On Aug. 25, 2016, the Federal Acquisition Regulatory (“FAR”) Council and the United States Department of Labor (“DOL”) issued their Final Rule and Final Guidance, respectively, on the Fair Pay and Safe Workplaces Executive Order (“EO”).
Many in the industry refer to the EO as the “blacklisting” rule because of a provision requiring all federal contractors — both primes and subs — to make pre-award disclosures about past labor law violations involving an administrative agency determination, an award resulting from an arbitration, or a civil judgment, even if those procedures are not final or are subject to further review. What we don’t yet know is how difficult it will be for a firm with recent labor law violations to obtain a satisfactory responsibility determination. Only time and practice will tell.
A full article outlining the most important points can be found here. The most impactful details of the EO are included below.
Important Differences Between the Proposed Rule and Final Rule
- Subcontractor Reporting: Originally, prime contractors were responsible for reporting their subcontractors’ labor law violations, along with their own. A newly defined process allows subcontractors to submit their own labor law violations directly to the DOL; prime contractors will receive a report to use in evaluating prospective subcontractors’ integrity and business ethics — otherwise referred to as “responsibility” — in advance of a bid.
- Staggered Implementation: The labor law violation reporting disclosure period is initially limited to one year and will gradually increase to three years by Oct. 25, 2018.
- DOL Preassessment Process: Firms may now obtain a non-binding DOL responsibility determination prior to the DOL receiving a formal request from a contracting officer.
Dates to Remember
- Week of Sept. 12, 2016: DOL Preassessment opens for business.
- Oct. 25, 2016: The final rule takes effect. Mandatory disclosure of labor law violations is required for all prime contractors under consideration for contracts with a total value greater than or equal to $50 million.
- Jan. 1, 2017: The paycheck transparency clause takes effect, requiring contractors to provide wage statements and notice of any independent contractor relationship to their covered workers.
- April 25, 2017: The total contract value threshold for prime contracts requiring disclosure of labor law compliance is reduced to $500,000.
- Oct. 25, 2017: Mandatory assessment begins for all subcontractors under consideration for subcontracts with a total value greater than or equal to $500,000.
More details can be found in Taft’s full article about the Final Rule and Taft’s earlier update about the Proposed Rule. An additional resource is the DOL Fair Pay and Safe Workplace Home Page.
This law update was co-authored by Taft partners Suzanne Sumner and Barbara Duncombe, with contributions from Taft’s Tony Busch.