“[W]e respectfully request that no further presidential directives primarily focused on government contractors be issued for the foreseeable future,” wrote four government contractor associations in a letter to the White House dated August 3, 2015. The letter was released publicly on Tuesday, August 11, 2015, and signed by representatives of the Aerospace Industries Association, the National Defense Industrial Association, the Professional Services Council, and the Information Technology Industry Council. The four associations argued that the president’s 12 executive orders pertaining to government contracting, resulting in 16 new regulations, have “significantly increase[d] the costs of doing business with the government.” Illustrating this point, the letter references an estimate that “nearly thirty cents of every contract dollar goes toward compliance with unique government regulations.” Continue Reading Contractors (Respectfully) Request that the President Stop Issuing Executive Orders Focused on Contractors
The key word is “suffer.”
Government contractors already face painful compliance burdens associated with the Fair Pay and Safe Workplaces Executive Order, the proposed implementing regulations, and the Labor Department’s “Guidance” amplifying the proposed regulations. Last week, the Department added another layer of complexity when it issued an Administrator’s Interpretation of the Fair Labor Standards Act. (Covington’s Employment group analyzed the Interpretation here.) The fifteen-page Interpretation stems from the Department’s conclusion that companies are increasingly misclassifying employees as independent contractors. It explains the Department’s view that the statutory definition of employ (“to suffer or permit to work”) informs the distinction between those classes of workers. We hate to spoil an ending, but the bottom line is clear: “most workers are employees.”
The Interpretation applies across a broad range of industries, but it presents special issues for government contractors. Federal contracts in excess of $500,000 trigger obligations under the Paycheck Transparency provisions (section 5) of the Executive Order. The proposed regulations require employers with covered contracts to provide each worker whom they classify as an independent contractor with “a document … informing the individual of that status.” Contractors must look elsewhere for guidance on format and content of the document.
Company communications with government authorities about potential criminal activity or wrongdoing by the company’s employees may expose that company to liability for defamation; that is, unless those communications are considered privileged. In the majority of states, communications with police or prosecutors are afforded “qualified” or “conditional” privilege, and generally may be the basis of a defamation suit only if they are made with malice or are knowingly false. And several states have afforded absolute privilege or immunity to communications that are made in response to a government investigation that could lead to prosecution.
But importantly for contractors, potential defamation liability on the basis of statements to the government could arise outside the context of a government investigation. For example, the recent issuance of the Fair Pay Safe Workplaces Order (“FPSW Order” or “Order”), which requires contractors to disclose violations of number of labor laws, may have significant implications for contractors’ exposure to defamation suits. Continue Reading New Obligations to Disclose Labor Law Violations Could Expose Contractors to Defamation Liability
Over the past year, we have been tracking the uptick in executive and regulatory actions affecting the labor and employment practices of government contractors. Last Friday, the D.C. Circuit upheld one of those regulations. The decision concludes the first skirmish in what promises to be a lengthy and high-stakes legal battle involving industry, Congress, and the Administration. Continue Reading D.C. Circuit Upholds Employment Regulations
President Obama recently issued two Executive Orders designed to ensure that federal contractors maintain strict compliance with various labor-related laws and regulations if they wish to remain eligible for federal contracts. Taken together, these Executive Orders place significant new compliance burdens on federal contractors. Please see our attached article for an in-depth analysis of these requirements and our suggestions for proactive steps contractors can take to address them.
The Fair Pay and Safe Workplaces Executive Order (No. 13673) creates a series of new reporting and evaluation requirements for federal contractors. Contractors must collect, maintain, and disclose data on any violations of labor laws. Agencies must appoint Labor Compliance Advisors to evaluate this data and coordinate their analysis with the contracting officer’s responsibility determination. The order also creates new reporting requirements for employee pay and hour data and severely restricts employers’ ability to require binding arbitration for employee grievances based on sexual assault, harassment, or claims arising out of Title VII of the Civil Rights Act. The order calls for rulemaking by the Department of Labor and proposed amendments to the Federal Acquisition Regulation.
The Non-Retaliation for Disclosure of Compensation Information Executive Order (No. 13665) targets prohibitions on discussing and disclosing information related to compensation. The order aims to increase transparency within companies to detect and interdict compensation discrimination. Under the proposed rule issued by the Department of Labor on September 15, 2014, agencies must include a new nondiscrimination provision in all contracts valued at more than $10,000. With limited exceptions, contractors may not discriminate against an employee who inquires about or discloses compensation information.