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Paycheck Requirements Take Effect January 1

Posted by Eric Kingsley | Dec 27, 2016 | 0 Comments

Paycheck Requirements under “Fair Pay and Safe Workplaces” 

The new paycheck transparency requirements under the “Fair Pay and Safe Workplaces” Executive Order (E.O. 13673) become effective beginning January 1, 2017. The requirements apply to all new federal procurement contracts and subcontracts of $500,000 or more. 

Covered contractors must fulfill four obligations, which will be triggered by inclusion of Federal Acquisition Regulation (FAR) clause 52.222-60 (Paycheck Transparency) in covered solicitations and contracts. Contractors must comply with the following:

  1. Provide a “wage statement” “document” for each pay period to each worker performing services under a covered contract and subcontract who is covered by the Fair Labor Standards Act (FLSA), the Service Contract Act, or the Wage Rate Requirements for Construction (also known as the Davis-Bacon Act).
  2. The statement for an FLSA-exempt employee need not include hours worked if the employee is notified in writing of his or her exempt status, either before the employee begins work on a covered contract or subcontract or in the first statement issued under the covered contract or subcontract.
  3. The wage statement need not be provided to an independent contractor (IC) working under a covered contract or subcontract. However, contractors must provide each “individual” IC with notice that he or she is being treated as an IC.
  4. Include (flow-down) FAR 52.222-60 from prime contracts to covered subcontracts.
Paycheck requirements

Specific Wage Statement Requirements

“Wage Statements” may be provided in electronic form if documents typically are provided to employees electronically, and if the worker can access the document through a device made available by the employer. The statement must provide the worker with the following:

  • total number of hours worked in the pay period;
  • number of hours worked that were overtime hours;
  • rate of pay;
  • gross pay;
  • itemized amount of any additions or deductions to/from gross pay; and
  • a break out of the hours worked and overtime hours to correspond to the period for which overtime is calculated and paid (typically, weekly).

Specific Requirements of the Independent Contractor Notice

The IC notice must meet the following requirements:

  • it must be a written document;
  • it must be provided at the time the IC relationship is established, but must be a standalone document — it cannot be included in any IC agreement;
  • it must be provided before the individual begins work on a covered contract;
  • it must be provided for each covered contract, even if the individual has been notified of his or her IC status under other covered contracts; and
  • it must be provided before an individual does any work if an employee converts to IC status during performance of a covered contract.

Recent Texas Injunction

In October 2016, a Texas federal district court enjoined two of the three main components of E.O. 13673. The court enjoined 1) the labor law violation reporting requirement, and 2) the prohibition of mandatory arbitration agreements covering Title VII claims. However, the court did not enjoin the paycheck transparency requirements (outlined above) of the Executive Order. Note:  the injunction has yet to be appealed and the future of the case and the Executive Order under a new Administration is uncertain.

California Employers

The paycheck requirements above are not retroactive and do not apply to any existing contracts or subcontracts.  If you are a contractor in California and have questions about paycheck requirements or any of California's employment related laws, feel free to contact leading California employment lawyers at Kingsley & Kingsley. Call toll-free at (888) 500-8469 or contact us via email.

About the Author

Eric Kingsley

In practice since 1996, attorney and firm co-founder Eric B. Kingsley has litigated complex cases and authored numerous appellate briefs in both state and federal court on behalf of the California law firm of Kingsley & Kingsley, including over 150 class actions. Mr. Kingsley concentrates his pra...

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