On March 28, the Department of Labor (DOL) and the Federal Acquisition Regulations (FAR) Council announced a proposed rule and guidance intended to reach the goals of the Fair Pay and Safe Workplaces Executive Order signed by President Obama in July 2014. When announcing the proposed rule, Labor Secretary Thomas Perez expressed the philosophy behind the regulations: “The opportunity to contract with the federal government is a privilege, not an entitlement. Taxpayer dollars should not reward corporations that break the law, and contractors who meet their responsibilities should not have to compete against those who do not.”
The proposed rule will phase in penalties for government contractors who fail to uphold both federal and state labor laws. The most serious penalty, for government contractors whose violations are “serious, repeat, willful or pervasive,” will be blacklisting from future contracts and cancellation of existing contracts. The proposed rule establishes a process for determining appropriate penalties based on factors like the scope and seriousness of the labor violation and the size of the contractor.
The rule piles on hefty reporting requirements to ensure compliance. Federal contractors with contracts worth more than $500,000 will be required to disclose past labor violations when applying for new contracts as well as update the federal government twice a year about recent violations. The current guidance speaks to federal laws like the Fair Labor Standards Act (FLSA), Americans With Disabilities Act (ADA), and Occupational Safety and Health Act (OSHA), but the DOL will issue more specific regulations regarding state labor laws in the future.
The comment period is open for 60 days and ends July 27, 2015. Federal contractors are invited to provide feedback on the proposed rule. While welcoming feedback on any topic, the DOL explicitly invited feedback on how to handle subcontractor compliance–asking, for example, whether subcontractors should report violations to the prime contractor or directly to the DOL.