Another executive order constricts compliance for government contractors

Proponents of the order see it as a boon for the improvement of labor and employment practices, and others see it as a hindrance to contractors obtaining bids

President Obama has signed an executive order requiring federal contractors to disclose any labor violations they have incurred in the past three years. The White House has said that this measure is part of the President’s plan to ensure fair wages and workplace safety, according to Reuters. Scrutiny has tightened on contracting companies that have violated labor laws over the last couple of years, as more information about how much taxpayers put into those violating companies has been published. Of course, government contractors will have to change tack a bit as to how their compliance ships are run, and the ways in which they capture data. Linda Jackson, shareholder in Littler’s Washington D.C. office, provided some insight into how contractors will be impacted, and how the measure integrates with labor violation laws.

Jackson said that the executive order “may impact operations [of government contractors] significantly. While it is too soon to tell what specific requirements will flow from this, we know from the executive order itself that government contractors will need to develop a tracking and reporting mechanism that accurately captures — and therefore permits the accurate reporting of — violations for the more than a dozen labor and employment laws listed in the order as well as all state laws covering the same topics.”

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Tracking and reporting issues are going to be paramount under this order; providing incorrect information to the government during the procurement process will be hugely detrimental, according to Jackson. This latest order comes after a number of other executive orders this year that target the labor and employment practices of government contractors. They have included mandates for a hike in minimum wage, an expansion of overtime eligibility, and a ban on discrimination on the basis of sexual orientation or gender identity.

The order is seen as one that could make it harder for companies to win contracting bids. Because the order instructs federal agencies to consider past violations when awarding federal contracts, some applicants with past violations might be denied contracts because of historical infractions. Improvements in compliance are therefore vital.

 

Jackson says that this order is not necessarily beneficial for insuring against labor violations because of the mechanisms already in place in the procurement process to “assess the integrity of the bidding contractor.” She says: “This order adds a potentially significant and complex layer of compliance and reporting obligations to an already significant an complex set of compliance and reporting requirements. From a practical perspective, I do wonder whether we will see an increase in complaints on these issues given the potential scope of determinations that may need to be reported, and the recognition of the value that may be associated with avoiding the risk of a potentially reportable violation.”

Reuters quotes Senator Tom Harkin of Iowa, a lawmaker on the Health, Education, Labor and Pensions Committees, in praise of the new order:

"The executive order announced by the White House is a bold response to a report I released last year. My report found that in 2012 alone, taxpayers provided more than $80 billion in contracts to companies that had committed significant violations of our basic labor laws.”

Regardless of the polarized viewpoints, the order will go into effect in 2016.

Contributing Author

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Juliana Kenny

Juliana Kenny is a contributor to InsideCounsel.com, covering a range of topics including patent litigation, conflict mineral laws, executive compensation, and antitrust regulation. Juliana earned B.A.s...

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