agreement within a reasonable period or has not met the terms of an existing agreement. If adopted, the clause would make labor compliance both a contract performance and a contractor responsibility issue.

9. Conclusion

   This is not final nor does this brief synopsis even attempt to notify you of all the changes. There are still many industry groups that will no doubt challenge this proposed implementation of the EO. Call us for more information or for any of your business and contract related issues. [email protected], 229-244-1527