Presented by:September 7, 2016

Federal Contracting What You Need to Know Now

FAIR PAY ANDSAFE WORKPLACES

JIMMY CHRISTIANSON, DOUG TABELING, AND BRIAN WOOD

2

Brief Timeline of Rulemaking

Executive Order 13673, Fair Pay and Safe Workplaces, signed on July 31, 2014

Notice of Potential Rulemaking issued on May 28, 2015

Final Rule and DOL guidance issued on August 25, 2016

3

AGC’s Efforts Fighting & Informing

Lobbied dozens of members of Congress, their staff and key congressional committees, organizing AGC members to contact Capitol Hill, participating in roundtable discussions, taking meetings, and testifying itself;

Engaged leaders of federal contracting agencies —U.S. Army Corps of Engineers, Naval Facilities Engineering Command, General Services Administration and Department of Veterans Affairs—at their offices and AGC conferences;

Met with the White House Office of Management and Budget;

Submitted 35-pages of extensive comments to the FAR Council and DOL opposing the EO and representing contractor concerns;

Raised contractor concerns at the U.S. Small Business Administration roundtable on the EO, which SBA included in its comments;

Surveyed its members to help gauge the impact of the rule on contractors

Held webinars, workshops and conferences that highlighted AGC concerns to inform the industry.

Successfully included provisions in the 2017 Defense Bill to prohibit application of the EO, which is pending further congressional action;

Worked with a coalition of industry associations to coordinate legislative advocacy efforts;

Taken efforts to advance timely and well-reasoned legal action;

Developed a 10-page, comprehensive document explaining the key essentials of the more than 850 pages of regulations; and

Holding this—and perhaps more—webinars.

4

FINAL RULE:Summary of Requirements

1. Disclosure of adverse actions related to labor, employment, and safety laws during prior 3 years (contracts and subcontracts > $500,000)*

2. Written notification to workers regarding wages, hours, and overtime (contracts and subcontracts > $500,000)

3. Prohibition of arbitration of claims of sexual assault, sexual harassment, and civil rights violations unless employee agrees to arbitration after claim accrues (contracts and subcontracts > $1 Million)

* The disclosure (“look-back”) period and covered contract value will be phased in

5

DISCLOSURE OF LABORVIOLATIONS

Fair Pay and Safe Workplaces

6

Required Disclosures

The rule requires contractors and subcontractors to disclose information on the following types of adverse actions related to labor and safety laws:

Civil Judgments

Arbitral Awards or Decisions

Administrative Merits Determinations

7

What is an AdministrativeMerits Determination”? An “administrative merits determination” includes the following 7 categories of

notices or findings, whether or not they are subject to appeal or further review:

1. From the Department of Labor’s Wage and Hour Division:• A WH–56 ‘‘Summary of Unpaid Wages’’ form;• a letter indicating that an investigation disclosed a violation of the FLSA or a violation of the FMLA, SCA, DBA, or Executive Order 13658;

• a WH–103 ‘‘Employment of Minors Contrary to The Fair Labor Standards Act’’ notice;

• a letter, notice, or other document assessing civil monetary penalties;• a letter that recites violations concerning the payment of subminimum wages to workers with disabilities under section 14(c) of the FLSA or revokes a certificate that authorized the payment of subminimum wages;

• a WH–561 ‘‘Citation and Notification of Penalty’’ for violations under OSHA’s field sanitation or temporary labor camp standards; or

• an order of reference filed with an administrative law judge.

8

What is an AdministrativeMerits Determination”? An “administrative merits determination” includes the following

7 categories of notices or findings, whether or not they are subject to appeal or further review:

2. A citation, an imminent danger notice, a notice of failure to abate, or any State equivalent from OSHA or any State agency designated to administer an OSHA-approved State Plan

3. A show-cause notice from OFCCP4. A letter of determination from the EEOC that reasonable

cause exists to believe that an unlawful employment practice has occurred or is occurring

5. A complaint issued by any Regional Director of the NLRB

9

What is an AdministrativeMerits Determination”? An “administrative merits determination” includes the following 7

categories of notices or findings, whether or not they are subject to appeal or further review:

6. A complaint filed by or on behalf of an enforcement agency with a court or administrative judge alleging that the contractor or subcontractor violated any provision of the covered laws

7. Any order or finding from any administrative judge, DOL’s Administrative Review Board, the Occupational Safety and Health Review Commission or State equivalent, or the National Labor Relations Board that the contractor or subcontractor violated any provision of the covered laws

10

Labor Law Violations Subject to Disclosure

1. Fair Labor Standards Act2. Occupational Safety and Health Act3. Migrant and Seasonal Agricultural Worker Protection Act4. National Labor Relations Act5. Davis-Bacon Act6. Service Contract Act7. Executive Order 11246 (Equal Employment Opportunity)8. Section 503 of the Rehabilitation Act9. Veterans’ Readjustment Assistance Acts10. Family and Medical Leave Act11. Title VII of the Civil Rights Act12. Americans with Disabilities Act13. Age Discrimination in Employment Act14. Executive Order 13658 (Establishing a Minimum Wage for Contractors)15. Equivalent State laws (currently only OSHA-approved state plans)

