[Federal Register Volume 80, Number 102 (Thursday, May 28, 2015)][Notices][Pages 30573-30604]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-12562]
Vol. 80
Thursday,
No. 102
May 28, 2015
Part III
Department of Labor
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Office of the Secretary
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Guidance for Executive Order 13673, "Fair Pay and Safe Workplaces"
Federal Register / Vol. 80, No. 102 / Thursday, May 28, 2015 /
Notices
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DEPARTMENT OF LABOR
Office of the Secretary
ZRIN 1290-ZA02
Guidance for Executive Order 13673, "Fair Pay and Safe
Workplaces"
AGENCY: Department of Labor.
ACTION: Proposed guidance.
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SUMMARY: The Department of Labor is proposing guidance to assist
federal agencies in the implementation of Executive Order 13673, Fair
Pay and Safe Workplaces (the Order). The Order was signed by President
Barack Obama on July 31, 2014, and it contains several new requirements
designed to improve the federal contracting process. The Order seeks to
increase efficiency and cost savings in the work performed by parties
that contract with the Federal Government by ensuring that the parties
are responsible and comply with labor laws. The Order requires federal
contractors to report whether there has been any administrative merits
determination, civil judgment, or arbitral award or decision rendered
against them during the preceding three-year period for violations of
any of 14 identified federal labor laws and executive orders or
equivalent State laws.\1\ Contracting officers and Labor Compliance
Advisors will assess these types of reported violations (considering
whether the violations are serious, repeated, willful, or pervasive) as
part of the determination of whether a contractor has a satisfactory
record of integrity and business ethics. Labor Compliance Advisors will
be available to consult with contractors that report these types of
violations and will coordinate assistance with the relevant enforcement
agencies. Contractors will require their subcontractors to report these
types of violations of the identified labor laws and will similarly
assess reported violations.\2\ And to achieve further paycheck
transparency for workers, contractors and subcontractors will be
required to provide their workers on federal contracts with information
each pay period regarding how their pay is calculated (a wage
statement) and provide notice to those workers whom they treat as
independent contractors.
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\1\ The Department will publish in the Federal Register at a
future date a second proposed guidance addressing which State laws
are equivalent to the 14 Federal labor laws and executive orders
identified in the Order.
\2\ The Department recognizes that the Federal Acquisition
Regulatory Council is considering allowing contractors to direct
their subcontractors to report violations to the Department, which
would then assess the violations.
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The Order directs the Department of Labor to develop guidance to
assist federal agencies in implementing the Order's requirements.
Consistent with that direction, this proposed guidance, when final,
will: define "administrative merits determination," "civil
judgment," and "arbitral award or decision," and provide guidance on
what information related to these determinations must be reported by
contractors and subcontractors; define "serious," "repeated,"
"willful," and "pervasive" violations and provide guidance to
contracting officers (or contractors with respect to their
subcontractors) and Labor Compliance Advisors for assessing reported
violations, including mitigating factors to consider; and provide
guidance on the Order's paycheck transparency provisions, including
identifying those States whose wage statement laws are substantially
similar to the Order's wage statement requirement such that providing a
worker with a wage statement that complies with any of those State laws
satisfies the Order's requirement.
The Order builds on the existing procurement system, and changes
required by the Order fit into established contracting practices that
are familiar to both procurement officials and the contracting
community. In addition, the Department of Labor will provide support
directly to contractors and subcontractors so that they understand
their obligations under the Order and can come into compliance with
federal labor laws without holding up their contract bids. Finally, the
Department will work with Labor Compliance Advisors across agencies to
minimize the amount of information that contractors have to provide and
to help ensure efficient, accurate, and consistent decisions across the
government.
The objective of the Order is to help contractors come into
compliance with federal labor laws, not to deny them contracts. To this
end, this proposed guidance, when final, will provide a roadmap to
contracting officers, Labor Compliance Advisors, and the contracting
community for assessing contractors' history of labor law compliance
with regard to their business integrity and ethics and considering
mitigating factors, most notably efforts to remediate any reported
labor law violations, including agreements entered into by contractors
with enforcement agencies.
DATES: Comments must be received on or before July 27, 2015.
ADDRESSES: You may submit comments, identified by ZRIN 1290-ZA02, by
either of the following methods:
Electronic comments: Comments may be sent via
http://www.regulations.gov, a Federal E-Government Web site that allows
the public to find, review, and submit comments on documents that agencies
have published in the Federal Register and that are open for comment.
Simply type in "guidance on fair pay and safe workplaces" (in quotes)
in the Comment or Submission search box, click Go, and follow the
instructions for submitting comments.
Mail: Address written submissions to Tiffany Jones, U.S. Department
of Labor, Room S-2312, 200 Constitution Avenue NW., Washington, DC
20210.
Instructions: Please submit only one copy of your comments by only
one method. All submissions must include the agency name and ZRIN,
identified above, for this document. Please be advised that comments
received will become a matter of public record and will be posted
without change to http://www.regulations.gov, including any personal
information provided. Comments that are mailed must be received by the
date indicated for consideration. For additional information on
submitting comments and the guidance process, see the "Invitation to
Comment" section of the SUPPLEMENTARY INFORMATION provided later in
this document.
Docket: For access to the docket to read background documents or
comments, go to http://www.regulations.gov. Docket name: Fair Pay and
Safe Workplaces. Docket ID: DOL-2015-0002.
FOR FURTHER INFORMATION CONTACT: Contact Kathleen E. Franks, Director,
Office of Regulatory and Programmatic Policy, U.S. Department of Labor,
Room S-2312, 200 Constitution Avenue NW., Washington, DC 20210;
telephone: (202) 693-5959 (this is not a toll-free number). Copies of
this proposed guidance may be obtained in alternative formats (large
print, Braille, audio tape or disc), upon request, by calling (202)
693-5959 (this is not a toll-free number). TTY/TDD callers may dial
toll-free [1-877-889-5627] to obtain information or request materials
in alternative formats.
SUPPLEMENTARY INFORMATION:
Background
Although most federal contractors comply with applicable laws and
provide quality goods and services to the government and taxpayers, a
small number of federal contractors have been responsible for a significant
number of labor law violations in the last decade. In 2010, the
Government Accountability Office issued a report that found that almost
two-thirds of the 50 largest wage-and-hour violations and almost 40
percent of the 50 largest workplace health-and-safety penalties issued
between FY 2005 and FY 2009 occurred at companies that later received
government contracts.\3\ In 2013, Senate Health, Education, Labor, and
Pensions Committee Chairman Tom Harkin issued a report which revealed
that dozens of contractors with significant health-and-safety and wage-
and-hour violations continued to receive federal contracts.\4\ Between
2007 and 2012, 49 federal contractors were cited for 1,776 separate
federal labor law violations and paid $196 million in damages and
penalties.\5\ In FY 2012, these same companies were awarded $81 billion
in federal contracts.\6\
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\3\ U.S. Government Accountability Office, GAO-10-1033, Federal
Contracting: Assessments and Citations of Federal Labor Law
Violations by Selected Federal Contractors, Report to Congressional
Requesters (2010), available at http://www.gao.gov/new.items/d101033.pdf*.
\4\ Majority Staff of Senate Committee on Health, Education,
Labor, and Pensions, Acting Responsibly? Federal Contractors
Frequently Put Workers' Lives and Livelihoods at Risk, 1 (2013),
available at
http://www.help.senate.gov/imo/media/doc/Labor%20Law%20Violations%20by%20Contractors%20Report.pdf*.
\5\ Id.
\6\ Id.
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Beyond their human cost, these violations create risks to the
timely, predictable, and satisfactory delivery of goods and services to
the Federal Government, and federal agencies risk poor performance by
awarding contracts to companies with histories of labor law violations.
Poor workplace conditions lead to lower productivity and creativity,
increased workplace disruptions, and increased workforce turnover. For
contracting agencies, this means receipt of lower quality products and
services, and increased risk of project delays and cost overruns.
Contracting agencies can reduce execution delays and avoid other
complications by contracting with contractors with track records of
labor law compliance--and by helping to bring contractors with past
violations into compliance. Contractors that consistently adhere to
labor laws are more likely to have workplace practices that enhance
productivity and to deliver goods and services to the Federal
Government in a timely, predictable, and satisfactory fashion.
Moreover, by ensuring that its contractors are in compliance, the
Federal Government can level the playing field for contractors who
comply with the law. Those contractors who invest in their workers'
safety and maintain a fair and equitable workplace should not have to
compete with contractors who offer slightly lower bids--based on
savings from skirting labor laws--and then ultimately deliver poor
performance to taxpayers. By contracting with employers who are in
compliance with labor laws, the Federal Government can ensure that
taxpayers' money supports jobs in which workers have safe workplaces,
receive the family leave they are entitled to, get paid the wages they
have earned, and do not face unlawful workplace discrimination.
Overview of Guidance
The Order instructs federal agencies to work together to implement
new contracting requirements and processes. The Order creates detailed
implementation roles for the Federal Acquisition Regulatory Council
(FAR Council), the Department of Labor (Department), the Office of
Management and Budget (OMB), and the General Services Administration
(GSA). These agencies will implement the Order in stages, on a
prioritized basis.
The Order gives the Department several specific implementation and
coordination duties. The Order directs the Secretary of Labor (the
Secretary) to develop guidance that defines the "administrative merits
determinations," "civil judgments," and "arbitral awards or
decisions" that contractors and subcontractors must report, see Sec.
2(a)(i); identifies the State laws that are "equivalent" to the 14
federal labor laws and executive orders for which violations must be
reported, see Sec. 2(a)(i)(O); assists contracting agencies (and
contractors with respect to their subcontractors) in determining if
reported violations are "serious," "repeated," "willful," or
"pervasive," see Sec. 4(b)(i); and specifies which State wage
statement requirements are substantially similar to the Order's
requirement such that providing a worker with a wage statement in
compliance with one of those State's requirements satisfies the Order's
wage statement requirement, see Sec. 5(a). The Order also directs the
Secretary to develop processes for coordination between newly
designated Labor Compliance Advisors in each contracting agency and the
Department and processes by which contracting officers and Labor
Compliance Advisors may give appropriate consideration to
determinations and agreements made by the Department and other
enforcement agencies. See Sec. 4(b)(ii).\7\
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\7\ The Department will set up a structure within the Department
to consult with Labor Compliance Advisors in carrying out their
responsibilities and duties and to help ensure efficient, accurate,
and consistent decisions across the government. In addition, the
Department will be available to consult with contractors and
subcontractors to assist them in fulfilling their obligations under
the Order. Contractors and subcontractors, before bidding, will also
be offered the opportunity to receive early guidance from the
Department and other enforcement agencies on whether any of their
violations of the labor laws are potentially problematic, as well as
the opportunity to remedy any problems.
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This proposed guidance satisfies most of the Department's
responsibilities for issuing guidance, and the Department will publish
at a later date a second guidance that satisfies its remaining
responsibilities. Section I below discusses the reasons for the Order
and summarizes its requirements. Section II defines the terms
"administrative merits determination," "civil judgment," and
"arbitral award or decision," and provides guidance regarding the
types of information that contractors and subcontractors should report
under the Order. Section III defines the terms "serious,"
"repeated," "willful," and "pervasive." It also provides guidance
on how reported violations should be assessed and what mitigating
factors should be considered. Section IV provides guidance on the
Order's paycheck transparency provisions. It identifies and solicits
comment on two options for determining those States whose wage
statement laws are substantially similar to the Order's wage statement
requirement. Section V is an invitation to comment, and Section VI
describes next steps.
This proposed guidance also provides guidelines for how contracting
officers and Labor Compliance Advisors may give appropriate
consideration to determinations and agreements made between contractors
and enforcement agencies. In addition, the Department will publish in
the Federal Register at a future date a second proposed guidance
addressing which State laws are equivalent to the 14 federal labor laws
and executive orders identified in the Order for which contractors and
subcontractors must report violations. For purposes of this initial
proposed guidance, however, State plans approved by the Department's
Occupational Safety and Health Administration (OSHA-approved State
Plans) are equivalent State laws (see discussion below).
As part of the development of this proposed guidance, the
Department has engaged with a range of interested parties (including
contractors, contracting agencies, and unions) to solicit their views
on the Order. The White House hosted four listening sessions to hear
their views, ideas, and concerns regarding the provisions of the Order.
The Department found these listening sessions helpful and considered
relevant information raised during those sessions in developing this
proposed guidance.
Consistent with its efforts to engage with interested parties
regarding the Order, the Department, in its discretion, is soliciting
public comment on this proposed guidance in the manner and before the
date specified above. Agencies are not required to provide notice and
an opportunity for public comment on guidance documents before they are
adopted, as is generally required for formal legislative rulemaking and
other regulatory action.
I. Purpose and Summary of the Order
The Order states that the Federal Government will promote economy
and efficiency in procurement by contracting with responsible sources
that comply with labor laws. See Sec. 1. The Order seeks to increase
efficiency and cost savings in the work performed by parties that
contract with the Federal Government by ensuring that they understand
and comply with labor laws. Id.
A. Existing Requirements for Contracting With Responsible Sources
By statute, contracting agencies are required to award contracts to
responsible sources. See 10 U.S.C. 2405(b); 41 U.S.C. 3703. A
"responsible source" means a prospective contractor that, among other
things, "has a satisfactory record of integrity and business ethics."
41 U.S.C. 113.
Part 9 of the Federal Acquisition Regulation (FAR) implements this
statutory "responsibility" requirement. The FAR states that
"[p]urchases shall be made from, and contracts shall be awarded to,
responsible prospective contractors only." 48 CFR 9.103(a). In
accordance with the statutory definition of "responsible source," the
FAR states that "[t]o be determined responsible, a prospective
contractor must . . . [h]ave a satisfactory record of integrity and
business ethics. . . ." 48 CFR 9.104-1. In addition, the FAR requires
contractors on certain contracts to disclose to contracting officers
any "credible evidence" that the agents of the contractor or any of
its subcontractors have committed violations of federal criminal laws
involving fraud, conflict of interest, bribery, or gratuities or of the
civil False Claims Act in connection with the contract. 48 CFR 52.203-
13; see also 48 CFR 52.209-5 and 52.209-7 (requiring disclosures). The
FAR also provides that, generally, prospective prime contractors are
responsible for determining the responsibility of their prospective
subcontractors. See 48 CFR 9.104-4.
B. Legal Authority
The President issued the Order, as stated therein, pursuant to his
authority under "the Constitution and the laws of the United States,"
expressly including the Federal Property and Administrative Services
Act (Procurement Act), 40 U.S.C. 101 et seq. The Procurement Act
authorizes the President to "prescribe policies and directives that
the President considers necessary to carry out" the statutory purposes
of ensuring "economical and efficient" government procurement and
administration of government property. 40 U.S.C. 101, 121(a). The Order
establishes that the President considers the requirements included in
the Order to be necessary to economy and efficiency in federal
contracting (noting that "[c]ontractors that consistently adhere to
labor laws are more likely to have workplace practices that enhance
productivity and increase the likelihood of timely, predictable, and
satisfactory delivery of goods and services to the Federal Government"
and that "[h]elping executive departments and agencies (agencies) to
identify and work with contractors with track records of compliance
will reduce execution delays and avoid distractions and complications
that arise from contracting with contractors with track records of
noncompliance"). See Sec. 1. The Order directs the Secretary to
define certain terms used in the Order and to develop guidance "to
assist agencies" in implementing the Order's requirements. See
Sec. Sec. 2(a)(i), 4(b).
C. Summary of the Order's Requirements and Interaction With Existing
Requirements
The Order builds on the existing procurement system by instructing
contracting officers to consider a contractor's history of labor laws
violations, if any, as a factor in determining if the contractor has a
satisfactory record of integrity and business ethics and may therefore
be found to be a responsible source eligible for contract award. See
Sec. Sec. 2(a)(ii)-(iii). To facilitate this determination, the Order
provides that, for procurement contracts for goods and services,
including construction, where the estimated value of the supplies
acquired and services required exceeds $500,000, each agency shall
ensure that provisions in solicitations require that the contractor
represent, to the best of its knowledge and belief, whether there has
been any administrative merits determination, civil judgment, or
arbitral award or decision rendered against it within the preceding
three-year period for violations of any of 14 identified federal labor
laws or executive orders or any equivalent State laws (the Labor Laws).
See Sec. 2(a)(i). The 14 federal labor laws or executive orders
identified in the Order are:
The Fair Labor Standards Act (the FLSA);
the Occupational Safety and Health Act of 1970 (the OSH
Act);
the Migrant and Seasonal Agricultural Worker Protection
Act (MSPA);
the National Labor Relations Act (the NLRA);
40 U.S.C. chapter 31, subchapter IV, also known as the
Davis-Bacon Act (the DBA);
41 U.S.C. chapter 67, also known as the Service Contract
Act (the SCA);
Executive Order 11246 of September 24, 1965 (Equal
Employment Opportunity);
section 503 of the Rehabilitation Act of 1973;
the Vietnam Era Veterans' Readjustment Assistance Act of
1972 and the Vietnam Era Veterans' Readjustment Assistance Act of 1974;
\8\
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\8\ Identifying these two statutes in their entirety reflects
the Order as amended by section 3 of Executive Order 13683,
Amendments to Executive Orders 11030, 13653, and 13673 (Dec. 11,
2014).
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the Family and Medical Leave Act (the FMLA);
title VII of the Civil Rights Act of 1964 (Title VII);
the Americans with Disabilities Act of 1990 (the ADA);
the Age Discrimination in Employment Act of 1967 (the
ADEA); and
Executive Order 13658 of February 12, 2014 (Establishing a
Minimum Wage for Contractors).
Prior to making an award, contracting officers shall, as part of
the responsibility determination, provide contractors with an
opportunity to disclose any steps taken to correct any reported
violations or improve compliance with the Labor Laws, including any
agreements entered into with an enforcement agency. See Sec. 2(a)(ii).
