In 2014, President Obama signed the Fair Pay and Safe Workplaces Executive Order. Folks like me on the management-side refer to this Order as the Blacklisting rules. In general terms (I’ll get a little more specific below), the Blacklisting rules require prospective federal contractors and subcontractors to disclose anything that may appear on a laundry list of labor-and-employment-law faux pas.
Last month, the Department of Labor (DOL) and the Federal Acquisition Regulatory Council (FAR Council) issued the final rules and guidance implementing the Executive Order.
If you read on, I’ll tell you who’s covered by the Blacklisting rules (hint: lots of government-contractor employers), what they say, and when they take effect. I’ll also include some tips about how you can proactively prepare for these Blacklisting rules now.
Who is covered by the Blacklisting rules?
For the immediate future, the rules only impact prime contractors with contracts with a total value greater than or equal to $50 million. However, by Halloween next year, just about any federal contractor or subcontractor with a contract valued at $500,000 (except for subcontracts for commercial-off-the-shelf products) will have to comply with these rules.
What must government contractors disclose?
A lot.
Before they can receive a contract, prospective contractors must publicly disclose their past 3 years of violations under 14 federal workplace laws ranging from the Fair Labor Standards Act to the Family and Medical Leave Act to the Americans with Disabilities Act.
A “violation” includes administrative merits determinations (e.g., a letter of determination from the EEOC that reasonable cause exists to believe that an unlawful employment practice has occurred or is occurring; a DOL letter indicating that an investigation disclosed a violation of the FLSA; or a complaint issued by any Regional Director of the NLRB), arbitration awards and civil judgments.
(There are other pitfalls too. For example, certain types of arbitration agreements with employees are automatic disqualifiers. Contractors must also provide wage statements to individuals working for them, and overtime exemption notices to employees exempt from the FLSA’a overtime compensation requirements).
The Department of Labor has a resource page here, you can find a FAQ here, and a slide deck further outlining the Blacklist rules here.
When do the Blacklisting rules commence?
From the Department of Labor website:
- September 12, 2016: Preassessment begins, through which current or prospective contractors may come to DOL for a voluntary assessment of their labor compliance history, in anticipation of bids on future contracts but independent of any specific acquisition.
- October 25, 2016: The final rule takes effect. Mandatory disclosure and assessment of labor law compliance begins for all prime contractors under consideration for contracts with a total value greater than or equal to $50 million. The reporting disclosure period is initially limited to one (1) year and will gradually increase to three (3) years by October 25, 2018.
- January 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 and assessment of labor law compliance is reduced to $500,000.
- October 25, 2017: Mandatory assessment begins for all subcontractors under consideration for subcontracts with a total value greater than or equal to $500,000.
What can you now to prepare for the Blacklisting rules? DOL Preassessment.
So, the U.S. Department of Labor is asking a government contractor to voluntarily submit to a government assessment of that contractor’s compliance history.
Ok. I know what you’re thinking…
(Am I the only one who uses Simpsons metaphors for compliance issues? It’s because I’m so evolved).
Actually, it’s not like The Simpsons Police Raffle Boat Sting at all. According to the DOL’s website, it’s like this:
Using DOL Guidance, the Department will assess whether any of the prospective contractor’s violations are serious, repeated, willful, or pervasive; and whether a labor compliance agreement may be warranted. If a contractor that has been assessed by the Department of Labor subsequently submits a bid, and the contracting officer initiates a responsibility determination of the contractor, the contracting officer and the Agency Labor Compliance Advisor (ALCA) may use the Department’s assessment that the contractor has a satisfactory record of labor law compliance unless additional labor law violations have been disclosed.
Put another way, if you have violations, you have available to you a voluntary, private process that is not associated with a specific acquisition. You can work with the DOL to proactively clean up your record and improve your odds of winning a future federal contract.
That said, the final guidance and rules span almost 900 pages. So, there’s lots to do to prepare and I wouldn’t recommend going it alone with the feds. Outside counsel can help not only manage risk, but coordinate with the federal government.
For example, together with a super-connected Government Affairs colleague, I am developing a concierge service to counsel employers through the preassessment process.
There’s only so much I can fit into a blog post. If you’d like more information on the Blacklisting rules/guidance and the preassessment process, please email me.