11

Joint Ventures and IDIQs/MATOCs

Joint Ventures Members of joint ventures submit violation information

separately/independently to the contracting agency (if JV is prime) or to DOL (if JV is a subcontractor), unless the JV is an individually and separately organized legal entity such as an LLC or a corporation

If the JV is an organized legal entity, violation information is submitted jointly to the agency or DOL

IDIQs/MATOCs: The rule will not apply to task orders issued where the base contract has already been solicited

12

Blacklisting Contracting officers will evaluate reported violations both prior to and after

contract awards to determine whether contractors are responsible and have satisfactory records of integrity and business ethics to be awarded or to continue performance of a contract with the federal government.

Prior to a contract award, Contracting Officers might require contractors to enter into or to enhance a labor compliance agreement with the Department of Labor in order to be eligible for award. Contracting Officers also can make referrals to agency suspending and debarring officials based on the compliance history submitted by an offeror during the bid or proposal stage of a solicitation.

During performance, ongoing semi-annual analysis could lead Contracting Officers to refer contractors and subcontractors to the Department of Labor for action (which may include a new or enhanced labor compliance agreement), to decline to exercise contract options, to terminate contracts, or to refer a contractor or subcontractor to an agency suspending and debarring official

Disclosure of basic information about the labor violations will be made publicly available in the Federal Awardee Performance and Integrity Information System (FAPIIS)

13

Agency LaborCompliance Advisors The rule creates the new role of Agency Labor Compliance

Advisor (ALCA) for each federal agency

ALCAs are to provide advice and guidance to agencies, contracting officers, contractors, and the labor community as subject-matter experts concerning the application of labor laws (statutes, executive orders, and regulations)

ALCAs are responsible for communicating with the DOL, other ACLAs, other agencies, and other parties concerning such matters

The rule requires contracting officers to request written advice and recommendations from ACLAs concerning contractors’ records of integrity and business ethics and the responsive actions that should be taken

14

Implementation of the Rule The disclosure requirements take effect for contractors on October 25, 2016

Disclosures will not be required for violations occurring before October 25, 2015

For the first six months that the rule is effective, disclosure requirements will apply only to solicitations valued at $50 million or more. Disclosure requirements will apply to solicitations valued at $500,000 or more beginning on April 25, 2017

Subcontractors will not be required to begin making disclosures until October 25, 2017—one year after the effective date of the regulations

The look-back period for which violations must be disclosed will initially be one year and will gradually increase to three years by October 25, 2018, and will remain three years thereafter

Future task orders solicited after October 25, 2016 as a part of MATOC contracts awarded before October 25, 2016 will not be subject to the disclosure requirements

15

Disclosure Steps At time of bid/offer : report whether any administrative merits

determinations, civil judgments, or arbitral awards have been rendered against the offeror in the last three (3) years*

Pre-award responsibility determination stage: provide details of law violated, case/citation/identification number, date of adverse decision or determination, and name of agency or court rendering it. Contractor may submit information it deems bearing on its responsibility, including mitigating circumstances, remedial measures (including labor compliance agreements), and other steps taken to achieve compliance with labor laws.

Semi-annual updates: contractor must update the information reported every six (6) months

Prior to award of subcontracts: contractors must direct subcontractors to violation information to the Department of Labor. Subcontractors must inform the contractor as to the recommendation made by DOL. Subcontractors must update reporting every six (6) months

16

Assessment of DisclosuresALCAs will make one of the following recommendations:

Supports a finding of a satisfactory record of integrity and business ethics ;

Supports a finding of a satisfactory record of integrity and business ethics, but the prospective contractor needs to commit, after award, to negotiating a labor compliance agreement or another acceptable remedial action;

Could support a finding of a satisfactory record of integrity and business ethics only if the prospective contractor commits, prior to award, to negotiating a labor compliance agreement or another acceptable remedial action;

Could support a finding of a satisfactory record of integrity and business ethics only if the prospective contractor enters, prior to award, into a labor compliance agreement; or

Does not support a finding by the contracting officer of a satisfactory record of integrity and business ethics, and the agency suspending and debarring official should be notified in accordance with agency procedures.

17

Mitigating Factors

Extent to which the contractor has remediated the violations and taken steps to prevent its recurrence

A single violation

The number of violations is low relative to the size of the contractor

Contractor has implemented a safety and health management program, collectively-bargained grievance procedure, or compliance program

Legal or regulatory changes were recent

Contractor acted in good faith and had reasonable grounds for believing it was not violating the law

A long period of compliance following violation(s)

18

Subcontractor Responsibility Determination Contractors must determine if a prospective subcontractor has a

satisfactory record of integrity and business ethics with regard to compliance with labor laws

A contractor must make its determination about the responsibility of subcontractors before award of the subcontract, except for subcontracts awarded within 5 days of prime contract execution. Contractors must make the determination for such early subcontracts within 30 days of subcontract award

When determining subcontractor responsibility, the contractor shall require the prospective subcontractor to disclose violation information to DOL through the DOL Web site at www.dol.gov/fairpayandsafeworkplaces

A contractor must inform subcontractors that they can submit to DOL information on mitigating factors and remedial measures

19

Subcontractor Representations to Contractor

A contractor may find a prospective subcontractor responsible if:

The subcontractor represents that it had no covered violations in the reporting period

The subcontractor represents to the contractor that the subcontractor has disclosed violation information to DOL and provides the contractor with the following information regarding the DOL’s evaluation:

1. DOL advised that the subcontractor had no serious, repeated, willful, and/or pervasive labor law violations;

2. DOL advised that the subcontractor has serious, repeated, willful, and/or pervasive labor law violations and i. a labor compliance agreement is not warranted;ii. the subcontractor has entered into a labor compliance agreement(s) with an enforcement agency and

states that it has not been notified by DOL that it is not complying with its agreement; oriii. the subcontractor has agreed to enter into a labor compliance agreement or is considering a labor

compliance agreement(s) with an enforcement agency to address all serious, willful, repeated, and/or pervasive labor law violations and has not been notified by DOL that it has not entered into an agreement in a reasonable period; or

3. The subcontractor disagrees with DOL’s advice or with DOL’s notification that it has not entered into a labor compliance agreement in a reasonable period or is not complying with the agreement. In such case, the subcontractor shall provide the contractor with the disclosure information. If the contractor finds the subcontractor responsible, the contractor will notify the Contracting Officer of the decision and provide the name of the subcontractor and the basis for the decision

20

Contractor Preparation and Implementation The Government estimates that is will take: 8 hours for a contractor to familiarize itself with the

rules

6.7 hours to determine what initial representation to make and to collect information for disclosure

2.8 hours to input and transmit the supporting information

2 hours for a contractor to update information for semi-annual disclosures

21

PAYCHECK TRANSPARENCYFair Pay and Safe Workplaces

22

Paycheck Transparency

Effective January 1, 2017 Applies to contractors and subcontractors with a

federal contract or subcontract of more than $500,000 Must provide employees with a wage statement for

each pay period if the employees are covered by the Fair Labor Standards Act, the Davis-Bacon Act, the Service Contract Act, or equivalent state laws identified by the Department of Labor

Must flow down requirement in subcontracts for more than $500,000

23

Paycheck Transparency

Wage statement must include hours worked, overtime hours, pay, and any additions or deductions made to pay

The wage statement must be issued every pay period and must contain the total number of hours worked in the pay period and the number of those hours that were overtime hours

The hours worked and overtime hours contained in the wage statement must be broken down to correspond to the period for which overtime is calculated and paid (typically weekly)

The wage statement provided to employees exempt from the overtime compensation requirements of the Fair Labor Standards Act need not include a record of hours worked if a contractor informs the individuals of their overtime-exempt status

24

Paycheck Transparency

Contractors and subcontractors who are treating any individual performing work under the contract or subcontract as an independent contractor and not as an employee must provide a document to the individual that informs the individual of this independent-contractor status

Must provide the document to the individual either prior to the work beginning or at the time the contractor and the individual form a contract

Where a significant portion of a workforce is not fluent in English, contractors and subcontractors must provide the wage statement and the independent-contractor notification in English and in the language(s) with which the workforce is more familiar

25

LIMITATION ON ARBITRATION CLAUSESFOR DISCRIMINATION CASES

Fair Pay and Safe Workplaces

26

Arbitration of Contractor Employee Claims The rule requires a contractor to obtain the voluntary consent of an

employee or independent contractor to arbitrate claims arising under title VII of the Civil Rights Act of 1964, or any tort related to or arising out of sexual assault or harassment

The consent must be given after the dispute arises

The arbitration rule applies to solicitations and subcontracts estimated to exceed $1M

The rule does not apply to collective bargaining agreements negotiated between a contractor and a labor organization representing the employees

The rule does not apply to employees or independent contractors who entered into a valid contract to arbitrate prior to the contractor bidding on a contract covered by the rule. The rule will apply if the contractor has the right to change the terms of the contract. The rule will also apply when the contract is renegotiated

27

QUESTIONS?

Doug TabelingSmith, Currie & HancockAtlanta, Georgia(404) 582-8058dltabeling@smithcurrie.com

Brian WoodSmith, Currie & HancockWashington, D.C.(202) 735-2451bswood@smithcurrie.com

Presented by:September 7, 2016

Federal Contracting What You Need to Know Now

FAIR PAY ANDSAFE WORKPLACES

JIMMY CHRISTIANSON, DOUG TABELING, AND BRIAN WOOD