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The Department of Labor (DOL)
issued proposed guidance May 27, 2015, on how federal contractors’ safety records will be evaluated before they are hired.
The guidance is a consequence of
President Barack Obama’s July 2014 Fair Pay and Safe Workplaces Executive Order, under which federal contractors seeking a contract valued at more than $500,000 will have to report any safety or other labor violations incurred over the previous three years. Contractors who have been awarded a government contract are required to report any violations incurred every six months. Contractors must require their subcontractors to report labor law violations as well.
Beginning in 2016, contracting officers and the newly instated labor compliance advisors in each contracting agency will be required to assess whether each contractor has a “satisfactory record of integrity and business ethics.”
The DOL guidance provides examples of what information must be reported, and how it is to be assessed. Specifically, the executive order requires contractors to report whether there has been any administrative merits determination, civil judgment, or arbitral award or decision rendered against them during the preceding three-year period for violations of any of 14 federal labor laws, executive orders or equivalent state laws, including the Occupational Safety and Health (OSH) Act. It defines “serious,” “repeated,” “willful” and “pervasive” violations and mitigating factors for labor compliance advisors to consider when assessing reported violations.
Secretary of Labor Thomas Perez said the guidance will promote better-informed procurement decisions by providing contracting officers with necessary information to ensure accurate, efficient and consistent compliance with labor laws. “The opportunity to contract with the federal government is a privilege, not an entitlement,” he said. “Taxpayer dollars should not reward corporations that break the law, and contractors who meet their responsibilities should not have to compete against those who do not.”
What Is Reportable
The DOL guidance outlines various notices and findings—whether final or subject to appeal or further review—issued by the Occupational Safety and Health Administration (OSHA) or the Occupational Safety and Health Review Commission that would constitute an administrative merits determination that must be reported. They include:
The OSH Act provides statutory definitions for what constitutes serious, repeat and willful violations. Whistle-blower violations, interfering with an OSHA inspection, breaching the terms of an OSHA settlement agreement, violating a court order under the OSH Act, or receiving a notice of failure to abate will all be considered serious violations.
Violations will be judged “pervasive” if they “reflect a basic disregard by the contractor or subcontractor for the labor laws as demonstrated by a pattern of serious or willful violations, continuing violations or numerous violations.” Violations must be multiple to be pervasive, although the size of the employer will be taken into account, because by virtue of their size, larger contractors are more likely to have multiple violations, the DOL said.
On the other hand, if a small employer with a single location is cited multiple times for serious violations under the OSH Act—for example, for improper storage of hazardous materials, failure to provide employees with protective equipment, inadequate safeguards on heavy machinery, lack of fall protection and inadequate emergency exits—that will be judged pervasive.
“Such a high number of workplace safety violations relative to the size of a small company with only a single location would likely demonstrate a basic disregard by the company for workers’ safety and health, particularly if the company lacked a process for identifying and eliminating serious health hazards,” the DOL said.
In addition, violations across multiple labor laws will “warrant careful examination by the contracting officer, in consultation with the labor compliance advisor,” and will more than likely be considered pervasive. An additional relevant factor in determining whether violations are pervasive is the involvement of higher-level management officials, the DOL said. For example, “If the chief safety officer at a chemical plant fields complaints from workers about several unsafe working conditions but then fails to take action to remedy the unsafe conditions, such violations are also likely to be pervasive because the dangerous working conditions were willfully sanctioned by a high-level company official and were evident throughout the chemical plant.”
The DOL said that each contractor’s disclosed violations “will be assessed on a case-by-case basis in light of the totality of the circumstances, including the severity of the violation or violations, the size of the contractor, and any mitigating factors.” Attempts at remediation, implementing a safety and health management program, grievance procedures, monitoring arrangements, or other compliance programs including agreements entered into with enforcement agencies, “will be given particular weight in this regard.”
Unnecessary Burden on Employers
The Society for Human Resource Management (SHRM) and other employer groups see the president’s executive order as an unnecessary impediment to doing business.
SHRM and 18 other trade and professional associations sent a letter Nov. 6, 2014, to the White House and the Department of Labor opposing the order.
SHRM and the other signatories pointed out that in addition to exceeding statutory authority, the order disregards existing enforcement powers the administration already has through the Federal Acquisition Regulation (FAR) and various labor laws.
“SHRM has strong reservations about what more will be asked for due to the new order, as we believe current federal acquisition regulations already have a process in place screening contractors’ integrity and business ethics,” said Mike Aitken, vice president of government affairs at SHRM.
“This initiative has long been on organized labor’s wish list because it facilitates corporate campaigns to pressure companies to recognize unions,” said Randy Johnson, senior vice president of labor, immigration and employee benefits at the U.S. Chamber of Commerce. “These reporting requirements will increase the cost of doing business with the government, slow the contracting process, and will create yet another barrier for small businesses looking to be involved in government contracting,” he said.
Stan Soloway, CEO and president of the Professional Services Council, agreed that “companies with pervasive, willful and repeated violations of law should not be awarded federal contracts.” However, he said the executive order is “fundamentally unfair and unnecessary,” as it denies due process for contractors.
“The rule and guidance treat mere allegations of wrongdoing, which have not been fully adjudicated similar to adjudicated cases where the established legal procedures have been allowed to play out as intended,” he said. “The same is true for the proposals’ treatment of arbitral settlements and settlements without any finding of guilt. Adding additional penalties to the ones already prescribed in law is tantamount to double jeopardy. And adding them only for contractors is a double standard.”
Roy Maurer is an online editor/manager for SHRM.
Follow him @SHRMRoy
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