Earlier this month, the National Labor Relations Board issued a memorandum announcing the steps it will take to report complaints alleged against federal contractor employers in order to comply with the Fair Pay and Safe Workplaces Executive Order 13673.  In doing so, the NLRB became the first government agency to implement reporting procedures under the Executive Order, though regulations have not been finalized.  Noteworthy, it appears the NLRB will use the Executive Order’s reporting requirements as a pressure point to further encourage the early settlement of complaints filed against companies.  While it remains to be seen exactly how the Executive Order’s “blacklisting” procedures will impact federal contractors, it is important that companies understand the potential impact of the Executive Order and the planned procedures of the various administrative agencies, including the NLRB, to comply with the Executive Order.

What is the Fair Pay and Safe Workplaces Executive Order?

In 2014, President Obama signed the Executive Order with the stated objective of promoting efficient procurement of government contracts with businesses “who comply with labor laws.”  Under the Executive Order, companies with government contracts valued at $500,000 or more must report violations under 14 labor and employment laws, including:

  • FLSA;
  • FMLA;
  • Title VII;
  • ADA;
  • ADEA;
  • OSHA;
  • NLRA;
  • laws that apply to federal contractors; and
  • equivalent state laws.

The government will then factor the company’s compliance record when deciding whether the company should be awarded, or be allowed to maintain, a federal contract.  The Executive Order contemplates that the various government administrative agencies will report information related to a federal contractor’s labor and employment violations with other agencies in order to crack down against repeat or egregious violators.  Depending on the violations, the contractor could potentially be barred from obtaining federal contracts.  The Executive Order’s final regulations were sent to the Office of Management and Budget for review and approval on May 4, 2016, though there continues to be discussion about legislation to exclude defense contractors from these requirements.

What information is the NLRB collecting?

In its memo, the NLRB stated that it will be collecting and reporting information from federal contractors who either commit a labor violation, or who have a labor complaint issued against them by a Regional Director on or after July 1, 2016.  The information includes certain information already tracked in the NLRB’s case management system, plus the companies’ EIN, TIN, CAGE, DUNS, and DUNS suffix numbers.

What happens if companies settle the complaint early?

Interestingly, the NLRB attached a draft email to the memorandum, which provides that if a company agrees to settle the alleged labor violation before the Regional Director issues a complaint, no information on the case will be forwarded to the central government database.  With this, the NLRB seems to be attempting to pressure federal contractors into early settlement of alleged violations, sometimes when not many facts are even known about the allegations, or else face the Executive Order’s reporting requirements.  As such, federal contractors will have to weigh the costs of settling a complaint against the risks associated with reporting information under the Executive Order.

Have other agencies started collecting data under the Fair Pay and Safe Workplaces Act?

Now that the NLRB has started collecting data regarding federal contractors’ labor violations, companies can expect other agencies to follow.  As of now, only the DOL has issued proposed guidance.  Companies should stay tuned for updates from the OMB regarding the publication of regulations on the Executive Order as well as any guidance from the various administrative agencies, including the EEOC, OSHA, and state agencies.