United States: Final Rule Implementing The Fair Pay And Safe Workplaces Executive Order Released

On August 25, 2016, the Federal Acquisition Regulatory Council ("FAR Council") issued a final rule implementing President Obama's Fair Pay and Safe Workplaces Executive Order. At the same time, the Department of Labor released final guidance regarding the rule. The Executive Order, commonly called the "blacklisting order," seeks to require contractors to disclose adverse "labor law decisions." These decisions include administrative determinations, arbitral awards, civil judgments, and even mere findings and reasonable cause determinations. An agency labor compliance advisor then analyzes the violations and advises the agency's contracting officer whether the contractor is responsible. The purported purpose of the Executive Order is to improve contractor compliance with labor laws to increase economy and efficiency in federal contracting.

Reporting of Past Labor Law Violations

The final rule implements the blacklisting order by imposing the reporting requirements on government contractors with more than $500,000 in government contracts. When a contractor bids on a federal contract, the contractor must disclose to the agency whether the contractor has violated any of 14 federal labor laws (and their state equivalents) resulting in any "administrative merits determinations, civil judgments, or arbitral awards or decisions" within the last three years. Labor law "decisions" is defined to include findings that are not final or remain subject to appeal. By design, this broad interpretation includes a citation from the Occupational Safety and Health Administration, a show cause notice from the Office of Federal Contract Compliance Programs, a complaint filed by any Regional Director of the NLRB, and even a reasonable cause finding from the Equal Employment Opportunity Commission.

In response to comments from a number of contractors, the final rule added a phase-in mechanism for contractors and subcontractors. Beginning in late October 2016, prime contractors must make disclosures; subcontractors have to start next October. When the rule first takes effect, the disclosure reporting period will be one year and gradually increase to three years in late 2018. The FAR Council did not similarly limit the public availability of contractors' disclosures, despite comments raising privacy concerns. The final rule requires all reported violations to be entered into the Federal Awardee Performance and Integrity Information System, which is open to the public.

The Department of Labor's final guidance details how the agency labor compliance advisors are supposed to weigh the reported labor law violations. The compliance advisor will follow a three-step process. First, the advisor will review the violations to find any "serious, repeated, willful, and pervasive" violations. Second, the advisor weighs those violations "in light of the totality of the circumstances," which include the severity, the contractor's size, and mitigating factors. The Department of Labor's guidance is vague on what qualifies as "serious, repeated, willful, and pervasive." Instead, the guidance provides that "the weighing process is not mechanistic, and this Guidance cannot account for all of the possible circumstances or facts related to a contractor's record of Labor Law compliance." Third, the advisor provides written analysis to the contracting officer regarding the contractor's record of labor law compliance and recommends whether or not a labor compliance agreement or other action is warranted.

Required Wage Statements and Prohibited Arbitration Agreements

The final rule contains two further requirements for contractors. First, it requires contractors to provide wage statements to workers, which will detail hours worked, overtime hours, rate of pay, gross pay, and itemized additions or deductions. Second, and perhaps more importantly, the rule forbids contractors on contracts worth than $1 million from entering into arbitration agreements with their employees for arbitration of civil rights claims. The civil rights claims include those under Title VII and any torts related to sexual harassment. Arbitration can occur only if the employee voluntarily consents to arbitration after the dispute arises.

Potential Legal Challenges

The final rule seems likely to be challenged in court on a number of grounds. For example, by creating new punishments for labor law violations—such as debarment or suspension—the rule violates the basic principle that the Executive Branch cannot add sanctions to the ones Congress has already created. After all, when Congress wanted to authorize debarment as an available penalty, it said as much. See, e.g., 40 U.S.C. § 4144 (debarment for three years when a contractor fails to pay prescribed wages).

In addition, the rule's arbitration requirement appears to conflict with the Federal Arbitration Act's "policy favoring arbitration" permitting the category of predispute arbitration agreements forbidden under the rule. See, e.g., 14 Penn Plaza LLC v. Pyett, 556 U.S. 247 (2008) (enforcing provision in collective bargaining agreement requiring union members to arbitrate age discrimination claims).

The rule's requirement that the labor law violations be publicly disclosed also appears to be in tension with Title VII, which requires the government to keep reasonable-cause determinations confidential unless conciliation between EEOC and an employer fails. And the public disclosure requirement certainly flies in the face of countless nondisclosure agreements that are part and parcel to arbitration proceedings.

Finally, the rule may violate due process by depriving prospective contractors of the opportunity to fairly respond to non-adjudicated allegations before being deemed not "responsible." However, unless and until a court sustains a challenge to the final rule, contractors are bound to comply with it.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions