President Obama recently signed two executive orders that prohibit federal contractors from discriminating on the basis of sexual orientation or gender identity and require federal contractors to disclose certain labor law violations, in addition to other requirements. Here’s what employers need to know about these executive orders:
Sexual Orientation/Gender Identity Discrimination: On July 21, 2014, President Obama signed an executive order, which amended previous executive order no. 11246. The primary effect of the executive order is that federal contractors are now prohibited from discriminating on the basis of sexual orientation or gender identity in employment, in addition to the other classes protected by executive order no. 11246 (race, color, religion, sex, and national origin). The Secretary of Labor may require that contractors provide a signed document certifying compliance with this requirement. Discrimination on the basis of any protected class may constitute a violation of a federal contract and render the contractor ineligible for future federal contracts.
Fair Pay and Safe Workplaces: On July 31, 2014, President Obama signed the “Fair Pay and Safe Workplaces” executive order. The executive order has three primary components that affect federal contractors and subcontractors: (i) disclosure of violations; (ii) paycheck transparency; and (iii) arbitration agreements.
Disclosure of Violations: The executive order requires that in order to be eligible for a federal contract for goods and services, including construction, where the estimated value of the supplies acquired and services required exceeds $500,000, a federal contractor must disclose any “administrative merits determination, arbitral award or decision, or civil judgment” rendered against the contractor within the preceding 3-year period for violations of any of the following laws or executive orders:
- The Fair Labor Standards Act;
- The Occupational Safety and Health Act;
- The Migrant and Seasonal Agricultural Worker Protection Act;
- The National Labor Relations Act;
- The Davis-Bacon Act;
- The Service Contract Act;
- Executive Order 11246 (Equal Employment Opportunity);
- The Rehabilitation Act;
- The Vietnam Era Veterans’ Readjustment Assistance Act;
- The Family and Medical Leave Act;
- Title VII of the Civil Rights Act of 1964;
- The Americans with Disabilities Act;
- The Age Discrimination in Employment Act;
- Executive Order 13658 of February 12, 2014 (Establishing a Minimum Wage for Contractors); or
- Equivalent state laws, as defined in guidance issued by the Department of Labor.
Federal contractors will be permitted an opportunity to disclose any steps taken to correct the violations or improve compliance with any of the labor laws listed above. For contracts that exceed $500,000 and that are not for commercially available off-the-shelf items, subcontractors will also be required to make similar disclosures. In addition to the pre-award disclosure, covered contractors and subcontractors will be required to provide updated disclosures every 6 months for as long as the contract is performed.
Paycheck Transparency: The executive order requires that a contractor must provide to any individual for whom wage records must be kept under the FLSA, the Davis-Bacon Act, the Service Contract Act, or similar state laws, a document that identifies individual’s hours worked, overtime hours, pay, and any additions made to or deductions made from pay. For contracts that exceed $500,000 and that are not for commercially available off-the-shelf items, subcontractors will be required to make the same disclosures. In addition, if an individual is performing work as an independent contractor, the contractor must provide a document informing the individual of this status.
Arbitration Agreements: For federal contracts and subcontracts where the estimated value of the supplies acquired or services required exceeds $1 million, contractors and subcontractors must agree that any decision to arbitrate claims arising under Title VII of the Civil Rights Act of 1964 or any tort related to or arising out of sexual assault or harassment may only be made with the voluntary consent of employees or independent contractors after such disputes arise. However, this provision does not apply to: (i) contracts or subcontracts for the acquisition of commercial items or commercially available off-the-shelf items; (ii) employees covered by a collective bargaining agreement; or (iii) any employees or independent contractors who entered into a valid contract to arbitrate prior to the contractor or subcontractor bidding on the covered contract – unless the contractor or subcontractor is permitted to change the terms of the contract with the employee or independent contractor, or the contract is renegotiated or replaced.