Breaking Down the Latest EO

Just a few days ago, my colleague, Michael O’Brien, posted an item on a letter written by the HR Policy Association, and sent to U.S. Department of Labor 490613709Secretary Thomas Perez, that expressed HRPA’s concern over President Obama’s use of executive orders. Well, it didn’t take long for the administration to respond yesterday with one more EO, this one requiring federal contractors to disclose their labor-law violations during the past three years.

The president’s latest such order, named Fair Pay and Safe Workplaces, states …

For procurement contracts for goods and services, including construction, where the estimated value of the supplies acquired and services required exceeds $500,000, each agency shall ensure that provisions in solicitations require that the offeror represent, to the best of the offeror’s knowledge and belief, whether there has been any administrative merits determination, arbitral award or decision, or civil judgment, as defined in guidance issued by the Department of Labor, rendered against the offeror within the preceding 3-year period for violations of any of the following labor laws and Executive Orders … .”

According a White House Fact Sheet, the EO will “ensure that the worst actors, who repeatedly violate the rights of their workers and put them in danger, don’t get contracts and thus can’t delay important projects and waste taxpayer money.”

Federal agencies, the Fact Sheet states, will require prospective contractors to disclose labor-law violations involving 14 covered federal statutes and equivalent state laws, including those addressing wage and hour, safety and health, collective bargaining, family and medical leave, and civil-rights protections.  Agencies will also require contractors to collect similar information from many of their subcontractors.

“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,” the Fact Sheet explains.

The White House reports that the “vast majority of federal contractors have clean records.” But it also references a 2010 Government Accountability Office report that found almost two-thirds of the 50 largest wage-and-hour violations and almost 40 percent of the 50 largest workplace health-and-safety penalties issued between FY 2005 and FY 2009 were at companies that went on to receive new government contracts.

In case you’re wondering, the Department of Labor estimates that there are roughly 24,000 businesses with federal contracts, employing about 28 million workers.

Other provisions in the EO include requiring contractors to “give their employees information concerning their hours worked, overtime hours, pay and any additions to or deductions made from their pay, so workers can be sure they’re getting paid what they’re owed” as well as directing the General Services Administration to develop a single website for contractors to meet their reporting requirements—for this order and for other contractor reporting.”

Mickey Silberman, a managing shareholder in Jackson Lewis’ Denver office, wrote in a blog post yesterday that the EO’s provisions don’t come as a huge surprise, with one exception—a section prohibiting contractors and subcontractors from requiring that new employees enter into pre-dispute mandatory arbitration agreements. “Many employers require employees to sign arbitration agreements at the outset of employment,” he writes. “This provision of the EO is a ‘game changer’ that government contractors and subcontractors must review and determine how to respond.”

It is possible, Silberman continues, that employers “will bring litigation challenging this provision of the EO.”

Littler Shareholder Michael J. Lotito, co-chair of Littler’s Workplace Policy Institute, shared with me similar sentiments. Government contractors are easy targets for more and more regulation, Lotito said. “The EO process engaging in these types of rules and regulations has been challenged on different grounds and will most certainly be again over the next several months. Even assuming the intent is sincere behind the proposals, they are subject to such abuse.”

Lotito added that “one always has to wonder how much of this is about politics and generating interest in the base between now and November.”

Guess we’ll have to wait to see if Silberman and Lotito’s predictions eventually come to pass. But there’s at least one thing we do know for sure—the Obama administration is showing no signs of letting up on its efforts to issue EOs targeted at the workplace.