United States: Government Releases Final Rule Implementing "Blacklisting" Law

The final rule and guidance implementing the Fair Pay and Safe Workplaces Executive Order, signed by President Barack Obama in July 2014 and finally published on August 25, 2016, remain almost as burdensome and problematic as they were when originally proposed. They will impact many federal contractors and require immediate attention to ensure full compliance, which for some will be required as soon as October 2016.

Often referred to as the "blacklisting" law, the Executive Order requires prospective and existing contractors to disclose violations of 14 federal labor laws plus state equivalents, 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 arbitration agreements to address sexual assault and civil rights claims. 

The rule from the Federal Acquisition Regulatory Council (U.S. Department of Defense, U.S. General Services Administration and NASA) and guidance from the U.S. Department of Labor (USDOL) are designed to assist agencies in implementing the Executive Order. They detail procedures for making the disclosures, assessing violations, developing conditions for further consideration of bids, and providing required notices to workers. 

The final rule and guidance remain burdensome and problematic for several reasons.  First, they create a publicly available repository of contractor violations. They also require the contracting officer to determine whether a contractor is a "responsible source" based on violations that may not be final or are subject to appeal. Moreover, contracting officers wield the power to require bidders with records deemed less-than-satisfactory to commit to a labor compliance agreement in order for their bids to be considered. Although some minor changes were made to the proposals between the initial release and ultimate finalization, the overall effect remains the same.

Disclosure Of Violations
The disclosure requirement applies to the legal entity whose name and address is entered on the bid/offer and that will be legally responsible for the performance of the contract (generally not to parent corporations, subsidiaries or affiliates).

Information to be Provided

Offerors must disclose whether, in the past three years, any labor law decision was rendered against them, regardless of when the underlying conduct occurred. The laws covered are those identified in the Executive Order:

  • Fair Labor Standards Act (FLSA);
  • Occupational Safety and Health Act (OSHA);
  • Migrant and Seasonal Agricultural Worker Protection Act;
  • National Labor Relations Act (NLRA);
  • Davis-Bacon Act;
  • Service Contract Act;
  • Executive Order 11246;
  • Section 503 of the Rehabilitation Act of 1973;
  • Vietnam Era Veterans' Readjustment Assistance Act;
  • Family and Medical Leave Act (FMLA); 
  • Title VII of the Civil Rights Act of 1964;
  • Americans with Disabilities Act of 1990 (ADA);
  • Age Discrimination in Employment Act of 1967 (ADEA);
  • Executive Order 13658 (establishing a Minimum Wage for Contractors); and
  • equivalent state laws. 

Initially, the only equivalent state laws at issue will be OSHA-approved State Plans, which can be found at www.osha.gov/dcsp/osp/approved_state_plans.html. The USDOL will further identify state law equivalents in a later guidance.

Administrative merits determinations, arbitration awards, and civil judgments must be reported. These terms are broadly defined and include decisions that are not final or are subject to appeal. Contractors must identify the following detail about each matter: the specific labor law violated; the case number or other identification number; the date rendered; and the name of the court, arbitrator(s), agency, board, or commission rendering the determination or decision. 

This information will be stored in a database available to the public. Contractors may also submit information on mitigating factors and remedial measures taken, but that information will not be made public without the contractor's authorization. 

Process

In a nutshell, the information will be used as follows. An agency labor compliance advisor (ALCA) will review the information and make a recommendation to the contracting officer regarding the contractor's labor law compliance. The ALCA could (a) determine compliance to be satisfactory, (b) recommend that a bidder with a less-than-completely-satisfactory record be required to commit to a labor compliance agreement before or after the contract is awarded, or (c) find the record unsatisfactory and conclude that the agency's suspending and debarring official should be notified. Only those violations considered serious, repeated, willful, or pervasive will be considered. While the final rule and the guidance narrowed the definitions of these terms somewhat from the initial proposal, they remain quite comprehensive.

The contracting officer will then consider the ALCA's recommendation and make a responsibility determination. Disclosure of labor law violations does not automatically render the prospective contractor nonresponsible. If the contracting officer requires a labor compliance agreement, the contractor must respond whether it intends to negotiate such an agreement.

The rule as initially proposed would have required prospective subcontractors to make their disclosures to the prime contractor for assessment. In a welcome change, the final rule requires prospective subcontractors to disclose their labor law violations directly to the USDOL. However, the prime contractor determines whether the subcontractor is a responsible source.  The USDOL provides advice to the subcontractor regarding its labor law compliance which the subcontractor passes on to the prime contractor to consider in making its determination. 

If a subcontractor disagrees with the agency's assessment of violations, the subcontractor must provide information about its violations and why it disagrees to the prime contractor. The rule covers subcontracts at any tier estimated to exceed $500,000 other than for commercially available off-the-shelf items.

Contractors and subcontractors 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 information from other sources (e.g., other government agencies, the public), and may recommend a contract remedy. This could include requiring a labor compliance agreement, electing not to exercise an option, or terminating the contract altogether.

Pre-Assessment

Prior to bidding, a contractor may voluntarily request an assessment of their record of labor law compliance. More information about this option is to be provided by the USDOL in the next few weeks.

Phased Implementation

From October 25, 2016 through April 24, 2017, only prospective prime contractors bidding on solicitations issued on or after October 25, 2016 for contracts valued at $50 million or more are required to make disclosures. Thereafter, the rule becomes effective for bidders on contracts of $500,000 or more. Subcontractors will not be required to begin making disclosures until October 25, 2017.

Contractors must disclose labor law violation determinations made during the period beginning on October 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 additional requirements apply to contractors 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: (i) the total number of hours worked in the pay period; (ii) the number of hours that were overtime; (iii) the rate of pay; (iv) gross pay; and (v) any additions to or deductions from gross pay. Exempt employees need not be provided this statement if they are informed of their exempt status before they perform any work under a covered contract or in their first wage statement under the contract.

Second, such contractors and subcontractors must provide notice to workers who are treated as independent contractors informing them of that status. The notice must be provided when the relationship is established or before the worker begins to perform work on the government contract or subcontract.

Notices may be provided by paper format or electronically. These requirements will be inserted in solicitations beginning January 1, 2017, and in resultant contracts.

Arbitration Clauses

Contractors with contracts and subcontracts for non-commercial items over $1 million must agree that a decision to arbitrate claims under Title VII or any tort related to sexual assault or harassment be made only with voluntary consent of employees or independent contractors obtained after such disputes arise. Limited exceptions are recognized for employees covered by collective bargaining agreements and, in some situations, where an arbitration agreement was entered into prior to bidding on a covered contract.

What Should Employers Do Now?

As a result of this new blacklisting rule and guidance, we encourage federal contractors to reassess their litigation strategy and overall defense philosophy. In our litigious society, employers sometimes decide not to fight claims of labor law violations, calculating them to be too costly from an administrative and financial perspective. Going forward, however, given this significant change, federal contractors may find they cannot afford to avoid the inevitable fight and possible appeal.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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.

Authors
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
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must 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.

Disclaimer

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.

General

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