United States: Final Fair Pay Rules Are Here: Contractors Face Complex Requirements And Challenges With New Reporting Obligations

The federal government released the final regulations implementing the Fair Pay and Safe Workplaces Executive Order ("EO" hereafter) this week. The regulatory package contains two parts: amendments to the Federal Acquisition Regulations and guidance from the Department of Labor for implementing the regulations. The regulatory package is a central part of the Administration's aggressive regulatory agenda we have previously discussed and reflects continuing burdens on federal contractors.

How We Got Here

The rule-making began with Executive Order 13673. Features of the EO include:

  • Requiring that contractors and subcontractors with over $500,000 in federal contracts report any "administrative merits determination, arbitral award or decision or civil judgment" arising out of 14 enumerated federal labor laws and the state equivalents in the preceding 3-year period;1
  • Mandating that contractors make the reports pre-award and update reporting every six months following the award;
  • Setting up a complex reporting and assessment scheme requiring reports to contracting officers who would report to an agency's "Labor Compliance Advisors" (ALCA) to assist the agency in making a determination of "responsibility;"
  • Creating various factors (serious, repeated, willful, or pervasive) that would underlie responsibility determinations; and
  • Threatening contractors with suspension or debarment if they did not establish that they are responsible.

The EO also takes aim at another aspect of President Obama's domestic agenda by severely limiting the use of arbitration agreements. The EO bans pre-dispute arbitration agreements for Title VII and gender related tort claims. The EO also requires that contractors provide notice to workers that they are independent contractors and notice to employees of the hours worked, overtime hours, pay, and any additions made to, or deductions made from, pay.

The EO further required that the Federal Acquisition Regulatory Council propose and finalize regulations amending the Federal Acquisition Regulations to include reporting obligations and that the Department of Labor develop guidance to assist agencies on compliance with the EO including making responsibility determinations.

The Final Rules

The final rules weave a complex web of broad requirements. Here is what federal contractors need to know.

What needs to be reported and to whom?

The final regulations require that contractors report the administrative merits determinations to the contracting officer through the government's contract management database. In a switch from the proposals, subcontractors will report the administrative merits determinations directly to the Department of Labor.

What are the important dates? The proposed regulatory package sets forth a three year reporting structure. The final rules have adopted a phase-in structure with key trigger dates:

October 25, 2015 – Date of the earliest administrative merits determination that must be reported

September 12, 2016 – DOL will begin a voluntary "pre-assessment" process whereby prospective contractors can submit their violation histories and receive guidance on whether their track records are acceptable

October 25, 2016 – Three provisions key off this date.

  1. General effective date of the rules
  2. Contract bids greater than $50 million must include reporting obligation clause.
  3. Contract bids above $1,000,000 must include provision prohibiting pre-dispute arbitration.

April 25, 2017 – Bids on contacts exceeding $500,000 must include reporting requirement

October 25, 2017 – Bids on subcontractors after this date require subcontractor reporting

October 25, 2018 – Full three-year reporting begins.

What's the process?

Pre-award. Offerees will have to provide information regarding administrative merits determinations at the pre-award stage. The process will be:

  1. The administrative merits determinations information is entered into the government database;
  2. The contracting officer requests that the ALCA provide a written analysis within 3 days,
  3. The ALCA makes a responsibility determination using the evaluation factors; and
  4. The contracting agency will evaluate a range of options from a "responsible" determination to a denial of the contract.

Post-award process. Contractors have the option of selecting the next reporting period as long as it is not longer than six months. Steps include:

  1. The contractor updates information in government database;
  2. The ALCA monitors for new data;
  3. ALCA assesses and provides written analysis considering factors, number of violations, mitigating factors and remedial measures;
  4. ALCA advises contracting officer of status; and
  5. Contracting officer determines appropriate action ranging from continuing the contract to recommending termination.

Who has access to the contractor violation information?

The administrative determinations data will be publicly available through the government FAPIIS database. This includes merits determinations that arise out of arbitrations even if they are confidential.

What are the top compliance challenges?

  1. Education. The regulatory package spans more than 1,000 pages and contains several detailed requirements. Do you understand those requirements fully?
  2. Record-keeping. Tracking merits determinations and ensuring that the reporting is accurate will be a challenge. Do you have the right systems in place to track and report?
  3. Subcontractor monitoring. While subcontractors will be reporting directly to DOL, prime contractors have an obligation to evaluate the "integrity and business ethics of subcontractors." Are you prepared to make that evaluation?
  4. Strategy. Determining an overall strategy on how to approach resolving reportable violations is key. Are there potentially reportable violations that you decide to settle and are there ones that you will fight?
  5. Publicity. The public disclosure of contractor violation information has the potential to affect corporate goodwill and encourage additional employment claims. Are you going to have a target on your back?
  6. Follow-up reporting. You will be scrambling to submit the first report. However, the second one will come fast in six months. Do you have processes in place to make sure that second report goes smoothly?
  7. Determinations. No requirement exists that responsibility determinations are made on a consistent basis. Will you be able to forecast whether you will be deemed responsible or not?

Contractors are encouraged to seek legal expertise to assist in wading through this complex governmental apparatus. In particular, contractors should carefully assess whether they will participate in the pre-assessment process will begin next month. Broader challenges like fully understanding the requirements, ensuring that reporting is accurate and determining an overall legal strategy will assist in avoiding the pitfalls that will inevitably come with these new obligations.

Footnotes

1 Specifically, the enumerated statutes are the Fair Labor Standards Act; the Occupational Safety and Health Act; the Migrant and Seasonal Agricultural Workers Protection Act; the National Labor Relations Act; the Davis-Bacon Act; the Service Contract Act; Executive Order 11246 of September 24, 1965 (Equal Employment Opportunity); Section 503 of the Rehabilitation Act of 1973; the Vietnam Era Veterans' Readjustment Assistance Act; the Family and Medical Leave Act; Title VII of the Civil Rights Act of 1964; the Americans with Disabilities Act of 1990; the Age Discrimination in Employment Act of 1967; and Executive Order 13658 of February 12, 2014 (Establishing a Minimum Wage for Contractors). The only state law equivalents covered are occupational safety and health "State Plans" that have been formally approved by OSHA.

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
Events from this Firm
26 Sep 2018, Seminar, Tokyo, Japan

Orrick’s Global Japan Practice is hosting a series of “Orrick Library” seminars to explore legal issues in various fields in Japan as well as the United States, Asia and Europe

26 Sep 2018, Conference, New York, United States

Employment Partner, Mandy Perry and Chair of Orrick's Global Employment Law Practice, Mike Delikat will be participating in the Global Business Protections 2018: International Restrictive Covenants and Confidential Information Conference.

10 Oct 2018, Conference, Florida, United States
Julie Totten is Program Chair of this year’s conference, Lynne Hermle is speaking on women in the courtroom, boardroom, and c-suite, and Erin Connell is speaking on pay equity and pay transparency.

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