On July 31, 2014, President Obama issued the Fair Pay and Safe Workplaces executive order. This is in defense of workers’ rights by issuing an executive order calling for an additional look at the federal contracting process, to get rid of the worst violators of basic labor laws. This order requires that:
- Companies applying for large federal contracts must disclose any violations of labor laws that occurred during the last 3 years, as well as their subcontractors.
- Repeat offenders may be restricted, or barred, from future contracting.
- Contractors receiving awards of more than $1 million should not force employees to sign an agreement when they are hired saying they will settle out of court in cases of sexual harassment and workplace discrimination.
Although noble in its’ intent to protect both:
- worker of Federal Contractor of their rights already guarantee under existing laws, and regulations.
- Fully complying Federal Contractors against those who may gain a competitive advantage by regularly violating those same requirements.
The requirements imposed incremental new reporting burdens, establish additional governmental oversight and bureaucracy, and will be governed by subjective and arbitrary standards at best. Additionally, these apply only to contracts in excess of $500,000. Studies show that most of the abuse that this order is hoping to prevent or minimize occurs in smaller contractors who will not be bidding on these larger contracts.
The most alarming provision of the order is the limitation on Arbitration Agreements. Arbitration allows for a swift, cost effective and predictable resolution of disputes and is an employment practice that is gaining rapid momentum. Under this order, contracts or subcontracts that exceed $1 million must include a provision requiring contractors to agree that the decision to arbitrate claims, arising under Title VII of the Civil Rights Act of 1964 or any tort related to or arising out of sexual assault or harassment, may only be made with the consent of employees or independent contractors … after such dispute arises. This is the case, unless the employee was covered by a collective bargaining agreement, or a valid arbitration agreement was entered into prior to the contractors bid on the covered contract. The effect of this provision will be to significantly limit this best employment practice in the Federal Contracting work space.
Although the Executive Order is effective immediately, it will not apply until the after the Federal Acquisition Regulatory Council issues a Final Rule to implement the order. This is not expected to occur until 2016.
Will this order impact your business? Let us know what you think.
