Proposed ‘Fair Pay’ Rule Riles Federal Contractors

Nearly a year after President Obama signed an executive order requiring contractors to disclose labor law violations when they submit bids for federal work, a proposed rule and guidance on how companies should comply are drawing a thumbs-down from many in industry.

Last week’s proposed rule from the Federal Acquisition Regulatory Council and accompanying Labor Department guidance are intended to assure workers that “their paychecks are accurate,” wrote Labor Secretary Thomas Perez in a May 27 blog post. “They also ensure that workers who may have had their civil rights violated or been sexually assaulted can have their day in court, ending pre-dispute mandatory arbitration agreements covering these claims at large federal contractors.”

The rule and guidance require companies to report past and pending labor law violations so that contracting officers may consider them—along with mitigating circumstances—during the award process for contracts topping $500,000. Both prime contractors and subcontractors are covered. The executive order requires that the firms provide workers and independent contractors every pay period with information on how they are paid. And agencies must create procedures to help companies comply, including an arbitration process for disputes.

Perez stressed that the proposals—now subject to a 60-day comment period—were informed by discussions with contractors and worker advocates. “Taxpayer dollars should not reward corporations that break the law, and contractors who meet their responsibilities should not have to compete against those who do not,” Perez wrote.

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