August 05, 2014

Obama Signs Two New Executive Orders for Federal Contractors Addressing Sexual Orientation Discrimination and Disclosure of Labor Violations

President Barack Obama recently signed two executive orders that will affect employers who are federal contractors.

Prohibition Against Sexual Orientation or Gender Identity Discrimination

On July 21, 2014, the President signed an executive order prohibiting federal contractors and subcontractors with contracts worth $10,000 or more from discriminating against employees on the basis of sexual orientation or gender identity. To implement this protection, the President will amend Executive Order 11246, signed by President Lyndon Johnson in 1965, to add sexual orientation and gender identity to the list of protected classes that currently include race, color, religion, sex and national origin.

The ban, however, does not modify the current exemption for religiously-affiliated contractors that was last amended by President George Bush in 2002. That exemption permits religiously-affiliated contractors to favor individuals of a particular religion when making employment decisions.

The Department of Labor's Office of Federal Contract Compliance Programs is slated to issue proposed implementing regulations within 90 days.      

Requirement to Disclose Labor Violations

On July 31, 2014, the President signed an executive order titled "Fair Pay and Safe Workplaces." The order requires companies seeking federal contracts exceeding $500,000 to disclose "any administrative merits determination, arbitral award or decision, or civil judgment" against them within the past three years for violations of certain federal labor laws. These laws include the Fair Labor Standards Act (FLSA), the Occupational Safety and Health Act (OSHA), the National Labor Relations Act (NLRA), the Family and Medical Leave Act (FMLA), Title VII of the 1964 Civil Rights Act, the Americans with Disabilities Act (ADA), and the Age Discrimination in Employment Act (ADEA). The order also requires companies to disclose steps taken to correct violations and any settlement or conciliation agreements entered into with any "enforcement agency." If the disclosures contain repeated, willful or egregious violations of these labor laws, they could provide for the basis for denial or termination of a contract.    

Once a covered government contract is entered into, the contractor must update its disclosures every six months. Contractors are also required to monitor their subcontractors who provide more than $500,000 in goods or services to the performance of the contract to ensure the subcontractors comply with the new requirements.   

In addition, the order prohibits companies seeking contracts worth $1 million or more from requiring employees to sign mandatory arbitration agreements for disputes arising under Title VII of the Civil Rights Act or for sexual assault or harassment violations. Arbitration of such claims may proceed only with the voluntary consent of the employee. Contractors must pass this requirement on to subcontractors providing goods or services in excess of $1 million for the contract.

Details on how the requirements will work have not yet been released. The Department of Labor's Federal Acquisition Regulatory Council will next propose implementing regulations which will be open to public comment before enactment. The White House expects the final implementing regulations to be effective by 2016. 

We will keep you updated as information becomes available about these new executive orders. In the interim, federal contractors should consider the potential impact of the new disclosure requirements on their pending and future federal contracts.

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