Obama EO Raises Scrutiny on Contractor Labor Violations

August 6, 2014

pic-whitehouseOn Thursday, July 31, 2014,Obama Signs EO Increasing Scrutiny on Contractors’ Labor Violations President Barack Obama signed an Executive Order (EO) requiring federal contractors to disclose any labor violations they’ve incurred. This EO comes on the heels of another EO requiring federal contractors to increase their minimum wage to $10.10 per hour.

The EO requires labor violations over the previous three years to be disclosed on any contract bids—those violations are related to: pay, safety, health, collective bargaining and civil rights. Additionally, agencies will have to designate a high-level contracting official as a labor compliance advisor to help guide decisions as they relate to companies’ past violations.

According to the Labor Department, there are roughly 24,000 businesses with federal contracts, amounting to approximately 28 million workers. In a 2010 report from the Government Accountability Office, nearly two-thirds of the 50 largest violators of wage and hour laws were found to have received new federal contracts.

Contracting firms have cited the complex web of labor rules—namely the Fair Labor Standards Act (FLSA)—as confusing and could lead to minor mishaps or mistakes causing a company to be blacklisted in the federal procurement arena. Currently, contracting officials can exclude companies with serious law violations from winning contracts, but the new EO would raise the attention paid to labor violations by charging a specific, high-level contracting officer with overseeing labor law compliance by federal contracting businesses. The administration has said the point of the EO, and ensuing regulations, is to prevent companies with a willful, repeated history of labor violations from winning federal contracts.

Please click here to read the full executive order.