Fair Pay & Safe Workplaces
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1 In This Edition: Fair Pay & Safe Workplaces Summary of DoL Proposed Rule/Guidance, Risks and Compliance Tips Presented by: David Robbins, Chair, Government Contracts and Grants Practice,
2 Background Material Friday May 27, 2015, the Department of Labor issued a Proposed Rule and Guidance for implementing Executive Order 13673, Fair Pay and Safe Workplaces. Implementing Guidance from DoL: Proposed Rule: The proposed rule implements a tiered approach focused on: 1. Data collection, reporting, and remediation (with definitions not-yet-fixed) of various categories of labor violations; 2. Contracting officer-level responsibility determinations with guidance from as-of-yet not identified senior level labor compliance advisors; and, 3. Eventual consideration of significant misconduct by Suspending and Debarring Officials. 2
3 In This Compliance Brief We Will Summarize the proposed rule and guidance Point out potential implementation issues Highlight risk factors for contractors Identify potential proactive steps to minimize impact of the rule before it becomes final Please note that we do not cover the Paycheck Transparency Procedures also contained in the Proposed Rule as they are different in scope and application. 3
4 Highlights of the Proposed Rule/Guidance (1 of 4) Linking contractor ethics with labor violations, the proposed rule seeks reporting and disclosure of administrative merits determination[s], civil judgment[s], or arbitral award or decision[s] rendered against [contractors] during the preceding three-year period for violations any of 14 identified labor laws and executive orders, or state laws. (p. 1, DoL Guidance) Violations include FLSA, OSHA, MSPA, NLRA, Davis-Bacon Act, Service Contract Act, EEO, Section 503 of Rehabilitation Act of 1973, VEVRA, FMLA, Title VII, ADA, ADEA, violations of minimum wage laws (p , DoL Guidance); State level equivalents were included in the Executive Order but are not covered by this Proposed Rule. They will be subject to future rulemaking. (p. 1 at note 1, DoL Guidance). Prime contractors will be responsible for obtaining subcontractor reporting (though separate proposal may allow direct subcontractor reporting) (p. 2 and note 2, DoL Guidance) COMPLIANCE NOTE: Administrative merits determinations, civil judgments and/or arbitral award decisions are not always the final decision and can trigger disclosure obligations at an earlier stage than is appropriate. May impact strategic decision making. See pp DoL Guidance. Contractors will be able to provide additional information and mitigation descriptions in their disclosures. See p. 23, DoL Guidance. 4
5 Highlights of the Proposed Rule/Guidance (2 of 4) Labor Compliance Advisors (LCA) will be created to consult with contractors that report these types of violations and will coordinate assistance with relevant enforcement agencies. (p. 2, DoL Guidance). LCAs will be senior agency official[s] focused on providing consistent guidance on whether contractors actions rise to the level of a lack of integrity or business ethics. (p. 13, DoL Guidance) DoL will also develop final guidance concerning when violations are serious, repeated, willful, and pervasive enough to trigger action by enforcement agencies (p. 2, DoL Guidance). Expect a matrixed approach with definitions taken from law and regulation. Extended discussion available beginning on page 32 of the DoL Guidance with assessment summary beginning on page 60, but significant pushback during comment period expected. Significant similarities and new remedies for whistleblower protection violations/retaliation is highly likely in the final rule. (See, e.g., p. 35, DoL Guidance) 5
6 Highlights of the Proposed Rule/Guidance (3 of 4) Remediation of Violations DoL Guidance Fair Pay & Safe Workplaces DoL Guidance recognizes the importance of contractors efforts to remedy past violations, calling it typically the most important factor that can mitigate the existence of a violation. (p. 62, DoL Guidance) However, the Guidance ties assum[ing] responsibility for the violation to remediation and the language may not contemplate neither admits nor denies arguments or nuisance value settlements. (p. 62, DoL Guidance) Remediation must correct the violation including by making any affected workers whole and efforts to prevent similar violations in the future. Preference is expressed for enterprise-wide remediation or an enhanced settlement agreement for violations. Commentary: This is an area of potential concern. Remediation does not appear fully fleshed out and does not square with reality that often the sanction or resolution of a matter is less severe than the initial communication (generally from DoL) that would trigger a reporting obligation. 6
7 Highlights of the Proposed Rule/Guidance (4 of 4) Multiple disclosure points required (pp , DoL Guidance): Initial Representation: upon offer or solicitation response with a three-year look-back from that date Pre-Award Reporting: additional, updated information before a FAR 9.1 pre-award responsibility determination Post-Award Reporting: semi-annual reporting during performance Subcontractor Reporting: upon subcontract award and semi-annually during performance, and [t]he Order requires contractors to make the same assessments regarding subcontractors and their violations of the Labor Laws as contracting agencies must make of contractors. This builds on contractors existing obligation to determine the responsibility of their subcontractors. (p. 31, DoL Guidance, internal citation omitted.) COMPLIANCE NOTE: This is an area with significant potential compliance challenges. Timeliness of look-back is potentially administratively difficult and the frequency of reporting compounds the burden. New internal reporting, tracking, and disclosure procedures will be required to comply, with significant potential consequences for noncompliance. Updating tracking and compliance procedures now and working out any kinks may prevent more severe consequences later. 7
8 Risks Largest risks apply to efforts to litigate or otherwise defend employment disputes and address union-related issues and must be considered as part of strategic decisions. The disclosure regime also sets up traps for the unwary for failing to gather potentially far-flung information and disclose it. Incomplete notions of remediation may also create misperceptions of adequacy of contractor ethics programs where none exist. Potential enforcement mechanisms are severe, including FAR 9.1 nonresponsibility determinations (difficult to overturn in a protest setting) and FAR 9.4 suspension/debarment (with can have severe reputational harm before a final decision is made). 8
9 Proactive Compliance Steps Review internal data gathering and reporting mechanisms for the categories of violations covered by the Proposed Rule. Adjustments to the processes should be considered with enough time to implement and train before the Final Rule is in effect. Consider strategic approaches to allegations of labor and health/safety violations in light of proposed changes. Prepare for potential collateral consequences so they do not come as a surprise. Focus on traditional prevention and candor with the customer as part of ongoing ethics and compliance programs and training efforts. Although not included specifically in the Proposed Rule, they are commonly accepted in, for example, FAR (a) (debarment mitigation) and Organizational Sentencing Guidelines analyses. 9
10 Questions, Comments, Concerns? Please contact: David Robbins Chair, Government Contracts and Grants Practice Shulman Rogers, 10
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