Contracting officers, in consultation with the relevant Labor
Compliance Advisor (LCA), shall then consider the information in
determining if a contractor is a responsible source with a satisfactory
record of integrity and business ethics. See Sec. 2(a)(iii).
Similar requirements apply to subcontractors where the estimated
value of the supplies acquired and services required in the subcontract
exceeds $500,000 and the subcontract is not for commercially available
off-the-shelf items. Under the Order, contracting officers must require
that, at the time of execution of the contract, contractors represent
that they will require subcontractors performing covered subcontracts
to disclose any administrative merits determination, civil judgment, or
arbitral award or decision rendered against the subcontractor within
the preceding three-year period for violations of any of the Labor
Laws. See Sec. 2(a)(iv). The contractor will (in most cases, before
awarding the subcontract) consider the information submitted by the
subcontractor in determining whether the subcontractor is a responsible
source that has a satisfactory record of integrity and business ethics.
Id. And the contractor will incorporate into covered subcontracts the
requirement that the subcontractor disclose to the contractor any
administrative merits determinations, civil judgments, or arbitral
awards or decisions rendered against the subcontractor within the
preceding three-year period for violations of any of the Labor Laws.
Id.\9\
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\9\ The Department recognizes that the FAR Council is
considering allowing contractors to direct their subcontractors to
report violations to the Department, which would then assess the
violations.
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The Order's reporting requirement continues after an award is made.
Semi-annually during the performance of the contract, contracting
agencies shall require contractors to update the information provided
about their own Labor Laws violations and to obtain the required
information for covered subcontracts. See Sec. 2(b)(i). If a
contractor reports information regarding Labor Laws violations during
contract performance, or similar information is obtained through other
sources, a contracting officer, in consultation with the LCA, shall
consider whether action is necessary. See Sec. 2(b)(ii). Such action
may include entering into agreements requiring appropriate remedial
measures and measures to avoid further violations, as well as declining
to exercise an option on a contract, contract termination in accordance
with relevant FAR provisions, or referral to the agency suspending and
debarring official. Id. If information regarding Labor Laws violations
by a contractor's subcontractor is brought to the attention of the
contractor, then the contractor shall similarly consider whether action
is necessary. See Sec. 2(b)(iii).
The Order requires each contracting agency to designate a senior
agency official to be an LCA to provide consistent guidance on whether
contractors' actions rise to the level of a lack of integrity or
business ethics. See Sec. 3. As a general matter, LCAs will coordinate
assistance for contractors that seek help in addressing and preventing
Labor Laws violations. See Sec. Sec. 3(b)-(c). And in consultation
with the Department and other agencies responsible for enforcing the
Labor Laws, LCAs will help contracting officers to: Review information
regarding violations reported by contractors; assess whether reported
violations are serious, repeated, willful, or pervasive; review the
contractor's remediation of the violation and any other mitigating
factors; and determine if the violations identified warrant remedial
measures, such as a labor compliance agreement. See Sec. 3(d). For
purposes of this proposed guidance, a "labor compliance agreement" is
an agreement entered into between an enforcement agency (defined below)
and a contractor or subcontractor to address appropriate remedial
measures, compliance assistance, steps to resolve issues to increase
compliance with labor laws, or other related matters. See Sec.
2(a)(ii).
The Order directs the FAR Council to propose such rules and
regulations and issue such orders as are deemed necessary and
appropriate to carry out the Order. See Sec. 7. Specifically, the FAR
Council will promulgate regulations for contracting agencies and
contractors (with respect to their subcontractors) to apply when
determining whether certain types of Labor Laws violations demonstrate
a lack of integrity or business ethics. See Sec. 4(a). The regulations
will: Provide that, subject to the determination of the contracting
agency, "in most cases a single violation of [a Labor Law] may not
necessarily give rise to a determination of lack of responsibility,
depending on the nature of the violation;" ensure appropriate
consideration is given to any remedial measures or mitigating factors,
including any agreements by contractors or other corrective action
taken to address violations; and ensure that contracting officers and
LCAs send information, as appropriate, to the agency suspending and
debarring official, in accordance with agency procedures. Id. And as
discussed above, the Order directs the Secretary to define certain
terms used in the Order and to develop guidance to assist contracting
agencies in implementing the Order's requirements.
The Order also contains two paycheck transparency requirements.
First, the Order requires contracting agencies to ensure that, for
contracts subject to the Order, provisions in solicitations and clauses
in contracts shall provide that, in each pay period, contractors
provide all individuals performing work under the contract for whom
they are required to maintain wage records under the FLSA, DBA, SCA, or
equivalent State laws, with a document with information concerning that
individual's hours worked, overtime hours, pay, and any additions made
to or deductions made from pay (i.e., a wage statement). See Sec.
5(a). Contracting agencies shall also require that contractors
incorporate this same requirement into covered subcontracts. Id.
However, the Order instructs that the wage statement provided to
individuals exempt from the overtime compensation requirements of the
FLSA need not include a record of hours worked if the contractor or
subcontractor informs the individuals of their exempt status. Id. The
Order's wage statement requirement will be deemed satisfied for workers
to whom the contractor or subcontractor provides a wage statement that
complies with an applicable State or local wage statement requirement
that the Secretary has determined is substantially similar to the
Order's wage statement requirement. Id. Second, the Order provides that
if a contractor or subcontractor is treating an individual performing
work under a covered contract as an independent contractor, and not an
employee, it must provide a document informing the individual of this
status. See Sec. 5(b).\10\
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\10\ The Order further requires contracting agencies to ensure
that for all contracts where the estimated value of the supplies
acquired and services required exceeds $1 million, provisions in
solicitations and clauses in contracts shall provide that
contractors agree that the decision to arbitrate claims arising
under Title VII or any tort related to or arising out of sexual
assault or harassment may only be made with the voluntary consent of
employees or independent contractors after such disputes arise,
subject to certain exceptions. See Sec. 6. Contracting agencies
must require contractors to incorporate this same requirement into
subcontracts where the estimated value of the supplies acquired and
services required exceeds $1 million, subject to certain exceptions.
Id. The Order does not direct the Secretary to address this
requirement.
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Finally, the Order requires that, in developing the guidance and
proposing to amend the FAR, the Secretary and the FAR Council shall
minimize, to the extent practicable, the burden of complying with the
Order for federal contractors and subcontractors and in particular
small entities, including small businesses, as defined in section
3 of the Small Business Act (15 U.S.C. 632), and small nonprofit
organizations. See Sec. 4(e). The intent of the Order is to minimize
additional compliance burdens and to increase economy and efficiency in
federal contracting by helping more contractors and subcontractors come
into compliance with workplace protections, not by denying them
contracts. Toward that end, the Order provides that a single Web site
will serve as the portal for all reporting requirements related to the
Order and that LCAs and the Department will be available for
consultation with contractors regarding the Order's requirements. See
Sec. Sec. 2(a)(vi), 3(c), 4(d). As part of the responsibility
determination in FAR 9.1, Responsible Prospective Contractor,
contracting officers (and contractors for their subcontractors) will
take into account any remedial actions and other mitigating factors,
including adherence to any agreements with enforcement agencies. The
Order's goals are to provide contractors and subcontractors with
additional incentives to come into compliance with Labor Laws and to
help ensure that contracts are awarded to responsible entities. This
will help prevent delays and waste of taxpayer money.
II. Disclosure Requirements
For all covered procurement contracts (defined below), the Order
requires contracting agencies to include provisions in their
solicitations requiring that the contractor represent, to the best of
its knowledge and belief, whether there have been any administrative
merits determinations, civil judgments, or arbitral awards or decisions
rendered against it within the preceding three years for violations of
the Labor Laws. Contracting agencies shall further require contractors,
at or before execution of the covered procurement contract, to
represent that they will require each subcontractor performing a
covered subcontract (also defined below) to report whether there have
been any administrative merits determinations, civil judgments, or
arbitral awards or decisions rendered against the subcontractor within
the preceding three years for violations of the Labor Laws. During the
performance of the covered contract, the Order requires contractors to
update their disclosures semi-annually and obtain similarly updated
information from their subcontractors.
The Order requires the Department to define in guidance the meaning
of "administrative merits determination," "civil judgment," and
"arbitral award or decision." This section of the proposed guidance
defines those terms and provides guidance on who must report Labor Laws
violations under the Order, what triggers the reporting obligations,
and what particular categories of information must be reported under
the Order.
A. Who Must Make Disclosures Under the Order
The FAR Council's proposed regulations would require any contractor
that responds to a solicitation for a covered procurement contract to
represent whether it has any Labor Laws violations reportable under the
Order. The FAR Council's proposed regulations would further require
prospective contractors for whom a contracting officer has initiated
the responsibility determination process, and who have represented that
they have Labor Laws violation(s), to disclose additional information
about the violation(s). For purposes of this proposed guidance and
coextensive with section 2(a)(i) of the Order, a "covered procurement
contract" is a procurement contract for goods and services, including
construction, where the estimated value of the supplies acquired and
services required exceeds $500,000.\11\ Additionally, the Order
requires contractors to require their subcontractors performing covered
subcontracts to disclose Labor Laws violations reportable under the
Order. See Sec. 2(a)(iv). For purposes of this proposed guidance and
coextensive with section 2(a)(iv) of the Order, "covered subcontract"
means any contract awarded to a subcontractor that would be a covered
procurement contract except for contracts for commercially available
off-the-shelf items.\12\ This proposed guidance uses "covered
contracts" to include both covered procurement contracts and covered
subcontracts.
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\11\ See 48 CFR 1.108(c) (dollar thresholds under the FAR).
\12\ The FAR, 48 CFR 2.101, defines "commercially available
off-the-shelf item."
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The Order applies to contracting activities by executive agencies.
See Sec. 1. The term "executive agency" is defined under the FAR as
"an executive department, a military department, or any independent
establishment within the meaning of 5 U.S.C. 101, 102, and 104(1),
respectively, and any wholly owned Government corporation within the
meaning of 31 U.S.C. 9101." 48 CFR 2.101. This proposed guidance
generally uses the term "contracting agencies" to refer to executive
agencies, as defined in the FAR, that are engaged in contracting.
As used in this proposed guidance, the term "contract" has the
same meaning as it has under the FAR, 48 CFR 2.101.\13\ Thus, the term
"contract" means a procurement contract and does not include grants
and cooperative agreements (which are not subject to the Order's
requirements).
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\13\ 48 CFR 2.101 states: "Contract means a mutually binding
legal relationship obligating the seller to furnish the supplies or
services (including construction) and the buyer to pay for them. It
includes all types of commitments that obligate the Government to an
expenditure of appropriated funds and that, except as otherwise
authorized, are in writing. In addition to bilateral instruments,
contracts include (but are not limited to) awards and notices of
awards; job orders or task letters issued under basic ordering
agreements; letter contracts; orders, such as purchase orders, under
which the contract becomes effective by written acceptance or
performance; and bilateral contract modifications. Contracts do not
include grants and cooperative agreements covered by 31 U.S.C. 6301,
et seq."
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In this proposed guidance, references to "contractors" and
"subcontractors" include entities that hold covered contracts as well
as "offerors," meaning any entity that bids for a covered contract.
The term "entity" is properly understood to include both
organizations and individuals that apply for and receive covered
contracts.
B. What Triggers the Disclosure Obligations
The Order creates disclosure requirements for contractors and
subcontractors performing or bidding on covered contracts. Under the
Order, contractors and subcontractors must report administrative merits
determinations, civil judgments, and arbitral awards or decisions that
have been rendered against them within the previous three years for a
violation of the Labor Laws.
The relevant three-year period is the three-year period preceding
the date of the offer (i.e., the contract bid or proposal). Therefore,
administrative merits determinations, civil judgments, and arbitral
awards or decisions rendered during that three-year period must be
reported even if the underlying conduct that violated the Labor Laws
occurred more than three years prior to the date of the report. See
Sec. Sec. 2(a)(i), 2(a)(iv)(A).
The Order's reporting requirements apply to administrative merits
determinations, civil judgments, and arbitral awards or decisions
"rendered against the [offeror or subcontractor] within the preceding
3-year period." See Sec. Sec. 2(a)(i), 2(a)(iv)(A). Therefore, it
requires contractors and subcontractors to report administrative merits
determinations, civil judgments, and arbitral awards or decisions that
were issued during the relevant three-year period even if they were not
performing or bidding on a covered contract at the time. For example,
if the Department's Wage and Hour Division renders an administrative
merits determination finding that an employer failed to pay overtime
due under the FLSA and the employer later (within three years of the
determination) bids for the first time on a covered procurement
contract, the employer must report the FLSA determination even though
it was not a contractor or bidding on a covered contract at the time
when it received the determination.
Administrative merits determinations, civil judgments, and arbitral
awards or decisions that must be reported under the Order include those
issued for violations of State laws equivalent to the fourteen federal
Labor Laws listed in the Order. See Sec. 2(a)(i)(O). Although the
Department will identify--in a second guidance to be published in the
Federal Register at a later date--those equivalent State laws that are
Labor Laws, OSHA-approved State Plans are equivalent State laws (and
thus Labor Laws) for purposes of this proposed guidance. This is
because the OSH Act permits certain States to administer OSHA-approved
State occupational safety and health plans in lieu of federal
enforcement of the OSH Act.\14\ Administrative merits determinations or
civil judgments finding violations under an OSHA-approved State Plan
are therefore subject to the Order's reporting requirements as soon as
those requirements become effective, even if the Secretary has not
published final guidance identifying other State laws that are
equivalent to the federal Labor Laws.
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\14\ Section 18 of the OSH Act encourages States to develop and
operate their own job safety and health programs, and OSHA approves
and monitors State Plans and provides up to 50 percent of an
approved plan's operating costs. OSHA-approved State Plans are
described and listed in 29 CFR part 1952, and further information
about such plans can be found at https://www.osha.gov/dcsp/osp/index.html.
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1. Defining "Administrative Merits Determination"
Enforcement agencies issue notices, findings, and other documents
when they determine that any of the Labor Laws have been violated. For
purposes of this proposed guidance, "enforcement agency" means any
agency that administers the federal Labor Laws, such as the Department
and its agencies, the Occupational Safety and Health Review
Commission,\15\ the Equal Employment Opportunity Commission, and the
National Labor Relations Board. Enforcement agencies do not include
other federal agencies who, in their capacity as contracting agencies,
undertake an investigation of a violation of the federal Labor
Laws.\16\ For purposes of this proposed guidance, "enforcement
agency" also means those State agencies designated to administer an
OSHA-approved State Plan, but only to the extent that the State agency
is acting in its capacity as administrator of such plan. And once the
Department's second guidance (to be published at a later date)
identifying the State laws that are equivalent to the federal Labor
Laws is finalized, "enforcement agency" will also include those State
agencies that enforce those identified equivalent State laws.
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\15\ The Occupational Safety and Health Review Commission is an
independent federal agency that provides administrative trial and
appellate review in contests of OSH Act citations or penalties.
\16\ For example, contracting agencies may investigate
violations of the DBA relating to contracts that they administer,
but that does not make them enforcement agencies for purposes of the
Order.
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For purposes of the Order, the term "administrative merits
determination" means any of the following notices or findings--whether
final or subject to appeal or further review--issued by an enforcement
agency following an investigation that indicates that the contractor or
subcontractor violated any provision of the Labor Laws:
(a) From the Department's Wage and Hour Division:
A WH-56 "Summary of Unpaid Wages" form;
a letter indicating that an investigation disclosed a
violation of sections six or seven of the FLSA or a violation of the
FMLA, SCA, DBA, or Executive Order 13658;
a WH-103 "Employment of Minors Contrary to The Fair
Labor Standards Act" notice;
a letter, notice, or other document assessing civil
monetary penalties;
a letter that recites violations concerning the payment
of special minimum wages to workers with disabilities under section
14(c) of the FLSA or revokes a certificate that authorized the
payment of special minimum wages;
a WH-561 "Citation and Notification of Penalty" for
violations under the OSH Act's field sanitation or temporary labor
camp standards;
an order of reference filed with an administrative law
judge.
(b) from the Department's Occupational Safety and Health
Administration (OSHA) or any State agency designated to administer
an OSHA-approved State Plan:
A citation;
an imminent danger notice;
a notice of failure to abate; or
any State equivalent;
(c) from the Department's Office of Federal Contract Compliance
Programs:
A show cause notice for failure to comply with the
requirements of Executive Order 11246, Section 503 of the
Rehabilitation Act, the Vietnam Era Veterans' Readjustment
Assistance Act of 1972, or the Vietnam Era Veterans' Readjustment
Assistance Act of 1974;
(d) from the Equal Employment Opportunity Commission (the EEOC):
A letter of determination that reasonable cause exists
to believe that an unlawful employment practice has occurred or is
occurring; or
a civil action filed on behalf of the EEOC;
(e) from the National Labor Relations Board:
A complaint issued by any Regional Director;
(f) a complaint filed by or on behalf of an enforcement agency
with a federal or State court, an administrative judge, or an
administrative law judge alleging that the contractor or
subcontractor violated any provision of the Labor Laws; or
(g) any order or finding from any administrative judge,
administrative law judge, the Department's Administrative Review
Board, the Occupational Safety and Health Review Commission or State
equivalent, or the National Labor Relations Board that the
contractor or subcontractor violated any provision of the Labor
Laws.
The above definition provides seven categories of documents,
notices, and findings from enforcement agencies that constitute the
administrative merits determinations that must be reported under the
Order. The list is an exhaustive one, meaning that if a document does
not fall within one of categories (a) through (g) above, the Department
does not consider it to be an "administrative merits determination"
for purposes of the Order.
In addition, the Department will publish at a later date a second
proposed guidance that identifies an eighth category of administrative
merits determinations: The documents, notices, and findings issued by
State enforcement agencies when they find violations of the State laws
equivalent to the federal Labor Laws.
