Monday, September 15, 2014

Executive Order - Fair Pay and Safe Workplaces - An Update

Last July 31st, the President signed an Executive Order (EO) entitled Fair Pay and Safe Workplaces. Briefly, this EO will require prospective contractors bidding on contracts greater than $500 thousand (a relatively low threshold) to self-disclose any violations of labor-related laws such as the Fair Labor Standards Act, OSHA, Davis-Bacon, Service Contracts Act, EEO, ADA, Age Discrimination, and more. The EO also prevents contractors from forcing employees to agree to arbitration in lieu of going to court. You can read a fuller synopsis by clicking here.

Although the full impact of this new EO will not be known until the corresponding regulations have been issued, there has been a number of public comments and articles that are expressing grave concern with the entire concept. First of all, it affects many many companies. The White House estimates that it will affect 24,000 companies and 28 million workers. That's almost 20 percent of the U.S. workforce. That percentage would be much higher if public sector employees were removed.

Some concerns were expressed in an article appearing in the Government Executive and authored by the Vice President of the Associated Builders and Contractors trade organization, Granted, this would not be considered an objective source but it does raise many valid concerns. Here are a few of the points the author made (parenthetical comments are ours).

  • It will discourage small businesses from pursuing federal contracts (possible, it will probably add a few hundred more pages to the regulations)
  • Threaten the livelihood of millions of Americans (doubtful, someone will do the work)
  • Increase costs to taxpayers (undoubtedly)
  • Many members fear that some of the best firms will be arbitrarily blacklisted from winning future federal contracts for committing even minor violations or a rapidly growing and constantly changing labyrinth of complex workplace laws and regulations.
  • By seeking to impose new penalties on contractors beyond those specified by Congress, the president is exceeding his office's constitutional authority and undermining the carefully balanced contracting provisions that already exist.
  • There is great concern that the livelihoods of federal contractors and their employees could be jeopardized or even destroyed based on the subjective decisions of a team of newly selected, unelected bureaucrats, who will be charged with picking winners and losers in federal contracting.
  • The EO could be used to reward political allies with contracts while blacklisting political foes (recall the IRS oversight of conservative organizations)

Although this EO became effective on the date of signing (July 31, 2014), it will apply to solicitations for contracts as set forth in any final rule issued by the FAR Councils. Since the FAR Councils have not issued their final ruling, it is not yet in effect. That process will take some time.

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