United States: Final Rule Requires Contractors To Disclose Labor Law Violations For The Past Three Years

Last Updated: September 21 2016
Article by Cynthia O. Akatugba

Contractors and practitioners took notice last month when the FAR Council issued a final rule implementing Executive Order 13673, Fair Pay and Safe Workplaces. To help contractors and agencies navigate this new regime, the Department of Labor ("DOL") simultaneously issued guidance on the new rule. The Executive Order, issued two years ago with subsequent amendments, requires contracting officers to consider a prospective contractor's violations of fourteen labor laws in making responsibility determinations. The reaction to the Order, as well as the proposed rules and guidance that followed, was immediate, with multiple parties weighing in on the impact it would have on government contracting. We reported last year on the proposed rule and guidance and questioned whether we would ever see a final rule due to the volume (more than 900) comments the FAR Council received.

To be determined responsible, contractors must demonstrate, among other things, a satisfactory performance record and satisfactory record of integrity and business ethics. Although contracting officers previously could take into account a contractor's violation of labor laws in making responsibility determinations, several government reports showed they lacked adequate information, and, even when information was available, they were reluctant to act due to the absence of guidance. The new rule and guidance focus on ensuring that contracting officers have accurate information by requiring contractors to furnish that information and by providing a framework for considering the information.

Specifically, the final rule requires contractors to represent in responding to a solicitation whether an "administrative merits determination, arbitral award or decision, or civil judgment" has been rendered against it for violation of any of fourteen enumerated labor laws, including the Occupational Safety and Health Act, the Family Medical Leave Act, and the National Labor Relations Act. If the answer is "yes" (and where the contracting officer will be required to make a responsibility determination), the contractor must disclose publicly in the System for Award Management ("SAM") the labor law at issue, the case number, date of decision, and the name of the body rendering the administrative determination, the arbitration decision, or the civil judgment against it. This representation must be updated to ensure the ongoing accuracy of representations made at the time of award. Although a violation will not automatically result in a determination of nonresponsibility, the contractor must disclose information about all civil violations, even if the matter is not final and will be appealable. The contractor may present any mitigating information either publicly or privately on SAM, including any measures taken to remediate the violation.

New Players

The Executive Order also created a new cadre of federal employees titled Agency Labor Compliance Advisors ("ALCAs") to help contracting officers evaluate contractors' labor violations. An ALCA is a designated senior agency official responsible for evaluating the information submitted by the contractor; determining which violations are serious, repeated, willful, or pervasive, taking into account the mitigating information; and making a recommendation to the contracting officer regarding the contractor's record of labor law compliance. Among the recommendations an ALCA may make is that even if the contractor's record supports a contracting officer's finding of satisfactory integrity and business ethics, the prospective contractor must nonetheless enter into a labor compliance agreement or another acceptable remedial action with the enforcing agency after award. The ALCA also may recommend that the contracting officer notify the agency's suspension and debarment official.

Subjectivity & Past Performance

Contractors have expressed concern that the determination of whether a violation is repeated, willful, or pervasive can be subjective, and therefore can result in unfair or uneven responsibility determinations. Moreover, although the guidance provides objective standards to determine which labor violations are per se serious, all violations involving retaliation against employees under the fourteen labor laws are deemed serious. In this context, it is small comfort that the rule states that a contractor's disclosure of labor law decisions does not automatically render the contractor nonresponsible. Concern for fair assessments is heightened by the relatively widespread, though quietly-stated, perception that DOL enforcement personnel tend to be less than objective when deciding whether something is or may be a violation of the labor laws. That said, ALCA's are neither DOL nor enforcement employees.

There is also a past performance twist to the rule: in addition to having to consider a contractor's labor violations for purposes of a responsibility determination, the rule also provides that Contracting Officers now must consider labor law violations and additional related information in evaluating a contractor's past performance.

Flow Down

The requirements of the new rule flow down to subcontracts valued at more than $500,000 and subcontractors at all tiers. Subcontractors must represent whether they have had any labor law violations within the last three years. Although the contractor is not responsible for making this representation on behalf of its subcontractors, the new rule requires the contractor to consider prior labor violations in making responsibility determinations. In a departure from the proposed rule, rather than disclosing labor violations to prime contractors, prime contractors may direct subcontractors to disclose labor law violations and any mitigating factors to the DOL. The rule lists the conditions in which a prime contractor may conclude that a prospective subcontractor is responsible. Prime contractors will also be able to consult with the DOL in making responsibility determinations.

Statements & Notice

In addition to disclosing labor law violations, the rule also implements other provisions of the Executive Order requiring contractors to provide wage statements to (1) employees subject to FLSA, (2) all laborers and mechanics subject to the Davis Beacon Act, and (3) all service employees covered by the Service Contract Labor Standards. These statements are due every pay period and should include the total number of hours worked in a pay period, the number of those house that were overtime hours, the rate of pay, gross pay, and any additions or deductions from gross pay. In addition, contractors must provide written notice to independent contractors explaining that they are being treated as an independent contractor and not an employee.


Although final and effective on October 25, 2016, the rule will be phased in over one year: for the first six months, it will apply only to solicitations expected to exceed $50 million; starting on April 24, 2017, the rule will apply to all solicitations expected to result in contract of more than $500,000. Subcontractors have one year from the effective date of the rule before they will be required to make the representations and disclosures described above. The three-year disclosure period is also being phased in—contractors do not have to disclose decisions rendered against them before October 25, 2015.

We recommend contractors develop and implement systems to track the information required by the rule, ensure that SAM representations are updated and accurate, and timely provide information to the contracting officer to ensure that responsibility determinations are based on accurate and up-to-date records. In addition, contractors can now request a preassessment of their record of labor law compliance from the DOL; if the preassessment is current at the time the contracting officer makes a responsibility determination, the contracting officer and the ALCA may rely on the DOL's preassessment.

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.

© Morrison & Foerster LLP. All rights reserved

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions