Key Issues

Federal Government Releases Blacklisting Rule Imposing New Requirements on Federal Contractors  

Washington Insider Alert | August 23, 2016

Today, the final rule implementing Executive Order (EO) 13673 (also known as the “Fair Pay and Safe Workplaces EO”) and the corresponding Department of Labor Guidance was made available for public inspection and will be published in tomorrow’s Federal Register. Additionally, the president amended EO 13673 to add language that will bolster the final rules against litigation challenging their constitutionality and their conflict with other federal statutes.

The EO requires prospective federal contractors and subcontractors to disclose labor law violations and provides guidance for agencies on how to consider labor violations when awarding federal contracts.

Unlike the proposed regulation and guidance issued in May 2015, the final rules include some positive changes for federal contractors, including an extension of the compliance timeline and a change in reporting requirements for subcontractors who will make their disclosures to DOL as opposed to the prime contractor. With the new rule fully phased in, prospective federal contractors will be required to disclose violations of 14 federal labor and employment laws (and their state equivalents) for the last three years in order to be considered for new federal contracts valued at more than $500,000.

The main points of the final rule include:

  • The effective date of the rule will be phased in starting on October 25, 2016.
  • For prime contractors:
    • The rule will only apply to contracts of at least $50 million from October 25, 2016 through April 25, 2017 (6 months).
    • The rule will become applicable to contracts of at least $500,000 on April 26, 2017.
  • For subcontractors, the rule will become effective on October 26, 2017, and reporting will be collected by DOL (not the prime contractor).
  • The lookback period will be lengthened prospectively and phased in over three years, with a full three-year reporting period being required beginning on October 25, 2018.
  • Reporting of state labor violations will also be phased and will only include OSHA-approved state plans at this time. Any additional state-level reporting requirements would be added via additional rulemaking.
  • Paycheck transparency requirements will become effective on January 1, 2017.
  • The prohibition on pre-dispute arbitration contract clauses will be effective on October 25, 2016.

We will provide a more detailed analysis once we have a chance to review the text of the final rules. In the meantime, DOL has published a press release and created a website with further information on the final guidance and regulations.