President Obama Issues Executive Order Barring Large Federal Contractors from Using Certain Pre-Dispute Arbitration Agreements and Requiring Reporting of Employment and Labor Violations

This morning, President Obama signed a new Executive Order which applies only to federal contractors with contracts in excess of $500,000.   Where the value of the goods or services being procured are expected to exceed $500,000, the contractor will be required to disclose any arbitration, court or agency awards, judgments or determinations concerning violations of, for instance, the FMLA, E.O. 11246 (aka affirmative actions requirements for women and minorities), the NLRA, the FLSA, OSHA, the FMLA, the Rehabilitation Act, Title VII, the ADA, the ADEA, Vietnam Era Veterans Readjustment Act and equivalent state laws.  These contractors will be required to update this information every six months and require their subcontractors to do likewise.  The DOL has been tasked with developing regulations about defining and creating consequences for repeated and serious violations.  

In addition, where the value of goods or services being procured exceeds $1M, the contractor is prohibited from using pre-dispute arbitration agreements with employees or contractors to govern disputes arising under Title VII or concerning or “any tort related to or arising out of sexual assault or harassment.” This requirement will not apply to collective bargaining agreements, pre-existing agreements, or where the employer provides commercially available off-the-shelf items.

Finally, the Executive Order requires the provision of pay stub information to the contractors with contracts in excess of $500,000:

Paycheck Transparency.  (a)  Agencies shall ensure that, for contracts subject to section 2 of this order, provisions in solicitations and clauses in contracts shall provide that, in each pay period, contractors provide all individuals performing work under the contract for whom they are required to maintain wage records under the Fair Labor Standards Act; 40 U.S.C. chapter 31, subchapter IV (also known as the Davis-Bacon Act); 41 U.S.C. chapter 67 (also known as the Service Contract Act); or equivalent State laws, with a document with information concerning that individual's hours worked, overtime hours, pay, and any additions made to or deductions made from pay.  Agencies shall also require that contractors incorporate this same requirement into subcontracts covered by section 2 of this order.  The document provided to individuals exempt from the overtime compensation requirements of the Fair Labor Standards Act need not include a record of hours worked if the contractor informs the individuals of their overtime exempt status.  These requirements shall be deemed to be fulfilled if the contractor is complying with State or local requirements that the Secretary of Labor has determined are substantially similar to those required by this subsection.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.