Fair Pay and Safe Workplaces Order: Answers to Questions

Fair Pay and Safe Workplaces Order: Answers to Questions

July 15, 2015
Fair Pay and Safe Workplaces Order: Answers to Questions
National Labor Relations
Employee right to unionize and
On July 31, 2014, President Obama issued Executive Order
Act (NLRA)
engage in collective bargaining
13673, Fair Pay and Safe Workplaces, with the stated intent
of increasing “efficiency and cost savings” by ensuring that
Davis-Bacon Act
Minimum wage and fringe benefits
executive branch procurement contractors understand and
for construction contractor workers
comply with labor laws.
Service Contract Act
Minimum wage and fringe benefits
What does the order require?
for service contractor employees
Executive Order 11246
Prohibits contractors from certain
The order requires that contractors and subcontractors
on Equal Employment
types of employment discrimination
disclose information about their compliance with 14
Opportunity
specified federal labor laws and their state equivalents as
part of the award process. The order also requires that
Section 503 of the
Contractor affirmative action
agency contracting officers take these disclosures into
Rehabilitation Act (Rehab requirements as to individuals with
consideration when assessing whether prospective vendors
Act)
disabilities
have a “satisfactory record of integrity and business ethics”
Vietnam Era Veterans
Contractor affirmative action
as part of the responsibility determination process.
Readjustment Assistance
requirements as to veterans
Agencies generally cannot award a procurement contract
Act (VEVRA)
without determining that the prospective vendor is
“affirmatively responsible” for purposes of that specific
Family Medical Leave Act Job-protected, unpaid leave for
contract.
(FMLA)
specified family and medical reasons
Title VII of the Civil
Prohibits certain types of
In addition, the order imposes requirements intended to
Rights Act of 1964
employment discrimination
promote “paycheck transparency” for contractor employees
and limit mandatory arbitration of employee claims.
Americans with
Prohibits discrimination against
Disabilities Act (ADA)
disabled individuals
Has the order been implemented?
Age Discrimination in
Prohibits employment discrimination
Employment Act (ADEA)
against those aged 40 or older
The order itself was effective immediately on its July 31,
2014, issuance, at which time the White House indicated
Executive Order 13658
Requires that contractors pay a
that it anticipates that the order’s requirements will be
Establishing a Minimum
minimum wage of $10.10 for certain
applied to new contracts “in stages,” beginning in 2016.
Wage for Contractors
employees
There does not appear to be any provision for application of
the order’s requirements to existing contracts, or new orders
What state laws are to be seen as the
under existing contracts. In early 2015, agencies issued
“equivalent” of covered federal laws?
guidance and proposed rules to implement the order.
Executive Order 13673 itself does not identify state laws
What federal labor laws are covered?
that are equivalent to the specified federal laws, and the
recently issued guidance and regulations partially
Executive Order 13673 requires covered contractors and
implementing the order provide no additional clarity other
subcontractors to disclose violations of the following
than observing that OSHA-approved state health and safety
fourteen federal labor laws.
regulatory plans are equivalent state laws.

Law
Basic Requirements
What is the President’s authority to
impose these requirements?
Fair Labor Standards Act
Minimum wage, overtime pay, and
(FLSA)
child labor standards
When issuing Executive Order 13673, President Obama
Occupational Safety and
Workplace safety standards
expressly referenced 40 U.S.C. §121 and the promotion of
Health Act (OSH Act)
“economy and efficiency” in contracting. In so doing, he
invoked provisions of the Federal Property and
Migrant and Seasonal
Protections for migrant and seasonal
Administrative Services Act of 1949, as amended, which
Agricultural Worker
workers in dealings with agricultural
authorize the President to “prescribe policies and directives
Protection Act (MSPA)
employers, agricultural associations,
that [he] considers necessary” to provide the “Federal
and farm labor contractors
Government with an economical and efficient system for ...
[p]rocuring and supplying property and ... services.”
www.crs.gov | 7-5700

