eLABORate: One Hot Summer for Federal Contractors

August 11, 2014

In the months since the new Section 503 and VEVRAA regulations became effective (March 24, 2014), the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) has continued to aggressively – and successfully – push for more.  On July 21, 2014, President Obama signed an executive order amending Executive Order 11246 by extending protections against workplace discrimination to members of the lesbian, gay, bisexual, and transgender (“LGBT”) community.  In a surprise move, the executive order does not contain any exemptions for religiously affiliated federal contractors, as some had hoped.  Religiously affiliated federal contractors still may favor individuals of a particular religion when making employment decisions.  President Obama directed the Secretary of Labor to prepare regulations implementing the new requirements by October 19, 2014.

Then, on July 31, 2014, President Obama signed the Fair Pay and Safe Workplaces executive order that requires those bidding on governmental contracts worth more than $500,000 to disclose their employment and labor law violations for the previous three years.  The executive order also bans employers who have federal contracts worth more than $1 million from requiring their employees to sign pre-dispute arbitration agreements applicable to "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."  This requirement also must be incorporated into subcontracts where the estimated value of the supplies acquired and services required exceeds $1 million.  The executive order will be implemented in 2016 after the Federal Acquisition Regulatory (FAR) Council, with guidance from the U.S. Department of Labor, issues specific regulations to carry out the Executive Order.

Most recently, on August 6, 2014, the OFCCP issued a Notice of Proposed Rulemaking (“NPRM”) requiring covered federal contractors and subcontractors with more than 100 employees to submit an annual Equal Pay Report (“EPR”) on employee compensation.  The NPRM was officially published in the Federal Register on Friday, August 8, and the deadline for comment is November 6, 2014.  According to the NPRM, covered contractors, defined as employers with 100 or more employees, will be required to file the EPR in the first quarter of every year for each establishment.  The EPR will supplement the already annually required EEO-1 Report.  The NPRM proposes that the EPR include W-2 earnings, as opposed to the base compensation most employers include in their submissions to the OFCCP, for all employees aggregated by EEO-1 category.  Covered contractors also will be required to include, by EEO-1 category, the aggregated hours worked for all non-exempt employees and for all exempt employees if tracked by the employer.

According to the OFCCP, “the data will enable [it] to direct its enforcement resources toward federal contractors whose summary data suggests potential pay violations, while reducing the likelihood of reviewing companies that are less likely to be out of compliance.”  The OFCCP also will release “aggregate summary data on the race and gender pay gap by industry and EEO-1 category to enable contractors to review their pay data using the same metrics as OFCCP and take voluntary compliance measures.”

 Copies of the above referenced executive orders are available on the OFCCP’s website at http://www.dol.gov/ofccp.  All of this activity, even though some of it will not take effect for some time and may change in form, is a reminder to federal contractors that they need to evaluate their employment practices and OFCCP compliance efforts, and consider whether they want to weigh in while the OFCCP is receiving input on its proposals.  For questions about the new executive orders or other issues related to the other recent regulatory compliance obligations imposed on federal contractors, please contact the author of this article or any member of the labor and employment group.