Employment Law Blog

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Sep 10, 2014

Executive Order requires scrutiny of labor law violations

Labor Relations 

The President recently issued an executive order to require certain federal contractors to disclose labor law violations, provide paycheck notices to employees, and refrain from requiring nonunion employees to sign certain pre-dispute arbitration clauses.

The President recently issued an executive order to require certain federal contractors to disclose labor law violations, provide paycheck notices to employees, and refrain from requiring nonunion employees to sign certain pre-dispute arbitration clauses. The order won’t take effect until regulations are proposed and finalized, however. Executive Order 13673 (Fair Pay and Safe Workplaces) includes the following directives:

  • Disclosures of labor law violations: This applies to “procurement contracts for goods and services, including construction” worth more than $500,000. Covered contractors must disclose violations of employment laws from the past three years to the awarding agency, with updates every six months. They must require their subcontractors to do the same if the subcontract is worth more than $500,000 and is for supplies (not counting commercially available off-the-shelf items) or services. The agency and the contractor must “consider whether action is necessary” in response to the disclosures. A violation means that a government agency, arbitrator, or court has ruled against the company regarding any of 15 federal employment laws or equivalent state laws.
  • Paycheck transparency: Contractors and subcontractors who are subject to the labor law disclosures above must also provide a notice to employees in each pay period stating their “hours worked, overtime hours, pay, and any additions made to or deductions made from pay.” The notice regarding hours worked doesn’t have to be given to employees who are exempt from overtime, as long as the contractor informs the employees they are exempt.
  • No pre-dispute arbitration clauses: This applies to supply and service contracts and subcontracts worth more than $1 million. No mention is made of construction contracts, although the regulations may provide guidance on that score. Covered contractors cannot require nonunion employees (or independent contractors) to arbitrate claims arising under Title VII of the Civil Rights Act or legal protections related to sexual assault or harassment, unless they voluntarily agree to do so after a dispute arises.

Tips: Vigilant will keep members informed regarding the eventual effective date of these changes. Small employers should bear in mind that coverage under this executive order is based solely on the amount of the federal contracts; the number of employees is irrelevant. Questions? Contact your Vigilant staff representative.

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