Categories (a) through (e) in the definition list types of
administrative merits determinations that are issued by specific
enforcement agencies. Categories (f) and (g) describe types of
administrative merits determinations that are common to multiple
enforcement agencies. Category (f) is necessary because it is possible
that an enforcement agency will not have issued a notice or finding
following its investigation that falls within categories (a) through
(e) prior to filing a complaint in court.
The administrative merits determinations listed in the definition
are issued following an investigation by the relevant enforcement
agency. Administrative merits determinations are not limited to notices
and findings issued following adversarial or adjudicative proceedings
such as a hearing, nor are they limited to notices and findings that are
final and unappealable. Thus, administrative merits determinations that
must be reported under the Order include an administrative merits
determination that the contractor or subcontractor is challenging, can
still challenge, or is otherwise subject to further review. However,
the Department understands that contractors and subcontractors may
raise good-faith disputes regarding administrative merits
determinations that have been issued to them. As set forth below, when
contractors and subcontractors report administrative merits
determinations, they may also submit any additional information that
they believe may be helpful in assessing the violations at issue
(including the fact that the determination has been challenged).
Additionally, contractors and subcontractors will have opportunities to
provide information regarding any mitigating factors.
Certain "complaints" issued by enforcement agencies are included
in the definition of "administrative merits determination." The
complaints issued by enforcement agencies included in the definition
are not akin to complaints filed by private parties to initiate
lawsuits in Federal or state courts. Each complaint included in the
definition represents a finding by an enforcement agency following a
full investigation that a Labor Law was violated; in contrast, a
complaint filed by a private party in a Federal or state court
represents allegations made by that plaintiff and not any enforcement
agency. Moreover, employee complaints made to enforcement agencies
(such as a complaint for failure to pay overtime wages filed with the
Department's Wage and Hour Division or a charge of discrimination filed
with the EEOC) are not administrative merits determinations.
2. Defining "Civil Judgment"
For purposes of the Order, the term "civil judgment" means any
judgment or order entered by any federal or State court in which the
court determined that the contractor or subcontractor violated any
provision of the Labor Laws, or enjoined or restrained the contractor
or subcontractor from violating any provision of the Labor Laws. Civil
judgment includes a judgment or order that is not final or is subject
to appeal.
A civil judgment could be the result of an action filed in court by
or on behalf of an enforcement agency or, for those Labor Laws that
establish a private right of action, by a private party or parties. The
judgment or order in which the court determined that a violation
occurred may be the result of a jury trial, a bench trial, or a motion
for judgment as a matter of law, such as a summary judgment motion.
Even a decision granting partial summary judgment may be a civil
judgment if, for example, the decision finds a violation of the Labor
Laws but leaves resolution of the amount of damages for later in the
proceedings. Likewise, a preliminary injunction can be a civil judgment
if the order enjoins or restrains a violation of the Labor Laws. Civil
judgments include consent judgments and default judgments to the extent
that there is a determination in the judgment that any of the Labor
Laws have been violated, or the judgment enjoins or restrains the
contractor or subcontractor from violating any provision of the Labor
Laws. A private settlement where the lawsuit is dismissed by the court
without any judgment being entered is not a civil judgment.
Civil judgments do not include judgments or orders issued by an
administrative law judge or other administrative tribunals, such as
those identified in the definition of administrative merits
determination. Such judgments and orders may be administrative merits
determinations. If, however, a federal or State court issues a judgment
or order affirming an administrative merits determination, then the
court's decision is a civil judgment.
Civil judgments include a judgment or order finding that a
contractor or subcontractor violated any of the Labor Laws even if the
order or decision is subject to further review in the same proceeding,
is not final, can be appealed, or has been appealed. As set forth
below, when contractors and subcontractors report civil judgments, they
may also submit any additional information that they believe may be
helpful in assessing the violations at issue (including the fact that
the civil judgment has been appealed). Additionally, contractors and
subcontractors will have opportunities to provide information regarding
any mitigating factors.
3. Defining "Arbitral Award or Decision"
For purposes of the Order, the term "arbitral award or decision"
means any award or order by an arbitrator or arbitral panel in which
the arbitrator or arbitral panel determined that the contractor or
subcontractor violated any provision of the Labor Laws, or enjoined or
restrained the contractor or subcontractor from violating any provision
of the Labor Laws. Arbitral award or decision includes an award or
order that is not final or is subject to being confirmed, modified, or
vacated by a court.
Arbitral award or decision includes an arbitral award or decision
regardless of whether it is issued by one arbitrator or a panel of
arbitrators and even if the arbitral proceedings were private or
confidential.
Arbitral award or decision also includes an arbitral award or
decision finding that a contractor or subcontractor violated any of the
Labor Laws even if the award or decision is subject to further review
in the same proceeding, is not final, or is subject to being confirmed,
modified, or vacated by a court. As set forth below, when contractors
and subcontractors report arbitral awards or decisions, they may also
submit any additional information that they believe may be helpful in
assessing the violations at issue (including the fact that they have
sought to have the award or decision vacated or modified).
Additionally, contractors and subcontractors will have opportunities to
provide information regarding any mitigating factors.
4. Successive Administrative Merits Determinations, Civil Judgments,
and Arbitral Awards or Decisions Arising From the Same Underlying
Violation
If a contractor or subcontractor appeals or challenges an
administrative merits determination, civil judgment, and/or arbitral
award or decision, there may be successive administrative merits
determinations, civil judgments, and/or arbitral awards or decisions
that arise from the same underlying violation. For example, if a
contractor or subcontractor receives an OSHA citation and appeals that
citation, it may receive an order from an administrative law judge
(ALJ) concerning that citation. Similarly, if a contractor or
subcontractor receives an adverse decision from the Department's
Administrative Review Board (ARB) and challenges the decision in
federal court, it may receive a court judgment concerning that
decision.
If a contractor or subcontractor receives, during the preceding
three-year period, successive administrative merits determinations,
civil judgments, and/or arbitral awards or decisions arising from the
same underlying violation, it need not report the violation if, at the
time of reporting, the determination that there was a violation of a
Labor Law has been reversed or vacated in its entirety. If the
determination that there was a violation of a Labor Law is later
reinstated on appeal or in further proceedings, then the subsequent
administrative merits determination, civil judgment, or arbitral award
or decision reinstating the finding of a violation is an administrative
merits determination, civil judgment, or arbitral award or decision within
the meaning of this guidance and the Order and therefore must be reported.
Thus, in the above examples, if the ALJ reverses the OSHA citation, or
if the federal court vacates the ARB's adverse decision, the contractor
or subcontractor need not report the violation. If the OSHA violation
is later reinstated by the full Occupational Health and Safety Review
Commission (OSHRC), or if the federal court's decision vacating the
ARB's adverse decision is reversed by a court of appeals, these
subsequent decisions must be reported.
If a subsequent decision concerning the same underlying violation
upholds or does not completely reverse or vacate the finding of
violation, the contractor or subcontractor should report only the
administrative merits determination, civil judgment, or arbitral award
or decision that is the most recent at the time of reporting. Thus, in
the first example above, if the ALJ affirms the OSHA citation in whole
or in part, the contractor or subcontractor must report the more recent
ALJ order but need not report the original citation. In the second
example above, if the federal court affirms the ARB's decision, or
modifies it but does not vacate it in its entirety, the contractor or
subcontractor should report the more recent court order and need not
report the original ARB decision.
If, however, the contractor or subcontractor appeals or challenges
only part of an administrative merits determination, civil judgment, or
arbitral award or decision, it must continue to report the original
administrative merits determination, civil judgment, or arbitral award
or decision even if a successive administrative merits determination,
civil judgment, or arbitral award or decision has been issued. For
example, if, within the preceding three-year period, a district court
finds a contractor or subcontractor liable for Title VII and FLSA
violations, and the contractor or subcontractor appeals only the Title
VII judgment to the court of appeals, it must continue to report the
district court decision (containing the finding of an FLSA violation)
even if a subsequent court of appeals decision is rendered concerning
the Title VII violation.
If the contractor or subcontractor reported an administrative
merits determination, civil judgment, or arbitral award or decision
before being awarded a covered contract, and a successive
administrative merits determination, civil judgment, or arbitral award
or decision arising from the same underlying violation is rendered
during the performance of the contract and affirms that the contractor
or subcontractor committed the violation, the successive administrative
merits determination, civil judgment, or arbitral award or decision is
an administrative merits determination, civil judgment, or arbitral
award or decision within the meaning of this guidance and the Order.
Therefore, the contractor or subcontractor must report the most recent
determination, judgment, award or decision when it updates its
disclosures at semi-annual intervals during performance of the covered
contract.
C. What Information Must Be Disclosed
The following sections provide guidance on what information must be
reported at different stages of the contracting process. When
finalized, the FAR Council regulation will set forth the specific
requirements for what must be reported at each stage, and how such
information is to be reported.
1. Initial Representation
When a contractor bids on a solicitation for a covered procurement
contract, the Order requires it to report to the contracting agency
issuing the solicitation whether any administrative merits
determinations, civil judgments, or arbitral awards or decisions have
been rendered against it within the preceding three-year period. See
Sec. 2(a). At this stage, the contractor will represent to the best of
its knowledge and belief whether it has or has not had such violations,
without providing further information.
2. Pre-Award Reporting
If a contractor reaches the stage in the process at which a
responsibility determination is made, and that contractor responded
affirmatively at the initial representation stage, the contracting
officer will require additional information about that contractor's
Labor Laws violation(s). For each administrative merits determination,
civil judgment, or arbitral award or decision that must be reported,
the contractor will provide:
The Labor Law that was violated;
the case number, inspection number, charge number, docket
number, or other unique identification number; \17\
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\17\ Specifically, the contractor should provide the inspection
number for OSH Act citations, the case number for National Labor
Relations Board proceedings, the charge number for EEOC proceedings,
the investigation or case number if known for Wage and Hour Division
investigations, the case number for investigations by the Office of
Federal Contract Compliance Programs, the case number for
determinations by administrative tribunals, and the case number for
court proceedings.
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the date that the determination, judgment, award, or
decision was rendered; and
the name of the court, arbitrator(s), agency, board, or
commission that rendered it.\18\
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\18\ Pursuant to FAR 9.105-1(a), contracting officers have a
duty to obtain such additional information as may be necessary to be
satisfied that a prospective contractor has a satisfactory record of
integrity and business ethics.
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The contractor may also provide such additional information as the
contractor deems necessary to demonstrate its responsibility, such as
mitigating circumstances, remedial measures (to include labor
compliance agreements), and other steps taken to achieve compliance
with the Labor Laws. Mitigating factors are discussed below.
3. Post-Award Reporting
The Order requires contractors to update the information reported
to contracting agencies semi-annually during performance of the covered
procurement contract. See Sec. 2(b). These periodic updates should
include any new administrative merits determinations, civil judgments,
and arbitral awards or decisions rendered since the last report and
updates to previously reported or provided information. As noted above
in section II.B.4, contractors must report new administrative merits
determinations, civil judgments, and arbitral awards or decisions even
if they arise from a violation of the Labor Laws that was already
reported. For example, if a contractor initially reported a federal
district court judgment finding that it violated the FLSA, it must
still report as part of the periodic updates any federal court of
appeals decision affirming that judgment. Through the ongoing post-
award reporting, contractors may also submit updated information
reflecting the fact that a given administrative merits determination,
civil judgment, or arbitral award or decision has been vacated,
reversed, or otherwise modified. And contractors may also report
mitigating factors and any other information that they believe may be
helpful in assessing the violations at issue.
4. Reporting by Subcontractors
The Order provides that contractors will require their
subcontractors performing covered subcontracts to report administrative
merits determinations, civil judgments, or arbitral awards or decisions
rendered against them within the preceding three-year period for
violations of any of the Labor Laws. See Sec. Sec. 2(a)(iv)-(v). The
Order further provides that contractors must require their
subcontractors to make such reports to the contractor prior to being
awarded a covered subcontract and semi-annually during performance of a
covered subcontract. Id. The Order requires contractors to make the
same assessments regarding subcontractors and their violations of the
Labor Laws as contracting agencies must make of contractors. Id. This
builds on contractors' existing obligation to determine the
responsibility of their subcontractors.
To facilitate these assessments, given that contractors may have
more difficulty than contracting officers and LCAs in obtaining copies
of administrative merits determinations, civil judgments, and arbitral
awards or decisions, the FAR Council's proposed regulations would
require contractors to include provisions in subcontracts requiring
that subcontractors who report violations of Labor Laws--and for which
a responsibility determination has been initiated--provide a copy of
the relevant administrative merits determination(s), civil judgment(s),
and arbitral award(s) or decision(s), as well as any notice from the
Department advising that the subcontractor either has not entered into
a labor compliance agreement within a reasonable period of time or is
not meeting the terms of an existing agreement. The preamble to the FAR
Council's proposed regulations indicates that the subcontractor
reporting requirement may be phased in through a delayed implementation
to allow the contracting community to become familiar with the Order's
requirements and procedures. To this end, contractors are encouraged to
contact the Department for assistance in obtaining information
necessary to assess any Labor Laws violations reported by their
subcontractors. The Department will set up a structure within the
Department to be available to consult with contractors in carrying out
these responsibilities, as well as provide guidance as needed to
contractors and subcontractors in compliance with the requirements of
the Order. The Department will also be available to assist
subcontractors directly in carrying out their responsibilities under
the Order.
The above paragraphs describe the duties of contractors and
subcontractors as set forth in the text of the proposed FAR rule.
However, the Department recognizes that the FAR Council is considering
allowing contractors to direct their subcontractors to report
violations to the Department, which would then assess the violations.
III. Weighing Violations of the Labor Laws
The Order directs the Department to develop guidance "to assist
agencies in determining whether administrative merits determinations,
arbitral awards or decisions, or civil judgments were issued for
serious, repeated, willful, or pervasive violations" of the Labor Laws
for purposes of implementing the final rule issued by the FAR Council.
See Sec. 4(b)(i). The Order specifies that the Department's guidance
should "incorporate existing statutory standards for assessing whether
a violation is serious, repeated, or willful" where they are
available. Id. The Order also provides some guidelines for developing
standards where none are provided by statute. Id.
This section of the proposed guidance defines the terms
"serious," "repeated," "willful," and "pervasive" and provides
guidance on their meanings and how violations of the Labor Laws should
be weighed. While contracting officers and LCAs can seek additional
information from the Department to provide context, in utilizing this
guidance to determine whether violations are serious, repeated,
willful, or pervasive, contracting officers should rely on the
information contained in the administrative merits determinations,
arbitral awards or decisions, and civil judgments.
All violations of federal labor laws are serious, but in this
context the Department has, pursuant to the Order, identified certain
violations as "serious," "willful," "repeated," and
"pervasive." This subset of all labor violations represents the
violations that are most concerning and bear on an assessment of a
contractor's or subcontractor's integrity and business ethics. The
Department has purposely excluded from consideration violations that
could be characterized as inadvertent or minimally impactful. In most
cases, even for violations subject to disclosure and consideration
under the Order, a single violation of one of the Labor Laws will not
give rise to a determination of lack of responsibility. In contrast, as
explained more fully below, pervasive violations and violations of
particular gravity, among others, will in most cases result in the need
for a labor compliance agreement. See section III.E below.
Each contractor's disclosed violations of Labor Laws will be
assessed on a case-by-case basis in light of the totality of the
circumstances, including the severity of the violation or violations,
the size of the contractor, and any mitigating factors. The extent to
which a contractor has remediated violations of Labor Laws, including
agreements entered into by contractors with enforcement agencies, will
be given particular weight in this regard. In fact, the vast majority
of administrative merits determinations (in some enforcement agencies,
as much as 90 percent) result in settlement agreements between
employers and enforcement agencies.
The Department will work with LCAs across contracting agencies to
help ensure efficient, accurate, and consistent decisions across the
government.
A. Serious Violations
Of the federal Labor Laws, only the OSH Act provides a statutory
standard for what constitutes a "serious" violation, and this
standard also applies to OSHA-approved State Plans. The other federal
Labor Laws do not have statutory standards for what constitutes a
serious violation. According to the Order, where no statutory standards
exist, the Department's guidance for "serious" violations must take
into account "the number of employees affected, the degree of risk
posed or actual harm done by the violation to the health, safety, or
well-being of a worker, the amount of damages incurred or fines or
penalties assessed with regard to the violation, and other
considerations as the Secretary finds appropriate." See Sec.
4(b)(i)(B)(1).
Accordingly, a violation is "serious" for purposes of the Order
if it involves at least one of the following:
An OSH Act or OSHA-approved State Plan citation was
designated as serious, there was a notice of failure to abate an OSH
Act violation, or an imminent danger notice was issued under the OSH
Act or an OSHA-approved State Plan;
The affected workers comprised 25% or more of the
workforce at the worksite;
Fines and penalties of at least $5,000 were assessed or
back wages of at least $10,000 were due or injunctive relief was
imposed by an enforcement agency or a court;
The contractor's or subcontractor's conduct violated
MSPA or the child labor provisions of the FLSA and caused or
contributed to the death or serious injury of one or more workers;
Employment of a minor who was too young to be legally
employed or in violation of a Hazardous Occupations Order;
The contractor or subcontractor engaged in an adverse
employment action (including discharge, refusal to hire, suspension,
demotion, or threat) or is responsible for unlawful harassment
against one or more workers for exercising any right protected by
any of the Labor Laws;
The findings of the relevant enforcement agency, court,
arbitrator, or arbitral panel support a conclusion that the
contractor or subcontractor engaged in a pattern or practice of
discrimination or systemic discrimination;
The findings of the relevant enforcement agency, court,
arbitrator, or arbitral panel support a conclusion that the
contractor or subcontractor interfered with the enforcement agency's
investigation; or
The contractor or subcontractor breached the material
terms of any agreement or settlement entered into with an
enforcement agency, or violated any court order, any administrative
order by an enforcement agency, or any arbitral award.
The definition provides an exhaustive list of the categories of Labor
Laws violations that may be serious under the Order.
1. OSH Act
Section 17(k) of the OSH Act, 29 U.S.C. 666(k), defines a violation
as serious, in relevant part, "if there is a substantial probability
that [the hazard created by the violation could result in] death or
serious physical harm . . . unless the employer did not, and could not
with the exercise of reasonable diligence know" of the existence of
the violation. In other words, a "violation may be determined to be
serious where, although the accident itself is merely possible * * *,
there is a substantial probability of serious injury if it does
occur." East Texas Motor Freight, Inc. v. Occupational Safety and
Health Review Comm'n, 671 F.2d 845, 849 (5th Cir. 1982) (internal
quotes and citations omitted).
In light of this clear statutory definition, a violation of the OSH
Act is serious if the contractor or subcontractor received a citation
for a violation designated as "serious" under the OSH Act or an OSHA-
approved State Plan, or an imminent danger notice under the OSH Act or
an OSHA-approved State Plan. Imminent danger notices are issued only
when "a danger exists which could reasonably be expected to cause
death or serious physical harm immediately or before the imminence of
such danger can be eliminated through the enforcement procedures
otherwise provided by [the OSH Act]." 29 U.S.C. 662(a). Because such
notices are issued only for violations that imminently threaten to
cause death or serious physical harm, imminent danger notices are by
definition issued only for serious violations of the OSH Act, and thus
constitute serious violations under the Order.
The OSH Act separately prohibits retaliation against workers for
exercising any right under the Act. 29 U.S.C. 660(c). As with
retaliation under other Labor Laws, an OSH Act whistleblower violation
will be a serious violation where the contractor or subcontractor
engaged in an adverse employment action (including discharge, refusal
to hire, suspension, demotion, or threat). Similarly, a contractor or
subcontractor that has interfered with an OSHA inspection or
investigation will be deemed to have committed a serious violation, as
will a contractor or subcontractor that has breached the material terms
of any OSHA settlement agreement, violated any court order under the
OSH Act, or received a notice that it has failed to abate any cited
OSHA violation.
2. 25% of the Workforce Affected
Consistent with the Order's directive to consider the number of
employees affected, a violation is serious when the workers affected by
the violation comprised 25% or more of the workforce at the worksite.
The Department believes that: using a percentage of the workforce
instead of an absolute number of workers is a more useful way of
considering the effects of a violation, given that employers of various
sizes will have disclosure obligations under the Order; 25% represents
a significant percentage of workers at a particular site, and as such,
that the underlying violation is a serious one; and 25% strikes an
appropriate balance by effectively excluding individualized or
localized violations from this category of "serious" while capturing
more widespread violations.
For purposes of this 25% threshold, "workforce" means all
individuals employed by the contractor or subcontractor. It does not
include workers of another entity, unless the underlying violation of
the Labor Laws includes a finding that the contractor or subcontractor
is a joint employer of the workers that the other entity employs at the
worksite.
For purposes of this 25% threshold, "worksite" means the physical
location or group of locations where the workers affected by the
violations work and where the contractor or subcontractor conducts its
business. For example, if the contractor or subcontractor conducts its
business at a single building, or a single office within an office
building, that building or office will comprise the worksite. However,
if the contractor or subcontractor conducts business activities in
several offices in one building, or in several buildings in a campus or
industrial park, the worksite consists of all of the offices or
buildings in which the business is conducted. On the other hand, if a
contractor or subcontractor has two office buildings in different parts
of the same city, and a violation affects workers in one building, the
worksite is the one building where the violation took place. For
violations that affect workers with no fixed worksite, such as
construction workers, transportation workers, and workers who perform
services at various customers' locations, the worksite is the site to
which they are assigned as their home base, from which their work is
assigned, or to which they report.
For purposes of this 25% threshold, "affected workers" means the
workers who were individually impacted by the violation. For example,
affected workers include workers who were not paid wages due, were
denied leave or benefits, were denied a job, a promotion, or other
benefits due to discrimination, or were harmed by an unlawful policy.
The Department specifically seeks comments on this category of
serious violations.
3. Fines, Penalties, Back Wages, and Injunctive Relief
Consistent with the Order's directive to take into account "the
amount of damages incurred or fines or penalties assessed," a
violation is serious if it resulted in $5,000 or more in fines and
penalties, or $10,000 or more in back wages. Such amounts, in the
Department's view, reflect a violation of sufficient gravity to be
deemed serious.
Administrative merits determinations finding violations of the laws
enforced by the Department's Wage and Hour Division, for example, may
be more likely to implicate these thresholds than those issued by other
enforcement agencies. According to recent enforcement data from the
Wage and Hour Division, these thresholds will capture only a minority
of the violations of the Labor Laws enforced by Wage and Hour, and a
smaller minority of the cases investigated by it under those laws.
According to recent data, Wage and Hour assessed penalties in only a
small minority of the cases in which it made a finding; in the small
number of cases in which penalties were assessed, they amounted to
$5,000 or more only approximately one-fourth of the time. Similarly,
back wages were due in less than half of the cases in which Wage and
Hour made a finding, and in cases in which back wages were due, they
would have passed the proposed threshold of $10,000 only about one-
third of the time. The Department specifically seeks comments on
whether the thresholds for fines and penalties and for back wages are
set at the appropriate levels.
Examples of "fines and penalties" include civil monetary
penalties assessed by the Department under MSPA or under the minimum
wage, overtime, and child labor provisions of the FLSA. Fines and
penalties do not include back wages, compensatory damages, liquidated
damages under the FLSA, or statutory damages under MSPA. However,
liquidated damages under the ADEA and punitive damages are included in
fines and penalties for purposes of this threshold.\19\ For purposes of
determining whether the $10,000 back wages threshold is met,
compensatory damages, liquidated damages under the FLSA, and statutory
damages under MSPA should be included as back wages.
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\19\ Unlike liquidated damages under the FLSA, liquidated
damages under the ADEA are punitive in nature, as they are expressly
tied to willful violations. See 29 U.S.C. 626(b).
---------------------------------------------------------------------------
The threshold amounts for fines and penalties are measured by the
amount "assessed." If an administrative merits determination, for
example, assesses $6,000 in civil monetary penalties against a
contractor or subcontractor but later that amount is reduced to $4,000
in settlement negotiations or only $4,000 is collected, the underlying
violation is serious based on the assessed amount. The Department
believes that the amount assessed is a better indication of seriousness
because civil monetary penalties may be reduced for reasons unrelated
to the seriousness of the violation. If the amount assessed was later
reduced, the contractor or subcontractor should provide that
information as a possible mitigating factor.
When considering whether these thresholds are met, the total fines
and penalties or the total back wages resulting from the Labor Laws
violation should be considered. In cases where multiple provisions of a
Labor Law have been violated, the fines and penalties assessed or the
back wages due should not be parsed and separately attributed to each
provision violated. For example, if the Department's FLSA investigation
discloses violations of the FLSA's minimum wage and overtime provisions
and back wages are due for both violations, the total back wages due
determines whether the $10,000 threshold is met. Likewise, if an
investigation discloses three violations of the same MSPA provision or
violations of three different MSPA provisions and each violation
results in assessed civil monetary penalties of $2,000, the MSPA
violation is serious because the assessed penalties total $6,000.
A violation is also serious if injunctive relief was imposed by an
enforcement agency, a court, or an arbitrator or arbitral panel.
Injunctive relief is an order from an enforcement agency or court
either to take a certain action or to refrain from taking a certain
action. For example, an order to reinstate a wrongfully terminated
worker, to modify discriminatory hiring practices, to make a location
accessible to individuals with disabilities, to reinstate workers who
are attempting to organize a union, or to refrain from intimidating
workers during an enforcement agency's investigation would constitute
injunctive relief.
4. MSPA or Child Labor Violations That Cause or Contribute to Death or
Serious Injury
Violations of the health and safety provisions of MSPA and the
child labor provisions of the FLSA may have serious health and safety
implications. In the most serious cases, violations of these statutes
may result in death or serious injury to one or more workers.
Consistent with the Order's directive to consider "the degree of risk
posed or actual harm done by the violation to health, safety, or well-
being of a worker," MSPA or child labor violations that cause or
contribute to the death or serious injury of one or more workers are
serious under the Order. For these purposes, serious injury has the
same meaning as in the FLSA's child labor provisions as administered by
the Department's Wage and Hour Division.
5. Employment of Minors Who Are Too Young To Be Legally Employed or in
Violation of a Hazardous Occupations Order
Consistent with the Order's directive to consider "the degree of
risk posed or actual harm done by the violation to health, safety, or
well-being of a worker," any violation of the FLSA's child labor
provisions where the minor is too young to be legally employed or is
employed in violation of any of the Secretary's Hazardous Occupations
Orders is a serious violation. Such violations do not include
situations where minors are permitted to perform the work at issue but
who perform the work outside the hours permitted by law. Rather, it
refers to minors who, by virtue of their age, are legally prohibited
from being employed or are not permitted to be employed to perform the
work at issue. Thus, for example, the employment of any minor under the
age of 18 to perform a hazardous non-agricultural job, any minor under
the age of 16 to perform a hazardous farm job, or any minor under the
age of 14 to perform non-farm work where he or she does not meet a
statutory exception otherwise permitting the work would be a serious
violation. This reflects the particularly serious dangers that can
result from the prohibited employment of underage minors. Conversely,
the employment of, for example, a 14 or 15 year-old minor in excess of
three hours outside school hours on a school day in a non-hazardous,
non-agricultural job in which the child is otherwise permitted to work
would not be a serious violation for purposes of the Order, even though
the work violates the FLSA's child labor provisions.
6. Adverse Employment Actions or Unlawful Harassment for Exercising
Rights Under Labor Laws
Consistent with the Order's directive to consider "the degree of
risk posed or actual harm done by the violation to health, safety, or
well-being of a worker," a violation involving an adverse employment
action or unlawful harassment against one or more workers for
exercising any right protected by the Labor Laws is a serious
violation. For these purposes, adverse employment actions include
discharge, refusal to hire, suspension, demotion, or threats. Examples
include disciplining workers for attempting to organize a union,
demoting workers for testifying in an investigation, lawsuit, or
proceeding involving one of the Labor Laws, firing or demoting workers
who take leave under the FMLA, and threatening workers with adverse
consequences--such as termination or referral to immigration or
criminal authorities--for making a complaint about potential violations
of Labor Laws. These are serious violations because they both reflect a
disregard by an employer for its obligations under the Labor Laws and
undermine the Labor Laws by making workers reluctant to exercise their
rights for fear of retaliation.
7. Pattern or Practice of Discrimination or Systemic Discrimination
Consistent with the Order's directive to consider "the degree of
risk posed or actual harm done by the violation to health, safety, or
well-being of a worker," a Labor Laws violation is serious if the
findings of the relevant enforcement agency, court, arbitrator, or
arbitral panel support a conclusion that the contractor or
subcontractor engaged in a pattern or practice of discrimination or
systemic discrimination. A pattern or practice of discrimination involves
intentional discrimination against a protected group of employees, rather
than discrimination that occurs in an isolated fashion. Systemic
discrimination involves a pattern or practice, policy, or class case
where the discrimination has a broad impact on an industry, profession,
company or geographic area. Examples include policies and practices
that effectuate discriminatory hiring barriers; restrictions on access
to higher level jobs on the basis of race, gender, gender identity,
sexual orientation, national origin, or other protected
characteristics; unlawful pre-employment inquiries regarding
disabilities; and discriminatory placement or assignments that are made
to comply with customer preferences. Systemic discrimination also
includes policies and practices that are seemingly neutral but may
cause a disparate impact on protected groups. Examples include pre-
employment tests used for selection purposes; height, weight or lifting
requirements or restrictions; compensation practices and policies; and
performance evaluation policies and practices.
8. Interference With Investigations
Violations of the Labor Laws in which the findings of the relevant
enforcement agency, court, arbitrator, or arbitral panel support a
conclusion that the contractor or subcontractor engaged in interference
with the enforcement agency's investigation also are serious under the
Order. Interference can take a number of forms, such as denial of
access by a contractor or subcontractor to an enforcement agency to
conduct an on-site investigation, evaluation, or review; refusal to
submit required documents to an enforcement agency or comply with its
request for information; threats to workers who speak to enforcement
agency investigators; falsification or destruction of records; lying or
making misrepresentations to investigators; and threatening workers
with termination or referral to immigration or criminal authorities if
they do not return back wages received as part of an investigation.
Like retaliation, interference with investigations is intentional
conduct that frustrates the enforcement of the Labor Laws and
therefore, in the Department's view, is a serious violation.
9. Material Breaches and Violations of Settlements, Agreements, or
Orders
Violations of the Labor Laws involving a breach of the material
terms of any agreement or settlement, or a violation of a court or
administrative order or arbitral award, are serious under the Order.
Such violations are serious because an employer that is a government
contractor or subcontractor is expected to comply with orders by a
court or administrative agency and to adhere to the terms of any
agreements or settlements into which it enters. A contractor's or
subcontractor's failure to do so may indicate that it will similarly
disregard its contractual obligations to, or agreements with, a
contracting agency (or a contractor in case of a subcontractor), which
could result in delays, increased costs, and other adverse
consequences. A contractor or subcontractor will not, however, be found
to have committed a serious violation if the agreement, settlement,
award, or administrative order in question has been stayed pending an
appeal or other further proceeding.
10. Table of Examples
For a table containing selected examples of serious violations, see
Appendix A.
B. Willful Violations
The Order provides that the standard for willful should
"incorporate existing statutory standards" to the extent such
standards exist. See Sec. 4(b)(i)(A). The Order further provides that,
where no statutory standards exist, the standard for willful should
take into account "whether the entity knew of, showed reckless
disregard for, or acted with plain indifference to the matter of
whether its conduct was prohibited by the requirements of the [Labor
Laws]." See Sec. 4(b)(i)(B)(3). A violation is "willful" under the
Order if:
For purposes of a citation issued pursuant to the OSH
Act or an OSHA-approved State Plan, the citation at issue was
designated as willful or any equivalent State designation (i.e.,
"knowing"), and the designation was not subsequently vacated;
For purposes of the FLSA (including the Equal Pay Act),
the administrative merits determination sought or assessed back
wages for greater than two years or sought or assessed civil
monetary penalties for a willful violation, or there was a civil
judgment or arbitral award or decision finding the contractor or
subcontractor liable for back wages for greater than two years or
affirming the assessment of civil monetary penalties for a willful
violation;
For purposes of the ADEA, the enforcement agency,
court, arbitrator, or arbitral panel assessed or awarded liquidated
damages;
For purposes of Title VII or the ADA, the enforcement
agency, court, arbitrator, or arbitral panel assessed or awarded
punitive damages for a violation where the contractor or
subcontractor engaged in a discriminatory practice with malice or
reckless indifference to the federally protected rights of an
aggrieved individual; or
For purposes of any of the other Labor Laws, the
findings of the relevant enforcement agency, court, arbitrator, or
arbitral panel support a conclusion that the contractor or
subcontractor knew that its conduct was prohibited by any of the
Labor Laws or showed reckless disregard for, or acted with plain
indifference to, whether its conduct was prohibited by one or more
requirements of the Labor Laws.
1. The OSH Act, the FLSA, and the ADEA
The term "willful" has well-established meanings under the OSH
Act, the FLSA, and the ADEA. These meanings are consistent with the
standard provided in the Order. Violations of the OSH Act, the FLSA,
and the ADEA are willful under the Order if they fit these well-
established meanings.
Under the OSH Act, a violation is willful where an employer has
demonstrated either an intentional disregard for the requirements of
the OSH Act or a plain indifference to its requirements. See A.E.
Staley Mfg. Co. v. Sec'y of Labor, 295 F.3d 1341, 1351-52 (D.C. Cir.
2002). For example, if an employer knows that specific steps must be
taken to address a hazard, but substitutes its own judgment for the
requirements of the legal standard, the violation is willful. Under the
OSH Act or an OSHA-approved State Plan, if a violation was designated
as willful and that designation has not been subsequently vacated, the
violation will be willful for purposes of the Order. Some States may
use a different term (i.e., "knowing") that means the same thing.
Similarly, under the FLSA, a violation is willful where the
employer knew that its conduct was prohibited by the FLSA or showed
reckless disregard for the FLSA's requirements. See 29 CFR 578.3(c)(1);
McLaughlin v. Richland Shoe Co., 486 U.S. 128, 133 (1988). For example,
an employer that requires workers to "clock out" after 40 hours in a
workweek and then continue working "off the clock" or pays workers
for 40 hours by check and then pays them in cash at a straight-time
rate for hours worked over 40 commits a willful violation of the FLSA's
overtime requirements. These actions show knowledge of the FLSA's
requirements to pay time-and-a-half for hours worked over 40 and an
attempt to evade that requirement by concealing records of
the workers' actual hours worked. Under the FLSA, because willful
violations are grounds for assessing back wages for greater than two
years or civil monetary penalties, these measures are understood to
reflect a finding of willfulness and therefore will be considered
indicative of willfulness under the Order.\20\
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\20\ Civil monetary penalties may be assessed under the FLSA for
violations that are either willful or repeated. Only civil monetary
penalties involving willful violations will constitute willful
violations under the Order.
---------------------------------------------------------------------------
Likewise, under the ADEA, a violation is willful when the employer
knew or showed reckless disregard for the matter of whether its conduct
was prohibited by the ADEA. See Trans World Airlines v. Thurston, 469
U.S. 111, 126 (1985). Willful violations are required for liquidated
damages to be assessed or awarded under the ADEA. See 29 U.S.C. 626(b).
Accordingly, any violation of the ADEA in which the enforcement agency,
court, arbitrator, or arbitral panel assessed or awarded liquidated
damages is understood to reflect a finding of willfulness and therefore
will be considered indicative of a willful violation under the Order.
