On August 25, 2016, the Federal Acquisition Regulatory Council (FARC) and U.S. Department of Labor (DOL) published the final regulations and guidance implementing Executive Order 13673, Fair Pay and Safe Workplaces. The effective date for prime contractors is October 25, 2016. The final rule can be found in the Federal Register publication at: https://www.gpo.gov/fdsys/pkg/FR-2016-08-25/pdf/2016-19676.pdf and the guidance from the DOL can be found at: https://www.gpo.gov/fdsys/pkg/FR-2016-08-25/pdf/2016-19678.pdf.
There is a phased enforcement for the new regulations. The effective date for prime contractors bidding $50 million or greater is October 25, 2016, and the reporting disclosure period is initially limited to one year. It will gradually increase to three years by October 25, 2018. Subcontractor reporting does not begin until October 25, 2017. On April 25, 2017, contractors with bids of $500,000 or greater will be required to begin disclosing any violations of 14 federal labor laws and executive orders. The effective date of the paycheck transparency requirements is January 1, 2017.
The final rule requires prospective contractors making bids to disclose if there have been violations, and if so, provide additional information regarding any mitigating factors or remedial actions taken. While the Executive Order also covers equivalent state laws, they are not covered in the current guidance and rule; they require a second rulemaking to implement. The stated purpose of requiring potential contractors to disclose any violations is to help to ensure that companies that play by the rules do not have to compete against those who put in lower offers by cutting corners on workers’ pay and safety.
The final regulations also require covered contractors to give workers wage statements which must contain hours worked, overtime hours, rate of pay, gross pay, and an itemization of each addition to and deduction from gross pay. The overtime hours must be broken down on a workweek basis. Covered contractors must provide workers that they consider independent contractors notice informing them that they are being treated as independent contractors. Finally, effective October 25, 2016, companies with federal contracts of $1 million or greater are prohibited from requiring workers to enter into pre-dispute arbitration agreements for disputes arising out of Title VII of the Civil Rights Act or from torts related to sexual assault or harassment, except where valid contracts already exist and remain unmodified.
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