Last week, President Obama signed the Fair Pay and Safe Workplaces Executive Order that requires contractors to (1) disclose recent violations of various workplace laws before being awarded federal contracts; (2) provide wage notifications to employees and notify independent contractors of their non-employee status; and (3) barring contractors from requiring employees to sign pre-dispute arbitration agreements. The Executive Order will be implemented on all covered contracts in stages on a “prioritized basis” starting in 2016.
A Fact Sheet released with the Executive Order identifies the purpose of this executive action is to “crack down” on federal contractors by ensuring that companies with a history of employee rights violations do not receive federal contracts. The White House indicated that the “goal of the process created by the Executive Order is to help more contractors come into compliance with workplace protections, not to deny contracts to contractors.” The Obama Administration also believes that the Executive Order will “promote efficiency in federal contracting” by removing “companies with workplace violations” that are “more likely to encounter performance problems.”
The Executive Order will apply to all federal contracts for goods and services, including construction contracts, where the estimated value of the contract exceeds $500,000. It also requires prime contractors to flow down this requirement to all subcontracts that are not for commercially available off-the-shelf items where the estimated value of the subcontract is over $500,000.
Again, the executive order includes exceptions. First, the prohibition on mandatory, pre-dispute arbitration agreements does not apply to employees who are covered by a collective bargaining agreement that was negotiated between the contractor and a labor organization representing the employees.
Second, the prohibition against certain arbitration agreements does not apply to employees or independent contractors who enter into valid agreements to arbitrate prior to the contractor or subcontractor's bid on a contract covered by this executive order (unless such arbitration agreement is changed, renegotiated or replaced after the implementation date of this provision). Because this section is unlikely to take effect until 2016, employers should consider implementing or updating their arbitration agreements, as applicable, in the near future.
The Federal Acquisition Regulatory Council, which helps direct and coordinate the procurement policy and procurement regulatory activities of the federal government, will propose “necessary and appropriate” implementing regulations to carry out the executive order, including the arbitration rule, and will issue final regulations after considering public comments. This process could take up to 120 days.
If you are a federal contractor in California and have concerns about the President's latest Executive Order, don't hesitate to contact leading California employment lawyers from Kingsley & Kingsley. To discuss your situation or concerns call us toll-free at (888) 500-8469 or click here to contact us.