September 28, 2020

Volume X, Number 272

September 25, 2020

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Fair Pay and Safe Workplaces Final Rule Presents Challenges to Government Contractors

Last week, the FAR Council released its Final Rule implementing President Obama’s 2014 Fair Pay and Safe Workplaces Executive Order. At the same time, the U.S. Department of Labor released its Final Guidance on the rule. Contractors need to take action immediately—the Final Rule goes into effect on October 25, 2016.

The proposed rule was issued back in May of 2015 and there has been lots written about it (and more than 10,000 comments and responses submitted). In today’s post, we highlight some of the requirements that may present challenges to contractors. Remember, once the rule takes effect, contractors will be required to report certain details about their labor law violations.

Public Disclosure of Labor Law Violations

Actually, contractors will be required to disclose violations of 14 federal labor laws and executive orders and state equivalents. Those laws range from the Fair Labor Standards Act and the Occupational Safety and Health Act to the Service Contract Act, the Davis Bacon Act and the Family and Medical Leave Act. The E.O.s include E.O. 13658 (Establishing a Minimum Wage for Contractors) and E.O. 1124 (Equal Employment Opportunity). The Final Rule also requires contractors to update their reports every six months. And, all disclosures under the new rule will be public.

Phase-In Periods

That’s probably one of the main takeaways here—the rule will be “phased in” over time. Starting on October 25, 2016, the disclosure requirements will become effective as to prime contracts valued at $50 million or more. By April 25, 2017, those requirements will apply to prime contracts valued at $500,000 or more. Subcontracts are not covered by the rule until October 25, 2017. Initially, the disclosure rules only will look back one year, but that “look back” period will stretch to three years by October 25, 2018.

Paycheck Transparency and Arbitration Restrictions

Starting on January 1, 2017, the “paycheck transparency” provisions take effect. Among other things, starting in 2017, contractors will be required to provide notices to workers about their status as independent contractors and whether they are exempt from overtime pay. Those notices will be particularly problematic for contractors who have not previously focused on proper classification and for all contractors in light of new overtime regulations and DOL’s increased attention to alleged worker misclassifications.

Subcontractor Reporting Directly to DOL

The Final Rule includes one significant change from the proposed rule and requires subcontractors to report directly to the Department of Labor rather than to the prime contractor. The rule also includes a contorted pathway for consideration of subcontractors’ disclosed violations, bouncing from DOL back to the sub and then up to the prime and then to the contracting officer. It remains to be seen how that process will work and if it will work efficiently.

Reporting Does Not Extend to Affiliates

The text of the Final Rule makes it clear that the reporting requirements do not extend to corporate parents, subsidiaries or affiliated companies. Instead, it is limited to the contracting party only.

Perhaps it is a silver lining for prime contractors that they will not be required to report on their subcontractors’ and their own affiliates’ labor law violations. But the new rules contain many new requirements and contractors should get ready now for the implementation to begin on October 25, 2016.

Copyright Holland & Hart LLP 1995-2020.National Law Review, Volume VI, Number 243


About this Author

Charles R. Lucy, Federal Regulatory Litigator, Holland Hart, law firm
Of Counsel

Mr. Lucy brings more than 30 years of experience in federal regulatory, business, and litigation experience, as well as technical experience in federal/state procurement and acquisition matters, bid protests, contract disputes act appeals, government contract audits and fiscal law issues, commercial space law, university/government technology transfer programs, homeland defense, and small business government contracting.

Mr. Lucy has lectured at numerous conferences and seminars in Europe, the Pacific, and the United States. Topics have included...

michael maloney, holland hart, bid protest lawyer, government contracts attorney
Of Counsel

Michael D. Maloney is Of Counsel in the Washington, D.C. office representing clients in all phases of government contracts and disputes in a wide array of industries. A seasoned litigator with over 25 years in private practice, Mr. Maloney strategically advises clients how and where to pursue complex bid protest matters before the Government Accountability Office, the Court of Federal Claims and other federal courts, or directly to the administering federal agency. He also counsels clients on federal, state, and local procurement compliance, guiding clients through the labyrinth of statutes and regulations, and advises contract awardees how to successfully administer contracts, correctly calculate and submit requests for payment, and when necessary, pursue and resolve payment claim disputes.

Mr. Maloney's extensive government contracts experience ranges from representation of clients in national security matters involving Department of Defense, Department of Energy, and intelligence community procurements to information technology purchasing and services contracts and Federal Emergency Management Agency and Department of Health and Human Services procurements. Mr. Maloney also counsels clients on trade secrets and privacy laws and represents clients in complex civil litigation including actions to protect clients' trade secrets and to enforce privacy laws. 

Steven M. Gutierrez, Holland Hart, employment lawyer, labor attorney

Mr. Gutierrez helps companies meet the varied challenges presented by the modern employment relationship. He has tried numerous cases before judges and juries, and on appeal, in complex labor and employment matters and other tort litigation.

With practical and cost-effective methods of practice, Mr. Gutierrez develops solutions to meet business employment needs and to maintain compliance with federal and state laws. One key way he does this is by advising and providing training to private employers regarding policies and practices relating to...