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President Barack Obama signed an executive order July 31, 2014, requiring federal contractors to disclose recent safety and health violations, in addition to other labor law offenses. The order also creates new compliance positions at government agencies to select which firms are awarded work.
Beginning in stages in 2016, the Fair Pay and Safe Workplaces Executive Order requires contractors with new contracts valued at more than $500,000 to disclose labor law violations for the previous three years.
The Department of Labor estimates that there are roughly 24,000 businesses with federal contracts, employing about 28 million workers.
“Our tax dollars shouldn’t go to companies that violate workplace laws,” Obama said before signing the order. “If a company is going to receive taxpayer money, it should have safe workplaces.”
The White House explained in a fact sheet that federal contracting officers will take into account only the most egregious violations, and each agency will designate a senior official as a Labor Compliance Advisor to “provide consistent guidance on whether contractors’ actions rise to the level of a lack of integrity or business ethics.”
Once awarded a contract, employers must update their violations history every six months. The order directs the General Services Administration to develop a website for contractors to report their information.
The Department of Labor estimates that most companies with federal contracts have no federal workplace violations in the past three years. “Responsible businesses will check a single box on a bid form indicating that they don’t have a history of labor law violations,” Obama said.
The White House also said that companies with labor law violations will be offered the opportunity to receive guidance on whether those violations are potentially problematic and remedy any problems.
In addition to safety and health laws, the order mandates disclosure of wage and hour, collective bargaining, and equal employment opportunity law violations. Many subcontractors will also be required to provide this information, according to the White House.
The Federal Acquisition Regulatory Council will draft regulations and guidance implementing the order, which will be published for public comment before being finalized.
The president’s action follows a December 2013 report issued by Senate Health, Education, Labor and Pensions Committee Chairman Tom Harkin, D-Iowa, revealing that dozens of contractors with significant health, safety, and wage and hour violations were continuing to be awarded federal contracts.
In 2010, the Government Accountability Office found that almost 40 percent of the 50 largest workplace health-and-safety penalties issued between fiscal years 2005-2009 were at companies that went on to receive new government contracts.
Employer Groups Concerned
The Society for Human Resource Management (SHRM) and other employer groups see the action as an unnecessary impediment to doing business. “This is similar to the Clinton administration’s ‘blacklisting’ policy back in 2000,” said Mike Aitken, vice president of government affairs at SHRM. The Clinton-era rule was almost immediately stayed and eventually revoked in 2001 by President George W. Bush.
“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 Aitken.
The executive order will create problems for companies who may have had difficulties complying with a wide range of labor and employment laws over the years, said Marc Freedman, executive director of labor law policy at the U.S. Chamber of Commerce. “We know that even the federal government has violations of various labor laws, and expecting private employers to always get it right is unrealistic,” he commented.
Associated Builders and Contractors Vice President of Government Affairs Geoff Burr said his association and the federal contracting community is preparing to fight the order in court. “It is hard to fathom that this administration wants to place more unelected bureaucrats in a position to subjectively pick winners and losers in the $500-billion-a-year federal contracting marketplace,” he said.Roy Maurer is an online editor/manager for SHRM.
Follow him @SHRMRoy
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