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Paycheck Transparency Mandates of Fair Pay and Safe Workplaces E.O. Take Effect January 1

The new paycheck transparency requirements under the “Fair Pay and Safe Workplaces” Executive Order (E.O. 13673) will be effective beginning January 1, 2017. The requirements will apply to all new federal procurement contracts and subcontracts of $500,000 or more. Covered contractors must fulfill four obligations, below, which will be triggered by inclusion of Federal Acquisition Regulation (FAR) clause 52.222-60 — Paycheck Transparency in covered solicitations and contracts.

These duties are not retroactive and do not apply to any existing contracts or subcontracts. (See our article, DOL and FAR Council Publish Final ‘Fair Pay and Safe Workplaces’ Rules for Government Contractors.)

Texas Injunction

In October 2016, a Texas federal district court enjoined two of the three main components of E.O. 13673: (1) the labor law violation reporting requirement; and (2) the prohibition of mandatory arbitration agreements covering Title VII claims. (For details, see our article, Texas Federal Court Blocks Enforcement of Key Portions of Fair Pay and Safe Workplaces Rules.)

The injunction has yet to be appealed and the future of the case, and the Executive Order under a Trump Administration, is uncertain.

The court did not enjoin the paycheck transparency requirements of the E.O.

Paycheck Transparency Requirements

Contractors must comply with the following:

1. Provide a “wage statement” “document” for each pay period to each worker performing services under a covered contract and subcontract who is covered by the Fair Labor Standards Act (FLSA), the Service Contract Act, or the Wage Rate Requirements for Construction (also known as the Davis-Bacon Act).

The document may be provided in electronic form if documents typically are provided to employees electronically, and if the worker can access the document through a device made available by the employer.

The statement must provide the worker with the following:

  • The total number of hours worked in the pay period;

  • The number of those hours that were overtime hours;

  • The rate of pay;

  • The gross pay; and

  • An itemized list of the specific amount of any additions made to or deductions taken from gross pay.

If the pay period is not weekly (e.g., bi-weekly), the statement also must break out the hours worked and overtime hours to correspond to the period for which overtime is calculated and paid (typically, weekly). Bottom line: employees must be able to see, without calculation, weekly hours and overtime hours worked and paid.

2. The statement for an FLSA-exempt employee need not include hours worked if the employee is notified in writing of his or her exempt status, either before the employee begins work on a covered contract or subcontract or in the first statement issued under the covered contract or subcontract.

3. The wage statement need not be provided to an independent contractor (IC) working under a covered contract or subcontract. However, contactors must provide each “individual” IC with notice that he or she is being treated as an IC.

Requirements for the IC notice include:

  • It must be a written document;

  • It must be provided at the time the IC relationship is established, but must be a standalone document — it cannot be included in any IC agreement;

  • It must be provided before the individual begins work on a covered contract;

  • It must be provided for each covered contract, even if the individual has been notified of his or her IC status under other covered contracts; and

  • If an employee converts to IC status during performance of a covered contract, the notice must be provided before the individual does any work under the contract as an IC.

4. Include (flow-down) FAR 52.222-60 from prime contracts to covered subcontracts.

Jackson Lewis P.C. © 2023National Law Review, Volume VI, Number 355

About this Author

Leslie Stout-Tabackman, Labor Employment Attorney, Shareholder, Jackson Lewis Law Firm

Leslie Stout-Tabackman is a Principal in the Washington, D.C. Region office of Jackson Lewis P.C. She has a broad-based practice counseling and representing employers on compliance with federal and state workplace laws and regulations, and designing and implementing sound practices and policies.

Ms. Stout-Tabackman regularly counsels and represents clients with matters before the U.S. Department of Labor’s (DOL) Wage and Hour Division, including Fair Labor Standards Act (FLSA) issues and prevailing wage and benefits issues arising under the Service Contract Act...

Laura Mitchell, Jackson Lewis, Management Representation lawyer, Contractual Drafting Attorney

Laura A. Mitchell is a Principal in the Denver, Colorado, office of Jackson Lewis P.C. She represents management exclusively in all areas of employment law, focusing on affirmative action and government contractor compliance.

Ms. Mitchell is a Principal in the firm’s Affirmative Action and OFCCP Defense practice group, representing government and non-government contractors in Office of Federal Contract Compliance Programs (OFCCP) matters, preparing for and defending OFCCP audits, and counseling employers on issues stemming...

F. Christopher Chrisbens, Jackson Lewis, litigation attorney, employment law, intellectual property legal counsel, OFCCP compliance lawyer
Of Counsel

F. Christopher Chrisbens is Of Counsel in the Denver, Colorado, office of Jackson Lewis P.C. Over his years as a litigation attorney, manager, trainer and workplace investigator, Mr. Chrisbens has developed a diverse array of employment law skills serving employers in a variety of legal and corporate settings.

Mr. Chrisbens began his career as a litigator and appellate practitioner in Los Angeles, California, and later returned to Boulder, Colorado where he was partner in a Boulder firm practicing in the areas of commercial...