At a time when there have been difficulties moving legislation quickly through Congress, the President has often acted through executive orders, many directed at federal contractors. Indeed, this year has been a year of action with regard to federal contractors.
Specifically, a new executive order raises the minimum wage for employees of federal contractors, and expands the number of workers who would be eligible for overtime pay. The order raises the hourly minimum wage paid by those contractors to workers performing on covered federal contracts to $10.10 per hour, beginning January 1, 2015. Beginning January 1, 2016, and annually thereafter, the minimum wage amount will be determined by the Secretary of Labor with annual increases to match in line with the consumer price index. The President hopes that the act will put pressure on Congress to raise the federal minimum wage.
President Obama also signed an executive order banning federal contractors from discriminating against employees on the basis of their sexual orientation or gender identity. The LGBT community has lobbied for years for the President to take action on this issue to ensure that federal contractors are not allowed to make discriminatory employment decisions on the basis of sexual orientation, much in the same way as they are prohibited from discriminating on the basis of race, color, religion, sex, or national origin. It is still to be determined whether “faith based” groups will be exempt from any new protections for LGBT employees.
Due to local ordinances, state laws, or recent EEOC guidance, many companies have already taken steps to ensure they have similar LGBT non-discrimination policies in place. For companies in states without these laws, it is a best practice to be proactive and ensure company policies include non-discrimination against LGBT employees, as well as training on this issue for Human Resources, managers, and employees. Companies should also determine whether they have workplace polices, practices, and procedures for transgender issues, including processes for employees who have gender reassignment.
Also as part of President Obama’s Year of Action, he signed a new executive order designed to crack down on federal contractors who repeatedly violate federal labor laws. The Fair Pay and Safe Workplaces Executive Order establishes a new set of rules for prospective federal contractors with more than $500,000 in federal procurements to annually disclose labor law violations they, or their subcontractors, have committed in the previous three years. According to the White House press release, “[c]ontracting officers will take into account only the most egregious violations, and each agency will designate a senior official as a Labor Compliance Advisor to provide consistent guidance on whether contractors’ actions rise to the level of a lack of integrity or business ethics.”
Potential violations include the fourteen federal statues and equivalent state laws covering wage and hour, safety and health, collective bargaining, family and medical leave, and civil rights protections. Not only do contractors have to disclose this information as to themselves, but they are required to collect similar information from their subcontractors. The federal officers will then have the discretion to weed out the companies that repeatedly violate these laws and award contracts to companies who have clean records and play by the rules. Companies with violations will have the opportunity to settle existing disputes and cure any violations. According to the fact sheet, the executive order “will be implemented on new contracts in stages, on a prioritized basis, during 2016.”
In another executive order, signed in April of this year, President Obama created a new pay transparency policy for federal contractors. The order prohibits federal contractors from retaliating against employees who inquire about pay, discuss pay, or disclose information about pay. The order covers federal contractors and subcontractors with contracts over $10,000. The OFCCP published a corresponding proposed rule in the Federal Register on September 17, 2014, with a comment period through December 16. If the proposed rule is ultimately adopted, it will necessitate changes in the EEO clause that contractors and subcontractors are required to include. The proposed rule contains a limiting exception which will allow disciplinary action against or termination of an employee who has access to the pay information of other employees as an essential job function, and who discloses such pay information to another employee who does not have such access, unless the disclosure is in response to a formal complaint or charge or in response to an investigation.
Moreover, the Department of Labor announced a proposed rule that requires federal contractors and subcontractors to submit annually an Equal Pay Report to the OFCCP in an effort to direct the OFCCP’s enforcement resources toward contractors with potential pay violations. The requirement will apply to companies that file EEO-1 reports, have more than 100 employees and hold federal contracts or subcontracts worth $50,000 or more for at least 30 days. The rule was published in the Federal Register on August 8, 2014. The deadline to submit comments is January 5, 2015.
Finally, in another significant development the Veterans’ Employment and Training Service (VETS) issued a final rule on September 25, 2014 regarding VEVRAA reporting requirements. The new rule changes the manner in which protected veterans are reported, and the VETS-100 and 100A forms have accordingly been replaced with the new VETS-4212 form. Protected veterans will now be reported by EEO-1 category as well as by total number. This replaces the old approach in the VETS-100/100A forms which required reporting by individual protected veteran categories. Applying to contractors or subcontractors with a contract of $100,000 or more, the VETS-4212 form must be submitted annually from August 1 to September 30.
The corresponding clause governing employer reports has also been updated to match the new reporting rules, and therefore covered federal contractors and subcontractors will need to revise their contracts going forward to incorporate the new language, which is found at 41 C.F.R. § 61-300.10. Rejecting the advice of some commenters to delay the effective date of the new rule, VETS put the new rule into effect on October 27, 2014. This means all covered contracts and subcontracts must now incorporate the new reporting clauses, and the VETS-4212 form will be required beginning in August–September of 2015.