The controversial new Fair Pay and Safe Workplaces rules begin to phase in starting Oct. 25, 2016.
The regulations, mandated by President Obama’s executive order and now being implemented in the Federal Acquisition Regulatory Council (FAR), have become known as the “Blacklisting” rules. Contractors stand to lose particular awards and may be referred for agency debarment for violating the new rules — or based on alleged labor violations that may or may not have been fully adjudicated.
Below is a summarized list of important considerations.
- Starting Oct. 25, 2016, the blacklisting rules will apply to each contract with an estimated value of $50 million or more. Each contract with an estimated value of $500,000 will be impacted beginning April 24, 2017.
- Contractors will be required to check a box in solicitations indicating whether they have been subject to a number of labor “violations” over the past three years. These “violations” include preliminary government notices such as Occupational Safety and Health Administration (OSHA) citations, Office of Federal Contract Compliance Programs (OFCCP) show cause notices, and Equal Employment Opportunity Commission (EEOC) reasonable cause findings.
- If a contractor indicates that it has been notified of a labor law violation, then contracting officers are required to request follow-up information on the number and type of violations – as well as any mitigating information the contractor chooses to submit. The contractor will submit this information into the System for Awards Management (SAM), which will make the information available to the public through the Federal Awardee Performance and Integrity Information System (FAPIIS) government database.
- Contracting officers are required to consider the information submitted to SAM as part of their pre-award responsibility determination. Department of Labor representatives will provide assistance to contracting officers in the responsibility determination.
- Contracting officers may require labor compliance agreements in order to find contractors responsible and thus eligible for award.
- If a contractor is found to be not responsible, then the contractor will lose the government contract it otherwise would have been awarded. Other remedies include the contractor being referred for government-wide debarment from federal contracting.
- Prime contractors are required to include in their applicable subcontracts an obligation that subcontractors report their labor violations into SAM, as well. Primes then must make their own “responsibility” determination in accordance with the FAR standard.
- Prime contractors and subcontractors are expected to provide information related to labor law violations dating back to Oct. 25, 2015, or for the three previous years – whichever is shorter.
- Pay stub transparency requirements will apply to contracts valued at more than $500,000 starting January 1, 2017.
- For non-commercial contracts expected to exceed $1 million, contractors will not be allowed to require employees to arbitrate certain employment claims – including Title VII and sexual assault claims.
For a more in-depth analysis, please see this article, distributed when the rules were finalized.
McGuireWoods will be issuing further legal alerts on this topic as we continue to analyze its terms and the related practical implications for federal contractors – both with respect to federal contract award bids / disputes and general labor and employment law compliance / enforcement. Until then, for further information or questions about the final FAR rule and DOL guidance, please contact the authors, your McGuireWoods contact, or other members of the firm’s government contracts, affirmative action, traditional labor, or labor and employment teams.