Fair Pay and Safe Workplaces Order: Answers to Questions
This is the same authority that President Obama and other
proposed Federal Acquisition Regulation (FAR) clause
Presidents have relied upon when imposing requirements
implementing the order. The proposed clause expressly
upon the procurement process. Such requirements have
notes the possibility of the contract being terminated for
generally been found to be within the President’s authority
false certifications. However, the government could also
so long as they are seen to have a “sufficiently close nexus”
take other action, including seeking monetary damages for
to economy and efficiency in procurement, and they do not
fraud under the civil False Claims Act.
conflict with congressional enactments.
How does Executive Order 13673
Did agencies have authority to consider
compare to the Clinton Administration’s
labor law violations in the procurement
contractor responsibility regulation?
process prior to Executive Order 13673?
The Clinton Administration’s amendments to the FAR
Neither the disclosure of labor law violations, per se, nor
(which were subsequently revoked by the Bush
the consideration of such violations in the responsibility
Administration) could be said to resemble Executive Order
determination process was required prior to the issuance of
13673 in that they called for contracting officers to consider
the executive order. However, the absence of such
vendors’ “compliance” with legal requirements in
requirements does not mean that agencies lacked the
determining whether vendors are “affirmatively
authority to consider contractors’ compliance with labor
responsible” for the award of a federal contract.
laws before the order was issued. Rather, agencies could
have considered at least certain labor law violations
There are, however, some notable differences between the
pursuant to their authority to (1) make responsibility
Clinton Administration’s amendments to the FAR and the
determinations; (2) establish qualification requirements and
FAR amendments proposed by the Obama Administration.
evaluation factors; and (3) debar and suspend contractors.
For example, the Clinton Administration considered
compliance with the broad categories of tax, labor and
Any consideration given to labor law violations was,
employment, environmental, antitrust, and consumer
however, generally within agency officials’ discretion prior
protection laws, while the Obama Administration focuses
to the issuance of Executive Order 13673, rather than
upon compliance with 14 specific federal labor and
required, as it is with the order. Also, the types of
employment laws and their state equivalents.
violations considered prior to the order tended to be more
limited than those to be considered under the order.
The Clinton Administration also amended the “general
standards” of responsibility in Section 9.104-1 of the FAR
What is de facto debarment, and will the
to address contractors’ violations of law. The Obama
order result in de facto debarment?
Administration, in contrast, does not propose to amend
these standards, but instead would address compliance with
The term de facto debarment refers to exclusion outside of
labor laws primarily in a new Subpart 22.20 of the FAR,
the formal suspension and debarment process. It can be
one provision of which would specify that contracting
seen as improper on this basis alone, because it involves
officers’ duty to consider labor law violations is “in
action that is not in compliance with the law. In addition,
addition” to their duties as to responsibility determinations
conduct that constitutes de facto debarment can violate
under Part 9 of the FAR.
contractors’ rights to due process by depriving them of
liberty interests in being able to challenge allegations about
What are Congress’s options?
their integrity that could deprive them of their livelihood
without notice or an opportunity for a hearing.
Congress could potentially take various actions—or no
action—in response to Executive Order 13673, depending
Whether Executive Order 13673 results in de facto
upon its policy preferences. If opposition to the order and
debarment seems likely to depend upon its implementation
its requirements is sufficiently widespread, Congress could
by the procuring agencies. If contracting officers were to
enact legislation that would bar implementation of the
make repeated determinations of nonresponsibility based on
order. Alternatively, if Congress were to favor the
the same labor law violations (or prior determinations of
disclosure requirements, it could enact legislation to codify
nonresponsibility), contractors could potentially
(or even augment) these requirements, thereby ensuring that
successfully raise claims of de facto debarment. On the
they are not repealed by a subsequent administration.
other hand, such claims may be less likely if the procuring
agencies developed practices or procedures whereby they
For a more extended discussion of these and other questions
routinely pursue exclusion or labor compliance agreements
regarding Executive Order 13673, see CRS Report R44106,
in situations where de facto debarment is possible.
Fair Pay and Safe Workplaces Executive Order: Questions
and Answers, by Kate M. Manuel and Rodney M. Perry.
What would happen if a contractor falsely
certifies as to its labor law violations?
Rodney M. Perry, rperry@crs.loc.gov, 7-5203
Kate M. Manuel, kmanuel@crs.loc.gov, 7-4477
The government has several means of recourse if a

contractor were to falsely represent that it is not the subject
of a covered labor violation, as would be required under the
IF10258
www.crs.gov | 7-5700