President Obama Signs Executive Order Requiring Federal Contractors to Disclose Labor Violations

Last week, the White House continued its efforts to advance its labor agenda through measures not requiring congressional approval. The president signed an executive order that will require certain federal contractors to disclose workplace violations as part of their efforts to obtain federal work. Beginning in 2016, the Fair Pay and Safe Workplaces order requires federal agencies awarding contracts to require potential contractors to list violations of 14 federal labor and employment laws as part of the bidding process for all contracts exceeding $500,000. Compliance status will be used as a criteria for awarding the contracts. Once awarded the contract, the employer must update its disclosures every six months during the life of the contract.
 
For federal contracts exceeding $1 million, the order prohibits employers from using mandatory arbitration agreements with employees that would apply to Title VII claims, or those relating to sexual assault or harassment. Finally, the order requires contractors to provide employees with detailed compensation information. All independent contractors must be provided with documentation disclosing this status.
 
Employers with no violations in the last three years can simply check a box noting this status. For other contractors, however, the order will present considerable disclosure burdens, and may call into question their ability to participate in federal contracts. When combined with existing affirmative action compliance obligations, this series of new executive orders requires employers contemplating bidding on federal contracts to determine the additional costs involved with such compliance. For many companies, absent significant profit margins from the work, bidding on federal contracts may make less business sense than in the past.