2. Title VII and the ADA
Violations of Title VII or the ADA are "willful" under the Order
if the enforcement agency, court, arbitrator, or arbitral panel
assessed or awarded punitive damages for a violation where the
contractor or subcontractor engaged in a discriminatory practice with
malice or reckless indifference to the federally protected rights of an
aggrieved individual. Punitive damages are appropriate in cases under
Title VII or the ADA where the contractor or subcontractor engaged in
intentional discrimination with "malice or reckless indifference to
the federally protected rights of an aggrieved individual." 42 U.S.C.
1981a. This means that a managerial agent of the contractor or
subcontractor, acting within the scope of employment, made a decision
that was in the face of a perceived risk of violating federal law, and
the contractor or subcontractor cannot prove that the manager's action
was contrary to its good faith efforts to comply with federal law. See
Kolstad v. American Dental Ass'n, 527 U.S. 526, 536, 545 (1999). For
example, if a manager received a complaint of sexual harassment but
failed to report it or investigate it, and the employer's anti-
harassment policy was ineffective in protecting the employees' rights,
or the employer did not engage in good faith efforts to educate its
managerial staff about sexual harassment, then the violation would
warrant punitive damages and qualify as "willful" under the Order,
See, e.g., EEOC v. Mgmt. Hospitality of Racine, Inc., 666 F.3d 422,
438-39 (7th Cir. 2012).
3. Other Labor Laws
For violations of Labor Laws other than the OSH Act, the FLSA, the
ADEA, Title VII, and the ADA, a violation is willful for purposes of
the Order if the findings of the relevant enforcement agency, court,
arbitrator, or arbitral panel support a conclusion that the contractor
or subcontractor knew that its conduct was prohibited by the Labor Laws
or showed reckless disregard for, or acted with plain indifference to,
whether its conduct was prohibited by Labor Laws.\21\ A contractor or
subcontractor need not act maliciously or with a bad purpose to commit
a willful violation; rather, the focus is on whether the enforcement
agency, court, arbitrator, or arbitral panel's findings support a
conclusion that, based on all of the facts and circumstances discussed
in the findings, the contractor or subcontractor acted with knowledge
or reckless disregard of its legal requirements. The administrative
merits determination, civil judgment, or arbitral award or decision
need not include the specific words "knowledge" or "reckless
disregard"; however, the factual findings or legal conclusions
contained in the determination, judgment, award or decision must
support a conclusion that the violation meets one of these conditions,
as described further below.
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\21\ Nothing in this guidance is intended to affect the
terminology or operation of FAR Part 22.4.
---------------------------------------------------------------------------
Generally, willfulness will be found in one of two circumstances.
One is where the findings of the enforcement agency, court, arbitrator,
or arbitral panel support a conclusion that the contractor or
subcontractor knew that its conduct was prohibited by law, yet engaged
in the conduct anyway. Knowledge can be inferred from the factual
findings or legal conclusions contained in the administrative merits
determination, civil judgment, or arbitral award or decision. For
example, willfulness will typically be found where the administrative
merits determination, civil judgment, or arbitral award or decision
supports a conclusion that a contractor or subcontractor was previously
advised by responsible government officials that its conduct was not
lawful, but engaged in the conduct anyway. Repeated violations may also
be willful to the extent that the original proceeding demonstrates that
the contractor or subcontractor was put on notice of its legal
obligations, only to later commit the same or a substantially similar
violation. If the administrative merits determination, civil judgment,
or arbitral award or decision supports a conclusion that a contractor
or subcontractor has a written policy or manual that describes a legal
requirement, and then knowingly violates that requirement, the
violation is also likely to be willful.
For example, if the administrative merits determination, civil
judgment, or arbitral award or decision supports a conclusion that a
contractor or subcontractor was warned by an official from the
Department that the housing it was providing to migrant and seasonal
agricultural workers did not comply with required safety and health
standards, and that the contractor or subcontractor then failed to make
the required repairs or corrections, such findings demonstrate that the
contractor or subcontractor engaged in a willful violation of MSPA.
Likewise, if the administrative merits determination, civil judgment,
or arbitral award or decision indicates that a contractor's or
subcontractor's employee handbook states that it provides unpaid leave
to employees with serious health conditions as required by the FMLA,
but the contractor or subcontractor refuses to grant FMLA leave or
erects unnecessary hurdles to employees requesting such leave, that
violation would also likely be willful. Certain acts, by their nature,
are willful, such as conduct that demonstrates an attempt to evade
statutory responsibilities, including the falsification of records,
fraud or intentional misrepresentation in the application for a
required certificate, payment of wages "off the books," or
"kickbacks" of wages from workers back to the contractor or
subcontractor.
The second type of willful violation is where the findings of the
enforcement agency, court, arbitrator, or arbitral panel supports a
conclusion that a contractor or subcontractor acted with reckless
disregard or plain indifference toward the Labor Laws' requirements.
These terms refer to circumstances in which the administrative merits
determination, civil judgment, or arbitral award or decision supports a
conclusion that a contractor or subcontractor failed to make sufficient
efforts to learn or understand whether it was complying with the law.
Although merely inadvertent or negligent conduct would not meet this
standard, blissful ignorance of the law is not a defense to a willful
violation. The adequacy of a contractor's or subcontractor's inquiry is
judged in light of all of the facts and circumstances, including the
nature of the violation, the complexity of the legal issue, and the
sophistication of the contractor or subcontractor. Reckless disregard
or plain indifference may also be shown where the administrative merits
determination, civil judgment, or arbitral award or decision supports a
conclusion that a contractor or subcontractor was aware of plainly
obvious violations and failed to take an appropriate action. For
example, an employer who employs a 13-year-old child in an obviously
dangerous occupation, such as operating a forklift, is acting in
reckless disregard of the law even if it cannot be shown that the
employer actually knew that doing so was in violation of one of the
Secretary's Hazardous Occupation Orders. Reckless disregard or plain
indifference will also be found if the administrative merits
determination, civil judgment, or arbitral award or decision supports a
conclusion that a contractor or subcontractor acted with purposeful
lack of attention to its legal requirements, such as if management-
level officials are made aware of a health or safety requirement but
make little or no effort to communicate that requirement to lower-level
supervisors and employees.
4. Table of Examples
For a table containing selected examples of willful violations, see
Appendix B.
C. Repeated Violations
The Order provides that the standard for repeated should
"incorporate existing statutory standards" to the extent such
standards exist. See Sec. 4(b)(i)(A). The Order further provides that,
where no statutory standards exist, the standards for repeated should
take into account "whether the entity has had one or more additional
violations of the same or a substantially similar requirement in the
past 3 years." See Sec. 4(b)(i)(B)(2). Accordingly, a violation is
"repeated" under the Order if it is the same as or substantially
similar to one or more other violations of the Labor Laws by the
contractor or subcontractor.
For a violation to be repeated, the same or substantially similar
other violation(s) must be reflected in one or more civil judgments,
arbitral awards or decisions, or adjudicated or uncontested
administrative merits determinations issued within the last three
years. Substantially similar does not mean "exactly the same." United
States v. Washam, 312 F.3d 926, 930 (8th Cir. 2002). Rather, two things
may be substantially similar where they share "essential elements in
common." Alameda Mall, L.P. v. Shoe Show, Inc., 649 F.3d 389, 392 (5th
Cir. 2011) (citing dictionary definition of the term). Whether a
violation is "substantially similar" to a past violation turns on the
nature of the violation and underlying obligation itself.
1. Timeframe
The civil judgment, arbitral award or decision, or adjudicated or
uncontested administrative merits determination for the prior, or
predicate, violation(s) must have occurred within the three-year
reporting period. This is the case even if a violation may be
designated as "repeated" within the meaning of one of the Labor Laws
if the prior violation took place more than three years earlier. For
example, under current OSHA policy, repeated violations under the OSH
Act take into account a five-year period. However, an OSH Act or OSHA-
approved State Plan violation designated as a repeated violation in the
citation would be repeated for purposes of the Order only if the
predicate violation was issued or affirmed within the three-year
reporting period.
2. Separate Investigations or Proceedings
The prior violation(s) must be the subject of one or more separate
investigations or proceedings. Thus, for example, if a single
investigation discloses that a contractor or subcontractor violated the
FLSA and the OSH Act, or committed multiple violations of any one of
the Labor Laws, such violations would not be deemed "repeated."
3. Type of Violation
The prior violation(s) must be reflected in one or more civil
judgments, arbitral awards or decisions, or adjudicated or uncontested
administrative merits determinations. To the extent that a prior civil
judgment, arbitral award or decision, or administrative merits
determination has been reversed or vacated in its entirety and is thus
exempt from the reporting requirements, it cannot render a subsequent
violation repeated.
As the definition indicates, for an administrative merits
determination to serve as a predicate violation that will render a
subsequent violation repeated, it must have been adjudicated or be
uncontested. An adjudicated administrative merits determination for
purposes of the Order is an administrative merits determination that
follows a proceeding in which the contractor or subcontractor had an
opportunity to present evidence or arguments on its behalf, such as at
a hearing or through written submissions, before the appropriate
decision-making authority. An uncontested administrative merits
determination is any non-reversed, non-vacated administrative merits
determination except one in which a timely appeal of the determination
has been filed or is pending before a court or other tribunal with
jurisdiction to hear the appeal.
Only the predicate administrative merits determination need be
adjudicated or uncontested when determining whether a violation is
repeated. Thus, for example, if a contractor or subcontractor receives
an OSH Act citation but timely contests it before the OSHRC, and during
the pendency of that proceeding is cited for a substantially similar
OSH Act violation, the second citation would not, during the pendency
of the OSHRC proceeding, be a repeated violation because the first
citation is neither adjudicated nor uncontested. However, if OSHRC
affirms the first citation, then the second citation could be a
repeated violation because the first violation is now the product of an
adjudication, even though the second violation is neither adjudicated
nor uncontested. This framework is intended to ensure that repeated
violations will only be assessed when the contractor or subcontractor
has had the opportunity to present facts or arguments in its defense
concerning the predicate violation.
4. Company-Wide Consideration
Repeated violations may be considered on a company-wide basis.
Thus, a prior violation by any establishment of a multi-establishment
company can render subsequent violations repeated, provided the other
relevant criteria are satisfied. As discussed below, the relative size
of the contractor or subcontractor as compared to the number of
violations may be a mitigating factor.
5. Substantially Similar Violations
The prior violation(s) must be the same as or substantially similar
to the violation designated as repeated. Whether violations fall under
the same Labor Law is not determinative of whether the requirements
underlying those violations are substantially similar. Rather, this
inquiry turns on the nature of the violation and underlying obligation
itself.
For example, the FLSA contains provisions requiring that employers
pay their covered employees the minimum wage and overtime for any hours
worked over 40 in a workweek. Two or more violations of these requirements
would be deemed substantially similar because they all would involve failure
to pay workers their proper wages.\22\ However, the FLSA also includes
prohibitions against forms of child labor. Although two or more violations of
child labor provisions would be substantially similar to each other,\23\ a
child labor violation would not be substantially similar to a violation of
the FLSA's wage provisions. The same would be true of a violation of
the FLSA's provision requiring break time for nursing mothers--a
violation of that provision would not be substantially similar to a
violation of the wage or child labor provisions.
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\22\ This is consistent with the treatment of such violations as
"repeated" in the FLSA's regulations. See 29 CFR 578.3(b).
\23\ 29 CFR 579.2 treats any two child labor violations as
repeated.
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Similarly, for NLRA violations, any two violations of section
8(a)(3), which prohibits employers from discriminating against
employees for engaging in or refusing to engage in union activities,
would be substantially similar, but would not be substantially similar
to violations of section 8(a)(2), which prohibits an employer from
dominating or assisting a labor union through financial support or
otherwise.
For violations of the OSH Act, violations are repeated if they
involve the same or a substantially similar hazard. A repeated
violation may be found based on a prior violation of the same standard,
a different standard, or the general duty clause, but the hazards
themselves must be the same or substantially similar. Thus, for
example, if an employer is cited in one instance for failing to provide
fall protection on a residential construction site, and a second time
for failing to provide fall protection at a commercial construction
site, those violations would be repeated because they involve the same
or substantially similar hazards, even though the cited standards are
different.
Under the FMLA, any two violations would generally be considered
substantially similar to each other, with the exception of violations
of the notice requirements. Thus, denial of leave, retaliation,
discrimination, failure to reinstate an employee to the same or an
equivalent position, and failure to maintain group health insurance
would all be considered substantially similar, given that each
violation involves either denying FMLA leave or penalizing an employee
who takes leave. Any two instances of failure to provide notice--such
as failure to provide general notice via a poster as well as failure to
notify individual employees regarding their eligibility status, rights,
and responsibilities--would be substantially similar to each other, but
not to other violations of the FMLA.
Under MSPA, multiple violations of the statute's requirements
pertaining to wages, supplies, and working arrangements (including, for
example, failure to pay wages when due, prohibitions against requiring
workers to purchase goods or services solely from particular
contractors, employers, or associations, and violating the terms of any
working arrangements) would all be substantially similar for purposes
of the Order. Likewise, violations of any of MSPA's requirements
related to health and safety, including both housing and transportation
health and safety, would all be substantially similar to each other.
Violations of the statute's disclosure and recordkeeping requirements
would also be substantially similar to each other. Finally, multiple
violations related to MSPA's registration requirements would be
substantially similar.
For purposes of Title VII, Section 503 of the Rehabilitation Act of
1973, the ADA, the ADEA, Section 6(d) of the FLSA (known as the Equal
Pay Act, 29 U.S.C. 206(d)), Executive Order 11246 of September 24,
1965, the Vietnam Era Veterans' Readjustment Assistance Act of 1972,
and the Vietnam Era Veterans' Readjustment Assistance Act of 1974,
violations are substantially similar if they involve the same or an
overlapping protected status--e.g., race/color, national origin, sex,
gender identity, sexual orientation, religion, disability, age,
protected veterans' status--even if they do not involve the same
employment practice--e.g., hiring, firing, harassment, compensation.
This is true regardless of whether the violations arise under the same
statute or different statutes, e.g., an ADA violation and a Section 503
violation. For example, two violations of requirements not to
discriminate on the basis of sex would be substantially similar even if
they involved two different employment practices--e.g., hiring and
promotions. Additionally, if, for example, the first violation involves
discrimination on the basis of national origin and the second violation
involves discrimination on the basis of national origin and race, the
violations are substantially similar because they involve an
overlapping protected status, namely, discrimination on the basis of
national origin.
Other violations arising under two or more different statutes may
also be substantially similar. For example, several of the Labor Laws
have provisions prohibiting retaliation against individuals who
exercise protected rights. An employer who commits two or more
violations involving retaliation will be found to have engaged in
repeated violations. Similarly, failure to pay wages mandated by the
FLSA, SCA, DBA, MSPA, or Executive Order 13658 would be substantially
similar violations since all of these violations concern the failure to
pay wages mandated by law. Likewise, violations of the OSH Act and
violations of the health and safety provisions of MSPA could be
substantially similar if they involve substantially similar hazards.
Two or more failures to post notices required under the Labor Laws
would also be deemed substantially similar, as would be two or more
failures to keep records.
The Department specifically seeks comments by interested parties
regarding its proposed definition of "substantially similar" for
determining if a violation is repeated under the Order.
6. Table of Examples
For a table containing selected examples of repeated violations,
see Appendix C.
D. Pervasive Violations
The Order provides that, where no statutory standards exist, the
standard for pervasive should take into account "the number of
violations of a requirement or the aggregate number of violations of
requirements in relation to the size of the entity." See Sec.
4(b)(i)(B)(4). No statutory standards for "pervasive" exist under the
Labor Laws.
Violations are "pervasive" if they reflect a basic disregard by
the contractor or subcontractor for the Labor Laws as demonstrated by a
pattern of serious or willful violations, continuing violations, or
numerous violations. Violations must be multiple to be pervasive,
although the number of violations necessarily depends on the size of
the contractor or subcontractor, because larger employers, by virtue of
their size, are more likely to have multiple violations. To be
pervasive, the violations need not be of the same or similar
requirements of the Labor Laws. Pervasive violations may exist where
the contractor or subcontractor commits multiple violations of the same
Labor Law, regardless of their similarity, or violations of more than
one of the Labor Laws. This category is intended to identify those
contractors and subcontractors whose numerous violations of Labor Laws
indicate that they may view sanctions for their violations as merely
part of the "cost of doing business," an attitude that is
inconsistent with the level of responsibility required by the FAR. LCAs
and contractors are strongly encouraged to consult with the Department
when determining whether violations are pervasive.
Pervasive violations differ from repeated violations in a number of
ways. First, unlike repeated violations, pervasive violations need not
be substantially similar, or even similar at all, as long as each
violation involves one of the Labor Laws. Additionally, pervasive
violations, unlike repeated violations, may arise in the same
proceeding or investigation. For example, a small tools manufacturer
with a single location may be cited multiple times for serious
violations under the OSH Act--once for improper storage of hazardous
materials, once for failure to provide employees with protective
equipment, once for inadequate safeguards on heavy machinery, once for
lack of fall protection, once for insufficient ventilation, once for
unsafe noise exposure, and once for inadequate emergency exits. While
these violations are sufficiently different that they would not
constitute repeated violations, such a high number of workplace safety
violations relative to the size of a small company with only a single
location would likely demonstrate a basic disregard by the company for
workers' safety and health, particularly if the company lacked a
process for identifying and eliminating serious health hazards. As
such, these violations would likely be considered pervasive.
In addition, violations across multiple Labor Laws--especially when
they are serious, willful, or repeated--are an indication of pervasive
violations that warrant careful examination by the contracting officer,
in consultation with the LCA. For example, a medium-sized company that
provides janitorial services at federal facilities may be found to have
violated the SCA for failure to pay workers their required wages, Title
VII for discrimination in hiring on the basis of national origin, the
National Labor Relations Act for demoting workers who are seeking to
organize a union, and the Family and Medical Leave Act for denying
workers unpaid leave for serious health conditions. While these
violations are substantively different from each other, a medium-sized
employer that violates so many Labor Laws is demonstrating a basic
disregard for its legal obligations to its workers and is likely
committing pervasive violations.
