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Contractors Told to Report Violations

Tuesday, August 5, 2014

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Builders and other major suppliers will have to begin self-reporting federal wage, safety and other labor violations when seeking large federal contracts, under a new order issued by the White House.

An Executive Order signed Thursday (July 31) will require companies competing for new federal contracts to disclose a wide range of labor law violations.

The order does not ban violators from receiving contracts, but it does aim to provide guidance to agencies on how to weigh violations when making awards.

Fair Pay and Safe Workplace Executive Order
White House

The "Fair Pay and Safe Workplace Executive Order" will govern new federal procurement contracts valued at over $500,000 and require companies to disclose labor law violations from past three years.

"Cheaters shouldn't win," said U.S. Secretary of Labor Thomas E. Perez. "This action ensures they won't."

Fair Pay, Safe Workplace

The "Fair Pay and Safe Workplace Executive Order" will govern new federal procurement contracts valued at over $500,000. Current federal contracts are not affected by the order, which will not take effect until 2016.

Roughly 24,000 businesses, employing 28 million workers, currently have federal contracts.

"Every year, our government signs contracts with private companies for everything from fighter jets to flapjacks, computers to pencils," Obama said.

"And we expect our tax dollars to be spent wisely on these contracts; to get what we pay for on time, on budget."

What to Report

Affected bidders for federal projects would be required to report violations from the prior three years of a long list of labor laws, including the:

  • Fair Labor Standards Act;
  • Occupational Safety and Health Act;
  • Migrant and Seasonal Agricultural Worker Protection Act;
  • National Labor Relations Act;
  • Davis-Bacon Act;
  • Service Contract Act;
  • Americans with Disabilities Act; and
  • Equal Employment Opportunity Act.

Violations related to minimum wage, affirmative action, age discrimination and civil rights would also be reportable.

OSHA Safety Stand Down

The measure is designed to promote compliance, safe and fair employment practices among major federal contractors and subcontractors, officials said.

Self-reported violations will not preclude an employer from obtaining a contract, officials stressed. The goal is to provide guidance to agencies on evaluating contractor violations and to identify and assist repeat offenders.

The measure also aims to encourage companies to settle existing disputes, like paying back wages.

8 Key Provisions

Current regulations require procurement officers to assess a contractor's record of integrity and business ethics, but not necessarily whether the company has committed any workplace violations.

According to a White House Fact Sheet, the order would:

  • Require potential contractors to disclose labor law violations from the past three years and to collect similar information from many of their subcontractors;
  • Give agencies better tools to evaluate egregious or repeat violations;
  • Promote efficient federal contracting;
  • Protect responsible contractors and build on the existing procurement system so it will be familiar to contractors and fit into established contracting practices;
  • Help companies improve by providing early guidance to violators on whether their violations are potentially problematic and on how to remedy them;
  • Give victims of sexual assault and civil-rights violations their day in court, by forbidding companies with federal contracts of $1 million or more from requiring employees to enter into predispute arbitration agreements;
  • Provide better, clearer information on paychecks; and
  • Streamline implementation and reporting by developing a single website for contractors to meet  reporting requirements.

The White House expects the order to be implemented on new contracts in stages, on a prioritized basis, during 2016.

Following Good Practices

Obama said the move, which is part of his Year of Action, "is one that's good for workers, it's good for responsible employers, and it's good for the middle class."

"[W]hen companies that receive federal contracts employ about 28 million Americans—about one in five workers in America work for a company that has a federal contract—we also expect that our tax dollars are being used to ensure that these jobs are good jobs," Obama said.

The "vast majority" of companies that do business with the government play by the rules, the president noted.

Senate HELP Committee

A study released by the Senate last year found almost 30 percent of the top violators of federal wage and safety laws are also current federal contractors.

And the order is not intended to punish companies with violations, he said. Rather, it is intended to give them a chance to follow good workplace practices and come into compliance with the law.

"Today's executive order is an important step to ensure that workers are protected, businesses have a fair shot to compete, and taxpayers get the best bang for their buck," said Perez. "Everyone is welcome to compete—as long as they are willing to do so fairly."

Violators with Contracts

Perez noted recent reports showing that companies with a history of labor law violations continue to receive lucrative federal contracts.

The Senate Health, Education, Labor and Pensions (HELP) Committee released a study in December 2013 that found almost 30 percent of the top violators of federal wage and safety laws were also current federal contractors.

"Acting Responsible? Federal Contractors Frequently Put Workers Live and Livelihoods at Risk" looked at data from 2007 to 2012 and followed a year-long committee staff investigation.The study said taxpayer dollars were "routinely paid to companies that are putting the livelihoods and the lives of workers at risk."

Department of Labor

"Everyone is welcome to compete—as long as they are willing to do so fairly," Labor Secretary Thomas Perez said.

"Given the scale of the findings, it is clear that violations of labor laws are not being adequately considered or analyzed in the contractor responsibility determination," the report concluded.

'Critical Safety Issue'

The U.S. Chemical Safety Board's chairperson, Rafael Moure-Eraso, praised the new Executive Order as "a vital step toward encouraging positive behavior by those who perform, or seek to do, business with the federal government."

"I welcome the issuance of this executive order by the President, and I applaud his decisive action on a critical safety issue confronting far too many federal contractors," Moure-Eraso said.

In January 2013, the CSB recommended that the Federal Acquisition Regulatory (FAR) Council establish a contractor responsibility determination requirement to address safety performance.

The CSB recommended, at a minimum, requiring a review of the contractor's environmental and safety programs, safety record and incident history; ability to use safe methods for work involving hazardous materials; and suitable training and qualifications for workers.

"Many thousands of workers performing potentially hazardous work will be safer when this executive order is fully implemented," he said.


Tagged categories: Contractors; Contracts; Government; Government contracts; Health and safety; Labor; Laws and litigation; President Obama; Violations; Workers

Comment from Dennis Guy, (8/6/2014, 8:26 AM)

"Many thousands of workers performing potentially hazardous work will be safer when this executive order is fully implemented," he said. I thought OSHA whose been in business for 40 years or so had a handle on this already... Why do we need another "law?" or excuse me, executive order?--Signed, Don't Audit me Dude.

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