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RJO Update: Labor and Employment
October 2016

Blacklisting Provisions and Arbitration Restrictions of “Fair Pay
and Safe Workplaces” Rules On Hold for Now;

Paycheck Transparency Provisions Go Into Effect January 1, 2017

By Virginia K. Young, Gayle M. Athanacio and Sharon Ongerth Rossi


On October 24, U.S. District Court Judge Marcia Crone in the Eastern District of Texas, granted a group of government contractors’ motion for a preliminary injunction, halting the implementation of the most highly controversial portions of President Obama’s “Fair Pay and Safe Workplaces” Executive Order 13673 (“EO”), commonly called the “blacklisting” rules. The case in which the preliminary injunction was issued is Associated Builders and Contractors of Southeast Texas, et, al v. Anne Rung, Administrator, Office of Federal Procurement Policy, Office of Management and Budget, et al. (Case No. 1:16-CV-425). The preliminary injunction and a Memorandum from the lead Federal Acquisition Regulation agencies directing federal officials on how to comply with the injunction are available on DOLís website.

The enjoined blacklisting rules required federal contractors to disclose various labor law allegations and violations, which would then be evaluated by DOL advisors in a complicated process which ultimately could render the contractor ineligible for federal contract awards. In granting the injunction, the Court’s Order expressed particular concern that contractors were required to disclose and face disqualification from contract awards for the broadly defined “administrative merits determinations” without the benefit of the due process protections available in suspension or debarment proceedings.

Judge Crone’s Order also enjoined the EO’s restrictions on contractors’ asking their employees to agree pre-dispute to arbitrate certain claims.

A preliminary injunction is an early step in the litigation process that is designed to preserve the status quo pending full adjudication of the merits. Contractors should expect that the government will defend blacklisting and arbitration restrictions vigorously in further proceedings. Whether the blacklisting and arbitration provisions are ultimately implemented – and in what form - remains to be seen. Nonetheless, government contractors unfamiliar with these enjoined provisions would be wise to familiarize themselves with their requirements in the event these rules become effective or are later implemented in a modified form. Please see RJO’s article, “Fair Pay Safe Workplaces: The ‘On Hold’ Rules and Guidance” for detailed summaries of these regulations.

The January 1, 2017 Paycheck Transparency” Requirements

In contrast to the blacklisting and arbitration provisions of the EO, the Court summarily denied the contractors’ request to enjoin the paycheck transparency provisions of the EO, as implemented by FAR Council Rules (“Rules”) and Department of Labor (“DOL”) Guidance (“Guidance”). These paycheck transparency requirements, which apply to procurement contracts where the value of goods or services exceeds $500,000, except for sub-contracts for commercial off the shelf items (COTS), go into effect as scheduled on January 1, 2017. The requirements do not apply to grants or cooperative agreements.

Contractors and subcontractors planning to bid on covered contracts should now ensure they are prepared to comply with the EO’s paycheck transparency requirements.

Starting January 1, 2017, covered contractors and subcontractors must include on all paychecks specific information: hours worked, overtime hours (broken down to correspond to the period for which overtime is calculated and paid – usually weekly), rate of pay, gross pay, and any additions made to or deductions made from pay. Exempt employees need not have hours worked or overtime pay listed, but must be informed, in writing, of their exempt status.

These wage-statement requirements are deemed fulfilled where the contractor complies with state or local requirements which DOL has determined are “substantially similar.” The DOL maintains on its Web site a list of these jurisdictions.  Currently, the following state laws are listed: Alaska, California, Connecticut, the District of Columbia, Hawaii, New York, and Oregon. The paycheck transparency provisions also require covered contractors and subcontractors to inform independent contractors in writing of their status as independent contractors. Such agreements must be separate from the independent contractor agreement with the individual. Wage statement compliance in “substantially similar states,” discussed above, does not satisfy this requirement.

Conclusion

Contractors and subcontractors must be prepared for the Paycheck Transparency requirements of the EO, Rules and Guidance, which go into effect on January 1, 2017. Despite the current injunction, all federal contractors and subcontractors would be wise to assess the disclosure requirements and arbitration restrictions of the EO so that they are prepared for compliance in the event these rules, or some modified version of these rules, become effective.

See the Final Rule, issued by the FAR Council, and Final Guidance issued by the Department of Labor (DOL).

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If you have any questions regarding the material in this update, please contact the Rogers Joseph O’Donnell attorney with whom you regularly work, or the authors of this legal update.

RJO’s Labor & Employment Law Practice Group is comprised of experienced labor and employment attorneys who regularly represent and advise employers, big and small, in a wide variety of industries.

The content of this article is intended to provide a general guide to the subject matter and is not a substitute for legal advice.

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