Whereas a repeate d violation may be found anytime a contractor or
subcontractor commits two or more substantially similar violations,
there is no specific numeric threshold for pervasive violations.
Rather, the number of violations necessary will depend on the size of
the contractor or subcontractor, as well as the nature of the
violations themselves.
A series of repeated violations may, however, become pervasive,
particularly if it demonstrates that a contractor or subcontractor,
despite knowledge of its violations, fails to make efforts to change
its practices and continues to violate the law. For example, if the
Department's Wage and Hour Division issued several administrative
merits determinations over the course of three years finding that a
contractor or subcontractor illegally employed underage workers, and
the contractor or subcontractor, despite receiving these notices,
failed to make efforts to change its child labor practices and
continued to violate the FLSA's child labor provisions, the series of
violations would likely be considered pervasive.
For smaller companies, a smaller number of violations may be
sufficient for a finding of pervasiveness, while for large companies,
pervasive violations will typically require either a greater number of
violations or violations affecting a significant number or percentage
of a company's workforce. For example, if the Department's Office of
Federal Contract Compliance Programs finds that a large contractor that
provides food services at federal agencies nationwide used pre-
employment screening tests for most jobs at the company's facilities
that resulted in Hispanic workers being hired at a significantly lower
rate than non-Hispanic workers over a 5-year period, and in addition,
the Wage and Hour Division finds that the company failed to comply with
the SCA's requirements to pay its workers prevailing wages at many of
its locations, such violations would likely be pervasive,
notwithstanding the large size of the contractor, because the
contractor's numerous serious violations spanned most of its locations
and affected many of its workers. Conversely, had the company only
engaged in these prohibited practices at, for example, only a few of
its locations, such violations might not necessarily be considered
pervasive.
Similarly, if a large company that provides laundry services to
military bases in several states is cited 50 times for serious OSHA
violations affecting most of its locations over the span of one year,
and a number of the citations are for failure to abate dangerous
conditions that OSHA had cited previously, and as a result the company
is placed on OSHA's Severe Violator Enforcement Program, such
violations would likely be pervasive because the sheer number of
violations over such a short period of time is evidence that the
company is ignoring persistent threats to workers' safety, fails to
treat safety as a serious problem, and is acting in disregard of its
legal obligations. Conversely, if the violations affected only a few of
the company's facilities, or if the company had acted quickly to abate
any violations, the violations might not necessarily be considered
pervasive.
The Department specifically seeks comments by interested parties
regarding how best to assess the number of a contractor's or
subcontractor's violations in light of its size.
An additional relevant factor in determining whether violations are
pervasive is the involvement of higher-level management officials. When
Labor Laws are violated with either the explicit or implicit approval
of higher-level management, such approval signals that future
violations will be tolerated or condoned, and may dissuade workers from
reporting violations or raising complaints. Thus, to the extent that
higher-level management officials were involved in violations
themselves (such as discrimination in hiring by an executive, or a
decision by an executive to cut back on required safety procedures that
led to violations of the OSH Act) or knew of violations and failed to
take appropriate actions (such as ignoring reports or complaints by
workers), the violations are more likely to be deemed pervasive. For
example, if the vice president of a construction company directs a
foreman not to hire Native American workers, and as a result the
company is later found to have committed numerous Title VII violations
against job applicants, such violations are likely to be pervasive.
Likewise, if the chief safety officer at a chemical plant fields
complaints from workers about several unsafe working conditions but
then fails to take action to remedy the unsafe conditions, such
violations are also likely to be pervasive because the dangerous
working conditions were willfully sanctioned by a high-level company
official and were evident throughout the chemical plant. Such behavior
indicates that the company views penalties for such violations as "the
cost of doing business," rather than indicative of significant threats
to its workers' health and safety that must be addressed. By the same
token, managers are expected to play an active role in ensuring Labor
Law compliance in their workforce rather than abdicating their
responsibility to do so. If managers actively avoid learning about
labor law violations (such as by failing to exercise appropriate
oversight or "passing the buck" to others), this may also indicate
that the violations are pervasive.
For a table containing selected examples of pervasive violations,
see Appendix D.
E. Assessing Violations and Considering Mitigating Factors
When assessing violations of the Labor Laws by a contractor or
subcontractor, all the facts and circumstances of the violations, as
well as any mitigating factors, should be considered.
The following types of violations raise particular concerns
regarding the contractor's or subcontractor's compliance with the Labor
Laws:
Pervasive violations. Pervasive violations, by definition,
demonstrate a basic disregard for the Labor Laws. Such disregard of
legal obligations creates a heightened danger that the contractor or
subcontractor may, in turn, disregard its contractual obligations as
well. Additionally, such contractors and subcontractors are more likely
to violate the Labor Laws in the future, and those violations--and any
enforcement proceedings or litigation that may ensue--may imperil their
ability to meet their obligations under a contract. Finally, that a
contractor or subcontractor shows such disregard for the Labor Laws is
highly probative of whether the contractor or subcontractor lacks
integrity and business ethics.
Violations that meet two or more of the categories
discussed above (serious, repeated, and willful). A violation that
falls into two or more of the categories is also, as a general matter,
more likely to be probative of the contractor's or subcontractor's lack
of integrity and business ethics than a violation that falls into only
one of those categories.
Violations that are reflected in final orders. To the
extent that the judgment, determination, or order finding a Labor Law
violation is final (because appeals and opportunities for further
review have been exhausted or were not pursued), the violation should
be given greater weight. Likewise, where a violation has not resulted
in a final judgment, determination, or order, it should be given lesser
weight.
Violations of particular gravity. In the Department's
view, certain Labor Laws violations that are serious under the Order
should be given greater weight, including violations related to the
death of an employee; violations involving a termination of employment
for exercising a right protected under the Labor Laws; violations that
detrimentally impact the working conditions of all or nearly all of the
workforce at a worksite; and violations where the amount of back wages,
penalties, and other damages awarded is greater than $100,000.
Various factors may mitigate the existence of a Labor Law
violation. The Department respects the fact that most employers
endeavor to comply with the Labor Laws. The Department values highly
contractors' good-faith efforts to comply, and it encourages them to
report these efforts, including workplace policies that foster
compliance.
In most cases, the most important mitigating factors will be the
extent to which the contractor or subcontractor has remediated the
violation and taken steps to prevent its recurrence. Other mitigating
factors include where the contractor or subcontractor has only had a
single violation; where the number of violations is low relative to the
size of the contractor or subcontractor; where the contractor or
subcontractor has implemented a safety and health management program, a
collectively-bargained grievance procedure, or other compliance
program; where there was a recent legal or regulatory change; where the
findings of the enforcement agency, court, arbitrator, or arbitral
panel support a conclusion that contractor or subcontractor acted in
good faith and had reasonable grounds for believing that it was not
violating the law; and where the contractor or subcontractor has
maintained a long period of compliance following any violations.
Contractors and subcontractors should provide any information that may
mitigate a Labor Law violation.
1. Remediation of Violation, Including Labor Compliance Agreements
As noted above, the extent to which a contractor or subcontractor
has remediated a Labor Law violation will typically be the most
important factor that can mitigate the existence of a violation.
Remediation is an indication that a contractor or subcontractor has
assumed responsibility for a violation and has taken steps to bring
itself into compliance with the law going forward. Conversely, failure
to remediate a violation may demonstrate disregard for legal
obligations and workers, which in turn would have bearing on whether
the contractor or subcontractor lacks integrity or business ethics. In
most cases, for remediation to be considered mitigating, it should
involve two components. First, the remediation should correct the
violation itself, including by making any affected workers whole. For
example, this could involve abating a dangerous hazard, paying workers
their back wages owed, or reinstating a wrongfully discharged employee.
Second, the remediation should demonstrate efforts by the contractor or
subcontractor to prevent similar violations in the future. For example,
if a contractor or subcontractor improperly misclassified workers as
exempt from the FLSA and pays any back wages due to the workers without
reviewing its classifications of the workers going forward, it will
likely commit similar violations in the future. Particular
consideration will be given where the contractor or subcontractor has
implemented remediation on an enterprise-wide level or has entered into
an enhanced settlement agreement with the relevant enforcement agency
or agencies that goes beyond what is minimally required under the law
to address appropriate remedial or compliance measures.
Similarly, when a contractor or subcontractor enters into a labor
compliance agreement (defined above) with the enforcement agency, that
agreement is an important mitigating factor. Entering into a labor
compliance agreement indicates that the contractor or subcontractor
recognizes the importance that the Federal Government places on
compliance with the Labor Laws.
2. Only One Violation
The Order provides that, in most cases, a single violation of a
Labor Law may not necessarily give rise to a determination of lack of
responsibility, depending on the nature of the violation. See Sec.
4(a)(i). However, a contracting agency is not precluded from making a
determination of non-responsibility based on a single violation in the
rare circumstances where merited.
3. Low Number of Violations Relative to Size
Larger employers, by virtue of their size, are more likely to have
multiple violations than smaller ones. When assessing contractors or
subcontractors with multiple violations, the size of the contractor or
subcontractor will be considered.
4. Safety and Health Programs or Grievance Procedures
Implementation of a safety and health management program such as
OSHA's 1989 Safety and Health Program Management guidelines or any
updates to those guidelines,\24\ grievance procedures (including
collectively-bargained ones), monitoring arrangements negotiated as part
of an enhanced settlement agreement, or other compliance programs foster
a corporate culture in which workers are encouraged to raise legitimate
concerns about Labor Laws violations without the fear of repercussions.
Such programs and procedures may prompt workers to report violations
that would, under other circumstances, go unreported. Therefore, the
implementation of such programs or procedures will be considered a
mitigating factor, particularly as to violations that might otherwise
be deemed repeated or pervasive.
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\24\ In addition, there are two industry consensus standards
that, if implemented, should be considered as mitigating factors for
violations involving workplace safety and health. The American
National Standards Institute (ANSI) and American Industrial Hygiene
Association (AIHA) have published a voluntary consensus standard,
ANSI/AIHA Z10--2005 Occupational Safety and Health Management
Systems (ANSI/AIHA, 2005), and the Occupational Health and Safety
Assessment Series (OHSAS) Project Group has produced a similar
document, OHSAS 18001--2007 Occupational Health and Safety
Management Systems (OHSAS Project Group, 2007). These consensus-
based standards have been widely accepted in the world of commerce
and adopted by many businesses on a voluntary basis. They all have a
similar set of elements (management leadership, worker
participation, hazard identification and assessment, hazard
prevention and control, education and training, and program
evaluation and improvement) that focus on finding all hazards and
developing a workplace plan for prevention and control of those
hazards.
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5. Recent Legal or Regulatory Change
To the extent that the Labor Laws violations can be traced to a
recent legal or regulatory change, that may be a mitigating factor. The
change must be recent, and the violations must not have been violations
but for the change.
6. Good Faith and Reasonable Grounds
It may be a mitigating factor if the contractor or subcontractor
shows that it made efforts to ascertain its legal obligations and to
follow the law, and that its actions under the circumstances were
objectively reasonable. For example, if a contractor or subcontractor
acts in reasonable reliance on advice from a responsible official from
the relevant enforcement agency, or an administrative or authoritative
judicial ruling, such reliance will typically demonstrate good faith
and reasonable grounds. This factor may also apply where the
contractor's or subcontractor's legal obligations are unclear, such as
when a new statute, rule, or standard is first implemented.
7. Significant Period of Compliance Following Violations
If, following one or more violations within the three-year
reporting period, the contractor or subcontractor maintains a steady
period of compliance with the Labor Laws, such compliance may mitigate
the existence of prior violations (e.g., violations were reported from
2\1/2\ years ago and there have been none since).
IV. Paycheck Transparency Provisions
Transparency in the relationships between employers and their
workers is critical to workers' understanding of their legal rights and
to the resolution of workplace disputes. When workers lack information
about how their pay is calculated and their status as employees or
independent contractors, workers are less aware of their rights and
employers are less likely to comply with labor laws. Providing workers
with information about how their pay is calculated each pay period will
enable workers to raise any concerns about pay more quickly, and will
encourage proactive efforts by employers to resolve such concerns.
Similarly, providing workers who are classified as independent
contractors with notice of their status will enable them to better
understand their legal rights, evaluate their status as independent
contractors, and raise any concerns during the course of the working
relationship as opposed to after it ends (which will increase the
likelihood that the employer and the worker will be able to resolve any
concerns more quickly and effectively). Thus, the Order's paycheck
transparency provisions will increase transparency in compensation
information and improve working relationships.
A. Wage Statement
The Order requires contracting agencies to ensure that, for covered
procurement contracts, provisions in solicitations and clauses in
contracts require contractors to provide all workers under the contract
for whom they must maintain wage records under the FLSA, the DBA, the
SCA, or equivalent State laws \25\ with a "document" each pay period
with "information concerning that individual's hours worked, overtime
hours, pay, and any additions made to or deductions made from pay."
See Sec. 5(a). Contracting agencies shall also ensure that contractors
"incorporate this same requirement" into covered subcontracts. Id.
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\25\ In a second proposed guidance to be published later in the
Federal Register, the Department will identify those State laws that
are equivalent to the FLSA, the DBA, and the SCA.
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The Order requires that the wage statement be provided to "all
individuals performing work" for whom the contractor or subcontractor
is required to maintain wage records under the FLSA, the DBA, the SCA,
or equivalent State laws. This means that a wage statement must be
provided to every worker subject to the FLSA, the DBA, the SCA, or
equivalent State laws regardless of the contractor's or subcontractor's
classification of the worker as an employee or independent contractor.
The Order states that the wage statement provided to workers each
pay period must be a "document." If the contractor or subcontractor
regularly provides documents to its workers by electronic means, the
wage statement may be provided electronically if the worker can access
it through a computer, device, system, or network provided or made
available by the contractor or subcontractor.
The Order further provides that the wage statement must be issued
every pay period and contain the total number of hours worked in the
pay period and the number of those hours that were overtime hours. The
FAR Council's proposed regulations would require, if the wage statement
is not provided weekly and is instead provided bi-weekly or semi-
monthly (because the pay period is bi-weekly or semi-monthly), that the
hours worked and overtime hours contained in the wage statement be
broken down to correspond to the period (which will almost always be
weekly) for which overtime is calculated and paid. If the hours worked
and overtime hours are aggregated in the wage statement for the entire
pay period as opposed to being broken down by week, the worker may not
be able to understand and evaluate how the overtime hours were
calculated. For example, if the pay period is bi-weekly and the worker
is entitled to overtime pay for hours worked over 40 in a week, then
the wage statement must provide the hours worked and any overtime hours
for the first week and the hours worked and any overtime hours for the
second week.
The Order states that the wage statement must also contain the
worker's pay--a reference to the gross pay due the worker for the pay
period--as well as all additions to and deductions from the gross pay.
Additions to pay may include bonuses, awards, and shift differentials.
Deductions from pay include deductions required by law (such as
withholding for taxes), voluntary deductions by the worker (such as
contributions to health insurance premiums or retirement accounts), and
all other deductions or reductions made from gross pay regardless of the
reason. Providing a worker with gross pay and all additions to and deductions
from gross pay will necessarily allow the worker to understand the net pay
received and how it was calculated.
According to the Order, the wage statement provided to workers who
have no entitlement to overtime compensation under the FLSA "need not
include a record of hours worked if the contractor informs the
individuals of their exempt status." See Sec. 5(a). Because such
workers are exempt from the FLSA's overtime compensation requirements,
there will be no overtime hours to include on the wage statement.\26\
To sufficiently inform a worker of exempt status so that the wage
statement need not include hours worked, the contractor or
subcontractor must provide written notice to the worker stating that
the worker is exempt from the FLSA's overtime compensation requirements
(oral notice is not sufficient).\27\ If the contractor or subcontractor
regularly provides documents to its workers by electronic means, the
document may be provided electronically if the worker can access it
through a computer, device, system, or network provided or made
available by the contractor or subcontractor.
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\26\ Workers may be entitled to overtime under the FLSA, but
under terms other than time-and-a-half for hours worked over 40 in a
week. See, e.g., 29 U.S.C. 207(j), (k). Such workers are not exempt
from the FLSA's overtime requirements, and wage statements provided
to them under the Order must contain a record of their hours worked.
\27\ As specified in the FAR Council's proposed regulations, if
a significant portion of the contractor's or subcontractor's
workforce is not fluent in English, the document provided notifying
the worker of exempt status must also be in the language(s) other
than English in which the significant portion of the workforce is
fluent.
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The wage statement requirements "shall be deemed to be fulfilled"
where a contractor or subcontractor "is complying with State or local
requirements that the Secretary of Labor has determined are
substantially similar to those required" by the Order. See Sec. 5(a).
This proposed guidance, when final, will therefore include a list of
the State and local jurisdictions that the Secretary determines to have
wage statement requirements that are "substantially similar" to the
Order's wage statement requirement ("Substantially Similar Wage
Payment States"). Providing a worker in one of these States with a
wage statement that complies with the requirements of that State would
satisfy the Order's wage statement requirement.
As described above, substantially similar does not mean "exactly
the same." Washam, 312 F.3d at 930. Rather, two things may be
substantially similar where they share "essential elements in
common." Alameda Mall, 649 F.3d at 392. The Secretary is considering
two options for determining whether State or local requirements are
substantially similar.
One option is to find a State or local requirement to be
substantially similar where it requires wage statements to include the
essential elements of overtime hours or overtime earnings, total hours,
gross pay, and any additions or deductions. When overtime hours or
earnings are disclosed in a wage statement, workers can identify from
the face of the document whether they have been paid for overtime
hours. The benefit of this option is that workers would be more likely
to become aware of a problem with their paycheck at an earlier date,
increasing the likelihood that the problem will be resolved
efficiently. Applying this method, the current list of Substantially
Similar Wage Payment States would be Alaska, California, Connecticut,
the District of Columbia, Hawaii, New York, and Oregon.\28\
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\28\ Oregon does not expressly require disclosure of overtime
hours. However, Or. Admin. Rule 839-020-0012 requires that "[i]f
multiple rates of pay are paid, the total number of hours worked at
each rate of pay" must be included on the wage statement, and
overtime pay is described as a "rate of pay" by Or. Admin. R. 839-
020-0030.
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A second option would allow wage statements to omit overtime hours
or earnings, so long as they instead include an element not listed in
the Order--the "rate of pay"--in addition to the essential elements
of total hours, gross pay, and any additions or deductions. The benefit
of this option is that it would allow more flexibility while still
requiring wage statements to provide enough information for a worker to
calculate whether he or she has been paid in full. By working backwards
from the information provided--dividing the gross earnings by the
number of hours worked and comparing the result to the rate of pay--the
worker should be able to determine whether the paycheck includes
payment for overtime hours. The drawback of this option is that a
failure to pay overtime would not be immediately identifiable from the
face of the document as it would be in the first option. Instead,
workers would need to complete a calculation in order to catch an
error. Thus, if the Department were to choose this second option,
workers in some of the Substantially Similar Wage Payment States would
be at greater risk of missing a problem with a paycheck than if the
Department were to choose the first option. Applying this second
method, the current list of Substantially Similar Wage Payment States
would be Alaska, California, Connecticut, the District of Columbia,
Hawaii, Massachusetts, Minnesota, New York, Oregon, Pennsylvania,
Texas, Vermont, Washington, and Wisconsin.\29\ The Department
specifically seeks comments regarding the two options above. It is also
open to considering other combinations of essential elements or other
ways to determine whether State or local requirements are substantially
similar.
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\29\ Neither of these two options would satisfy the Order's
requirement that an employer inform workers of their status as
exempt from overtime in order to provide a wage statement to exempt
employees that does not include a record of hours worked.
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After this proposed guidance is finalized, the Department will
maintain on its Web site a list of the Substantially Similar Wage
Payment States. The Secretary recognizes that States may change their
wage statement laws, such that some States whose wage statement laws
are initially designated as substantially similar may later weaken
them, and other States whose laws are not initially designated as
substantially similar may later strengthen them. When the Secretary
determines that a State must be added to or removed from the list of
Substantially Similar Wage Payment States, notice of such changes will
be published on the Web site.\30\ The Department may also issue All
Agency Memoranda or similar direction to contracting agencies and the
public to communicate updates to the list of the Substantially Similar
Wage Payment States.
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\30\ The same is true for local wage statement ordinances. The
Department will list on the Web site any newly enacted local
ordinances that are substantially similar.
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B. Independent Contractor Notice
The Order requires contractors and subcontractors, for workers
under covered contracts for whom they are required to maintain wage
records under the FLSA, the DBA, the SCA, or equivalent State laws, to
provide those workers whom they treat as independent contractors with
"a document informing the individual of this [independent contractor]
status." See Sec. 5(a). For covered contracts, provisions in
solicitations and clauses in contracts should be included requiring
such notice to workers treated as independent contractors.
The notice informing the worker of status as an independent
contractor must be provided to each individual worker treated as an
independent contractor before the worker performs any work under the
contract. The notice must be a "document" (oral notice of independent
contractor status is not sufficient).\31\ The document must be separate
from any contract entered into between the contractor or subcontractor
and the independent contractor. If the contractor or subcontractor
regularly provides documents to its workers by electronic means, the
document may be provided electronically if the worker can access it
through a computer, device, system, or network provided or made
available by the contractor or subcontractor.
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\31\ As specified in the FAR Council's proposed regulations, if
a significant portion of the contractor's or subcontractor's
workforce is not fluent in English, the document notifying the
worker of independent contractor status must also be in the
language(s) other than English in which the significant portion of
the workforce is fluent.
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As of the effective date of the Order's independent contractor
notice requirement, contractors and subcontractors must provide the
required notice to each independent contractor then engaged to perform
work under a covered contract. Thereafter, contractors and
subcontractors must provide the notice to an independent contractor
each time that he or she is engaged to perform work under a covered
contract (and certainly before he or she performs any work under the
contract). The notice provided is specific to a particular covered
contract regardless of whether the worker performs the same type of
work on another covered contract. If a worker who has performed work
under a contract and who received notice that his or her status was as
an independent contractor is engaged to perform work as an independent
contractor under a different covered contract, then the contractor or
subcontractor shall provide the worker with a new notice informing the
worker of his or her status as an independent contractor for work
performed under the different contract.
The provision of the notice to a worker informing the worker that
he or she is an independent contractor does not mean that the worker is
correctly classified as an independent contractor under applicable
laws. The Department will not consider the notice when determining
whether a worker is an independent contractor or employee. The
determination of whether a worker is an independent contractor under a
particular law remains governed by that law's definition of
"employee" and its standards for determining for its purposes which
workers are independent contractors and not employees.
V. Invitation To Comment
As discussed above, the Department, in its discretion, solicits
comments on this proposed initial guidance document in the manner and
before the date specified herein. After the comment period has ended,
the Department will publish final guidance in the Federal Register.
This solicitation of public feedback is intended to improve the
internal management of the Executive Branch and is not intended to, and
does not, create any right or benefit, substantive or procedural,
enforceable at law or in equity, against the United States, its
agencies or other entities, its officers or employees, or any other
person.
VI. Next Steps
This proposed guidance is the first step in the phased
implementation of the Order.
The Order requires the FAR Council to propose to amend the Federal
Acquisition Regulation to incorporate the Order's requirements into the
process by which contracting officers make pre-award responsibility
determinations, among other necessary and appropriate proposed changes.
See Sec. 4(a). This proposed guidance, when finalized, will assist the
FAR Council in promulgating regulations that will be binding for
covered contracts. The Order further requires the GSA Administrator, in
consultation with other relevant agencies, to develop a single Web site
for Federal contractors to use for all Federal contract reporting
requirements related to the Order to the extent practicable. See Sec.
4(d). The final FAR rule will include the reporting Web site address
for Federal contractors.
As indicated in this proposed guidance, the Department will publish
in the Federal Register at a later date a second proposed guidance
under this Order.
Signed this 19th day of May 2015.
Mary Beth Maxwell,
Principal Deputy Assistant Secretary, Office of the Assistant Secretary
for Policy, U.S. Department of Labor.
------------------------------------------------------------------------
-------------------------------------------------------------------------
Appendix A: Examples of Serious Violations
------------------------------------------------------------------------
All violations of federal labor laws are serious, but in the context of
Executive Order 13673, Fair Pay and Safe Workplaces, the Department of
Labor has identified certain violations as "serious," "willful,"
"repeated," and "pervasive." This subset of all labor violations
represents the violations that are most concerning and bear on the
assessment of a contractor or subcontractor's integrity and business
ethics. The Department has purposely excluded from consideration
violations that could be characterized as inadvertent or minimally
impactful. Ultimately, each contractor's disclosed violations of Labor
Laws will be assessed on a case-by-case basis in light of the totality
of the circumstances, including the severity of the violation or
violations, the size of the contractor, and any mitigating factors. In
most cases, even for violations subject to disclosure and consideration
under the Order, a single violation of one of the Labor Laws will not
give rise to a determination of lack of responsibility.
The chart below includes a non-exhaustive list of examples of Labor Laws
violations that may be found to be "serious" under the Department's
proposed guidance for Executive Order 13673. These are examples only:
They are not minimum requirements, nor are they exclusive of other
violations under each Labor Law that may be serious. The chart does not
include violations of "equivalent state laws," which are also covered
by the Order, but (with the exception of OSHA State Plans, which are
addressed in the current proposed guidance) will be addressed in future
guidance. Where the chart indicates that a violation is serious for
more than one reason, this means that either of the reasons listed is
an independent ground for finding that the violation is serious, as
defined in the guidance.
------------------------------------------------------------------------
Summary of Definition of "Serious Violation"
------------------------------------------------------------------------
The full definition of a "serious violation" is set forth in section
III.A of the Department of Labor's proposed guidance. When evaluating
violations, Labor Compliance Advisors and contracting officers, and
contractors when evaluating subcontractors, should refer to the full
definition in the guidance.
In summary, the guidance provides that a violation of one of the Labor
Laws is serious if it involves at least one of the following:
An OSH Act or OSHA-approved State Plan citation was
designated as serious, there was a notice of failure to abate an
OSH Act violation, or an imminent danger notice was issued under
the OSH Act or an OSHA-approved State Plan;
The affected workers comprised 25% or more of the workforce
at the worksite;
Fines and penalties of at least $5,000 were assessed or
back wages of at least $10,000 were due or injunctive relief was
imposed by an enforcement agency or a court;
The contractor's or subcontractor's conduct violated MSPA
or the child labor provisions of the FLSA and caused or contributed
to the death or serious injury of one or more workers;
Employment of a minor who was too young to be legally
employed or in violation of a Hazardous Occupations Order;
The contractor or subcontractor engaged in an adverse
employment action (including discharge, refusal to hire,
suspension, demotion, or threat) or is responsible for unlawful
harassment against one or more workers for exercising any right
protected by any of the Labor Laws;
The findings of the relevant enforcement agency, court,
arbitrator or arbitral panel support a conclusion that the
contractor or subcontractor engaged in a pattern or practice of
discrimination or systemic discrimination;
The findings of the relevant enforcement agency, court,
arbitrator or arbitral panel support a conclusion that the
contractor or subcontractor interfered with the enforcement
agency's investigation; or
The contractor or subcontractor breached the material terms
of any agreement or settlement entered into with an enforcement
agency, or violated any court order, any administrative order by an
enforcement agency, or any arbitral award.
When evaluating Labor Laws violations, Labor Compliance Advisors and
contracting officers, and contractors when evaluating subcontractors,
will review all of the above criteria to determine whether a violation
is serious. The examples below are intended to illustrate how these
criteria may arise in different contexts, but a violation will be
serious if it meets any of the above criteria.
------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Labor law Example of serious violation
----------------------------------------------------------------------------------------------------------------
Fair Labor Standards Act (FLSA).................................. The Wage and Hour Division of DOL (WHD) found
that a contractor violated the minimum wage
and overtime provisions of the FLSA. It
issued the contractor a Form WH-56 "Summary
of Unpaid Wages," and also assessed civil
monetary penalties. The back wages due
totaled $75,000, and the civil monetary
penalties assessed totaled $6,000.
This is a serious violation for two reasons.
First, a violation of any of the Labor Laws
is serious if fines and penalties of at
least $5,000 were assessed. Second, a
violation of any of the Labor Laws is
serious if back wages of at least $10,000
were due. Conversely, if the back wages due
totaled less than $10,000 and the civil
monetary penalties assessed had totaled less
than $5,000, the violation would not be a
serious violation, assuming that none of the
other criteria for seriousness listed above
are met.
WHD finds that a meat processor employed 10
workers under the age of 18 to operate power-
driven meat processing machines, such as
slicers, saws, and choppers. One of these
workers died in an accident involving one of
the machines.
This is a serious violation for two reasons.
First, a violation of FLSA's child labor
provisions is serious if it involves the
employment of a minor too young to be
legally employed or in violation of a
Hazardous Occupations Order. The employment
of minors in the above-described occupation
is prohibited under Hazardous Occupation
Order No. 10. Second, a violation of FLSA's
child labor provisions is serious if it
causes or contributes to the death or
serious injury of one or more workers.
Conversely, the employment of, for example,
a 14- or 15-year-old minor in excess of
three hours outside school hours on a school
day in a non-hazardous, non-agricultural job
in which the child is otherwise permitted to
work would not be a serious violation,
assuming that none of the other criteria for
seriousness listed above are met.
Occupational Safety and Health (OSH) Act......................... OSHA issued a citation for failing to protect
against fall hazards on a construction
worksite. The citation was designated as
"serious."
This is a serious violation because all
citations designated as serious by OSHA (or
an OSHA State Plan) are serious under the
Order. Conversely, if OSHA (or the
equivalent state agency under an OSHA State
Plan) had designated the violation as
"other-than-serious," the violation would
not be a serious violation under the Order.
Migrant and Seasonal Agricultural Worker Protection Act (MSPA)... WHD issued a letter indicating that an
investigation had disclosed a violation of
MSPA that contributed to the serious injury
of a worker.
This is a serious violation because a
violation of MSPA is serious if it caused or
contributed to the death or serious injury
of one or more workers. Conversely, if WHD
issued a letter indicated that the
investigation had disclosed that 3 of the 50
MSPA workers at a job site did not receive
their wages when due, and those wages
totaled $1,000 and the civil monetary
penalties totaled $500, the violation would
not be serious, assuming that none of the
other criteria for seriousness listed above
are met.
National Labor Relations Act (NLRA).............................. The General Counsel of the National Labor
Relations Board (NLRB) issued a complaint
alleging that the contractor fired the
employee who was the lead union adherent
during the union's organizational campaign.
This is a serious violation because a
violation of any of the Labor Laws is
serious where the contractor or
subcontractor engaged in an adverse
employment action (including discharge,
refusal to hire, suspension, demotion, or
threat) or is responsible for unlawful
harassment against one or more workers for
exercising any right protected by any of the
Labor Laws. Conversely, if the NLRB's
complaint had instead alleged that the
contractor had, for example, denied a single
employee a collectively-bargained benefit
(for example, a vacation to which the
employee was entitled based on her
seniority), the violation would not be
serious, assuming that none of the other
criteria for seriousness listed above are
met.
Davis-Bacon Act (DBA)............................................ WHD issued a letter indicating that a
contractor violated the DBA, and that back
wages were due in the amount of $12,000. The
contractor had previously been investigated
by WHD and, to resolve that investigation,
had entered into a written agreement to pay
the affected workers prevailing wages as
required by the DBA.
This is a serious violation for two reasons.
First, a violation of any of the Labor Laws
is serious if back wages of at least $10,000
were due. Second, a violation of any of the
Labor Laws is serious if the contractor or
subcontractor breached the material terms of
any agreement or settlement entered into
with an enforcement agency. Conversely, if
WHD issued a letter indicating that a
contractor owed several workers a total of
$8,000, and the contractor's conduct did not
constitute a breach of a prior agreement or
meet any of the other criteria for
seriousness listed above, the violation
would not be serious.
Service Contract Act (SCA)....................................... An ALJ issued an order finding a food service
company violated the SCA by failing to
provide the required amount of health and
welfare benefits to 35 of its 100 workers at
a particular location. The order included a
finding that the contractor interfered with
WHD's investigation by threatening to fire
workers who spoke to WHD investigators.
This is a serious violation for two reasons.
First, a violation of any any of the Labor
Laws is serious if the affected workers
comprise 25% or more of the workforce at the
worksite. Second, a violation of any of the
Labor Laws is serious where the findings of
the relevant enforcement agency, court,
arbitrator or arbitral panel support a
conclusion that the contractor or
subcontractor interfered with the
enforcement agency's investigation.
Conversely, if the ALJ's order had indicated
that the contractor owed back wages to only
10 of the 100 SCA-covered workers at the
location, and did not contain a finding of
interference, the violation would not be
serious, assuming that none of the other
criteria for seriousness listed above are
met.
Executive Order 11246 (Equal Employment Opportunity)............. OFCCP issued a show cause notice indicating
that an investigation had disclosed that a
contractor had discriminated against African-
American and Hispanic job seekers in
violation of EO 11246. OFCCP had determined
that back wages were due to job applicants
in an amount upwards of $50,000. The
contractor subsequently settled the case
with OFCCP for a total of $30,000 in back
wages.
This is a serious violation for two reasons.
First, a violation of any of the Labor Laws
is serious if findings of the relevant
enforcement agency, court, arbitrator or
arbitral panel support a conclusion that the
contractor or subcontractor engaged in a
pattern or practice of discrimination or
systemic discrimination. Second, a violation
of any of the Labor Laws is serious if back
wages of at least $10,000 were due.
Conversely, if OFCCP issued a show cause
notice indicating that the investigation
disclosed that the contractor had
discriminated against only a few such job
seekers, and the amount of back wages due
was only $9,000, the violation would not be
serious, assuming that none of the other
criteria for seriousness listed above are
met.
Section 503 of the Rehabilitation Act............................ The ARB affirmed an ALJ order directing the
contractor to change a practice of medical
screenings that discriminated against job
applicants with disabilities--and that were
not job-related or consistent with business
necessity--in violation of Section 503.
This is a serious violation for two reasons.
First, a violation of any of the Labor Laws
is serious if injunctive relief is imposed
by an enforcement agency or court. Second, a
violation of any of the Labor Laws is
serious if the findings of the relevant
enforcement agency, court, arbitrator or
arbitral panel support a conclusion that the
contractor or subcontractor engaged in a
pattern or practice of discrimination or
systemic discrimination. Conversely, if the
ARB had found that the contractor's practice
of medical screenings was generally not
discriminatory, but that the contractor had
discriminated against two specific disabled
job applicants in another fashion, and the
ARB did not order the contractor to take any
specific actions, the violation would not be
serious, assuming that none of the other
criteria for seriousness listed above are
met.
Vietnam Era Veterans' Readjustment Assistance Act (VEVRAA)....... OFCCP issued a show cause notice indicating
that an investigation had disclosed that a
contractor had discriminated against a
veteran job applicant, and that back wages
were due to the job applicant in an amount
upwards of $10,000.
This is a serious violation because a
violation of any of the Labor Laws is
serious if back wages of at least $10,000
were due. Conversely, if OFCCP had
determined that the job applicant was due
only $5,000 in back wages, the violation
would not be serious, assuming that none of
the other criteria for seriousness listed
above are met.
Family and Medical Leave Act (FMLA).............................. The Secretary of Labor filed a complaint in
federal court after an investigation found
that a contractor fired a worker in
retaliation for taking FMLA leave.
This is a serious violation because a
violation of any of the Labor Laws is
serious where the contractor or
subcontractor engaged in an adverse
employment action (including discharge,
refusal to hire, suspension, demotion, or
threat) or is responsible for unlawful
harassment against one or more workers for
exercising any right protected by any of the
Labor Laws. Conversely, had the Secretary
filed a complaint in federal court alleging
that a contractor improperly denied an
employee two weeks of FMLA leave but did not
take any adverse employment action against
the employee, the violation would not be
serious, assuming that none of the other
criteria for seriousness listed above are
met.
Title VII of the Civil Rights Act of 1964........................ The EEOC filed a complaint in federal court
after an investigation found that the
contractor engaged in a pattern or practice
of discrimination under Title VII.
This is a serious violation because a
violation of any of the Labor Laws is
serious if the findings of the relevant
enforcement agency, court, arbitrator or
arbitral panel support a conclusion that the
contractor or subcontractor engaged in a
pattern or practice of discrimination or
systemic discrimination. Conversely, had the
EEOC's complaint alleged that the contractor
discriminated against only a single
individual, the violation would not be
serious, assuming that none of the other
criteria for seriousness listed above are
met.
Americans with Disabilities Act of 1990 (ADA).................... In a private action under the ADA brought in
federal district court, the court issued
injunctive relief to the plaintiff, ordering
the contractor to cease violating the ADA,
to rehire the plaintiff, and to provide the
plaintiff a reasonable accommodation for her
disability.
This is a serious violation because a
violation of any of the Labor Laws is
serious if injunctive relief is imposed by
an enforcement agency or court. Conversely,
had the court's relief been limited to an
award of damages, the violation would not be
serious, assuming that none of the other
criteria for seriousness listed above are
met.
Age Discrimination in Employment Act of 1967 (ADEA).............. In a private action brought in federal
district court, the factfinder found that
the contractor unlawfully discriminated
against the plaintiff on the basis of age
when it discharged the plaintiff. The court
awarded back wages of $50,000 to the
plaintiff.
This is a serious violation because a
violation of any of the Labor Laws is
serious if back wages of at least $10,000
were due. Conversely, had the court awarded
only $8,000 in back wages, the violation
would not be serious, assuming that none of
the other criteria for seriousness listed
above are met.
Executive Order 13658 (Minimum Wage for Contractors)............. WHD issued an investigative findings letter
indicating that an investigation disclosed a
violation of Executive Order 13658 and
finding that a total of $15,000 in back
wages are due.
This is a serious violation because a
violation of any of the Labor Laws is
serious if back wages of at least $10,000
were due. Conversely, had WHD's
investigative findings letter indicated that
only $1,500 in back wages were due, the
violation would not be serious, assuming
that none of the other criteria for
seriousness listed above are met.
----------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------
-------------------------------------------------------------------------
Appendix B: Examples of Willful Violations
------------------------------------------------------------------------
All violations of federal labor laws are serious, but in the context of
Executive Order 13673, Fair Pay and Safe Workplaces, the Department of
Labor has identified certain violations as "serious," "willful,"
"repeated," and "pervasive." This subset of all labor violations
represents the violations that are most concerning and bear on the
assessment of a contractor or subcontractor's integrity and business
ethics. The Department has purposely excluded from consideration
violations that could be characterized as inadvertent or minimally
impactful. Ultimately, each contractor's disclosed violations of Labor
Laws will be assessed on a case-by-case basis in light of the totality
of the circumstances, including the severity of the violation or
violations, the size of the contractor, and any mitigating factors. In
most cases, even for violations subject to disclosure and consideration
under the Order, a single violation of one of the Labor Laws will not
give rise to a determination of lack of responsibility.
The chart below includes a non-exhaustive list of examples of Labor Laws
violations that may be found to be "willful" under the Department's
proposed guidance for Executive Order 13673. These are examples only:
They are not minimum requirements, nor are they exclusive of other
violations under each Labor Law that may be willful. The chart does not
include violations of "equivalent state laws," which are also covered
by the Order, but (with the exception of OSHA State Plans, which are
addressed in the current proposed guidance) will be addressed in future
guidance.
------------------------------------------------------------------------
Summary of Definition of "Willful Violation"
------------------------------------------------------------------------
The full definition of a "willful violation" is set forth in section
III.B of the Department of Labor's proposed guidance. When evaluating
violations, Labor Compliance Advisors and contracting officers, and
contractors when evaluating subcontractors, should refer to the full
definition in the guidance.
In summary, the guidance provides that a violation of one of the Labor
Laws is willful if:
For purposes of a citation issued pursuant to the
Occupational Safety and Health (OSH) Act or an OSHA-approved State
Plan, the citation at issue was designated as willful or any
equivalent State designation (i.e., "knowing"), and the
designation was not subsequently vacated;
For purposes of the Fair Labor Standards (including the
Equal Pay Act), the administrative merits determination sought or
assessed back wages for greater than two years or sought or
assessed civil monetary penalties for a willful violation, or there
was a civil judgment or arbitral award or decision finding the
contractor or subcontractor liable for back wages for greater than
two years or affirming the assessment of civil monetary penalties
for a willful violation;
For purposes of the Age Discrimination in Employment Act
(ADEA), the enforcement agency, court, arbitrator, or arbitral
panel assessed or awarded liquidated damages;
For purposes of Title VII or the Americans with
Disabilities Act, the enforcement agency, court, arbitrator, or
arbitral panel assessed or awarded punitive damages for a violation
where the contractor or subcontractor engaged in a discriminatory
practice with malice or reckless indifference to the federally
protected rights of an aggrieved individual; or
For purposes of any of the other Labor Laws, the findings
of the relevant enforcement agency, court, arbitrator or arbitral
panel support a conclusion that the contractor or subcontractor
knew that its conduct was prohibited by any of the Labor Laws or
showed reckless disregard for, or acted with plain indifference to,
whether its conduct was prohibited by one or more requirements of
the Labor Laws.
When evaluating Labor Laws violations, Labor Compliance Advisors and
contracting officers, and contractors when evaluating subcontractors,
will review all of the above criteria to determine whether a violation
is willful. The examples below are intended to illustrate how these
criteria may arise in different contexts, but a violation will be
willful if it meets any of the above criteria.
------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Labor law Example of willful violation
----------------------------------------------------------------------------------------------------------------
Fair Labor Standards Act (FLSA).................................. In a private lawsuit under the FLSA, a
federal district court issued an order
requiring payment of three years of back
wages after finding that a contractor
willfully violated the FLSA overtime
regulations by paying workers for 40 hours
by check and then paying them in cash at a
straight-time rate for hours worked over 40.
This is a willful violation because FLSA
violations are willful under the Order if
back wages for greater than two years are
assessed. Conversely, if the court had
ordered the payment of back wages for only
two years, the violation would not be
willful under the Order.
WHD finds that a contractor employed a 13-
year-old child to operate a forklift. In
recognition of the contractor's reckless
disregard of its obligations under child
labor laws, WHD assesses the contractor
civil monetary penalties for the violation.
This is a willful violation because civil
monetary penalties were assessed on the
grounds that the violation was willful under
the FLSA. Conversely, if, for example, WHD
had found that a contractor had
inadvertently allowed a 15-year-old, who was
about to turn 16 years old, to work as a
file clerk during school hours, and WHD did
not assess any civil monetary penalties, the
violation would not be willful under the
Order.
Occupational Safety and Health (OSH) Act......................... The Indiana Commissioner of Labor issued a
Safety Order finding that a refinery
committed a "knowing" violation of the
Indiana Occupational Safety and Health Act
(an OSHA State Plan) by failing to properly
train truck drivers in a propane loading
system, which resulted in an explosion.
This is a willful violation because all
citations designated as willful by OSHA--or
equivalent state documents designated
similarly (e.g., as "knowing") by an OSHA
State Plan--are willful under the Order.
Conversely, had the Safety Order not
designated the violation as willful or some
other equivalent state designation, the
violation would not be willful under the
Order.
Migrant and Seasonal Agricultural Worker Protection Act (MSPA)... An ALJ issued an order finding that the
contractor was warned by an official from
WHD that the housing the contractor was
providing to migrant and seasonal
agricultural workers did not comply with
required safety and health standards and
that the contractor then failed to make the
required repairs or corrections.
This is a willful violation because the
findings of the ALJ support a conclusion
that the contractor knew, based on the
warning of the WHD official, that its
conduct was prohibited by law, yet continued
to engage in the prohibited conduct.
Conversely, if, for example, the ALJ's
findings indicated that the contractor did
not receive any warning from WHD and, after
making a reasonable inquiry into its legal
obligations, believed in good faith that its
housing was fully in compliance with the
relevant standards, the violation would not
be willful under the Order.
National Labor Relations Act (NLRA).............................. The NLRB issued a decision finding that a
unionized roofing contractor set up a non-
union alter ego corporation to avoid paying
its employees the wages and benefits
provided in its contract with the union.
This is a willful violation because the
NLRB's finding that the contractor formed
the alter ego corporation supports a
conclusion that the employer was aware of
its requirements under the NLRA, yet engaged
in the prohibited conduct anyway.
Conversely, had the contractor, for example,
inadvertently failed to pay its workers the
benefits specified in its contract because a
human resources specialist had incorrectly
calculated the workers' seniority, the
violation would not be willful.
Davis-Bacon Act (DBA)............................................ An ALJ order affirming a violation of the DBA
included a finding that the contractor
manipulated payroll documents to make it
appear as if it had paid workers the
required prevailing wages.
This is a willful violation because the
findings of the ALJ support a conclusion
that the contractor knew that its conduct
was prohibited by the DBA. The ALJ's finding
that documents were falsified indicates that
the contractor knew that it was required to
pay the workers prevailing wages, yet paid
them less anyway. Conversely, had the
contractor, for example, failed to pay
certain workers prevailing wages because of
a good-faith misunderstanding about the
workers' proper classification for the
purpose of DBA wage determinations, the
violation would not be willful.
Service Contract Act (SCA)....................................... The DOL's Administrative Review Board (ARB)
affirmed WHD's determination that a
contractor violated the SCA. The order
included a finding that the contractor
documented the wages as paid, but required
the workers to kick back a portion of their
wages to the contractor.
This is a willful violation because the
findings of the ARB support a conclusion
that the contractor knew that its conduct
was prohibited by the SCA. The finding that
the contractor required the workers to kick
back wages paid indicates that the
contractor knew that it was required to pay
the workers prevailing wages, yet paid them
less anyway. Conversely, had the ARB found,
for example, that employees were not paid
their required SCA wages because the
contractor's payroll system, due to a
systems error, failed to include the most up-
to-date SCA wage determinations, the
violation would not be willful.
Executive Order 11246 (Equal Employment Opportunity)............. An ALJ decision found that a contractor's
vice president knew that federal law
prohibits discrimination on the basis of
gender, but had a policy of not promoting
women to managerial positions.
This is a willful violation because the
findings of the ALJ support a conclusion
that the contractor knew that its
discrimination was prohibited by law, but
engaged in the conduct anyway. Conversely,
had the contractor used a neutral procedure
for selecting employees for promotion and
validated this procedure in accordance with
OFCCP regulations, but the procedure was
ultimately determined by the ALJ to be
discriminatory on the basis of gender
because the contractor did not fully comply
with validation requirements, the violation
would not be willful.
Section 503 of the Rehabilitation Act............................ An ARB decision found that a contractor
refused to hire any individuals with
physical disabilities, and that in doing so,
the contractor made no attempt whatsoever to
determine whether any of these individuals'
disabilities would affect their abilities to
do the jobs for which they applied.
This is a willful violation because the
findings of the ARB support a conclusion
that the contractor acted in reckless
disregard of its obligations under Section
503 of the Rehabilitation Act. Conversely,
had the ARB found that the contractor made
good-faith efforts to determine whether the
applicants' disabilities affected their
abilities to do the jobs for which they
applied, but submitted insufficient evidence
to support its claim that accommodations
would impose an undue burden, the violation
would not be willful.
Vietnam Era Veterans' Readjustment Assistance Act (VEVRAA)....... An ALJ decision finding hiring discrimination
in violation of VEVRAA made a factual
finding that each time a veteran covered by
VEVRAA's protections applied for a job with
a contractor, the reasons cited by the
contractor as a basis not to hire that
individual were pretextual.
This is a willful violation because the
findings of the ALJ support a conclusion
that the contractor knew that its conduct
was prohibited by VEVRAA, yet sought to hide
its discriminatory practices by creating
pretextual reasons for its refusal to hire
covered veterans. Conversely, had the
contractor used a neutral procedure for
selecting employees that the contractor
claimed was job-related and consistent with
business necessity, but the procedure was
ultimately determined by the ALJ to be
discriminatory against veterans, the
violation would not be willful.
Family and Medical Leave Act (FMLA).............................. After suit in federal district court by a
private litigant, the court issued a
decision that included findings that the
contractor's employee handbook provided for
unpaid leave to employees with serious
health conditions as required by the FMLA,
but that the contractor in practice erected
unnecessary hurdles to employees requesting
such leave.
This is a willful violation because the
court's findings support a conclusion that
the contractor knew of its requirements
under the FMLA, yet violated these
requirements. Conversely, had the court's
decision instead found that the contractor's
actions were based on a good-faith
misunderstanding of the FMLA's provisions
concerning medical certification, the
violation would not be willful.
Title VII of the Civil Rights Act of 1964........................ After a federal district court trial finding
the contractor liable for sexual harassment,
the factfinder assessed punitive damages
after finding that the contractor engaged in
a discriminatory practice with malice or
reckless indifference to the federally
protected rights of an aggrieved individual
because the employer's anti-harassment
policy was ineffective and a manager, after
receiving a complaint of sexual harassment,
failed to report it or investigate it.
This is a willful violation because Title VII
violations are willful under the Order if
the enforcement agency, court, arbitrator,
or arbitral panel assessed or awarded
punitive damages for a violation where the
contractor or subcontractor engaged in a
discriminatory practice with malice or
reckless indifference to the federally
protected rights of an aggrieved individual.
Conversely, had the district court not
awarded any punitive damages, the violation
would not be willful.
Americans with Disabilities Act of 1990 (ADA).................... After a trial in federal court, the
factfinder assessed punitive damages after
finding that the contractor engaged in an
ADA-prohibited discriminatory practice with
malice or reckless indifference to the
federally protected rights of an aggrieved
individual, and the contractor could not
demonstrate good faith.
This is a willful violation because ADA
violations are willful under the Order if
the enforcement agency, court, arbitrator,
or arbitral panel assessed or awarded
punitive damages for a violation where the
contractor or subcontractor engaged in a
discriminatory practice with malice or
reckless indifference to the federally
protected rights of an aggrieved individual.
Conversely, had the factfinder not assessed
punitive damages, the violation would not be
willful.
Age Discrimination in Employment Act of 1967 (ADEA).............. An arbitral award included liquidated damages
for a willful violation of the ADEA.
This is a willful violation because ADEA
violations are willful under the Order if
the enforcement agency, court, arbitrator,
or arbitral panel assessed or awarded
liquidated damages. Conversely, had the
arbitrator not awarded any liquidated
damages, the violation would not be willful.
Executive Order 13658 (Minimum Wage for Contractors)............. An ALJ order affirming a violation of
Executive Order 13658 included a finding
that the employer, an experienced and
sophisticated government contractor, made no
effort whatsoever to determine what its
minimum wage obligations were or whether its
workers were employees or independent
contractors, but instead chose to pay them a
flat fee that fell well short of the
requirements of Executive Order 13658.
This is a willful violation because the ALJ
order shows that the contractor made no
effort whatsoever to learn or understand
whether it was complying with the law, which
supports a conclusion that the contractor
was acting in reckless disregard or plain
indifference of its requirements under
Executive Order 13658. Conversely, if the
employer in question was a small business
and a new federal government contractor and
the employer, after reading the regulations
implementing Executive Order 13658,
mistakenly concluded in good faith that it
was not covered by these minimum wage
requirements, the violation would not be
willful.
----------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------
-------------------------------------------------------------------------
Appendix C: Examples of Repeated Violations
------------------------------------------------------------------------
All violations of federal labor laws are serious, but in the context of
Executive Order 13673, Fair Pay and Safe Workplaces, the Department of
Labor has identified certain violations as "serious," "willful,"
"repeated," and "pervasive." This subset of all labor violations
represents the violations that are most concerning and bear on the
assessment of a contractor or subcontractor's integrity and business
ethics. The Department has purposely excluded from consideration
violations that could be characterized as inadvertent or minimally
impactful. Ultimately, each contractor's disclosed violations of Labor
Laws will be assessed on a case-by-case basis in light of the totality
of the circumstances, including the severity of the violation or
violations, the size of the contractor, and any mitigating factors. In
most cases, even for violations subject to disclosure and consideration
under the Order, a single violation of one of the Labor Laws will not
give rise to a determination of lack of responsibility.
The chart below includes a non-exhaustive list of examples of Labor Laws
violations that may be found to be "repeated" under the Department's
proposed guidance for Executive Order 13673. These are examples only:
They are not minimum requirements, nor are they exclusive of other
violations under each Labor Law that may be repeated. The chart does
not include violations of "equivalent state laws," which are also
covered by the Order, but (with the exception of OSHA State Plans,
which are addressed in the current proposed guidance) will be addressed
in future guidance.
------------------------------------------------------------------------
Summary of Definition of "Repeated Violation"
------------------------------------------------------------------------
The full definition of a "repeated violation" is set forth in section
III.C of the Department of Labor's proposed guidance. When evaluating
violations, Labor Compliance Advisors and contracting officers, and
contractors when evaluating subcontractors, should refer to the full
definition in the proposed guidance.
In summary, the guidance provides that a violation of one of the Labor
Laws is repeated if it is the same as or substantially similar to one
or more other violations of the Labor Laws by the contractor or
subcontractor. "Substantially similar" does not mean exactly the
same; rather, two things may be substantially similar where they share
essential elements in common. Whether violations fall under the same
Labor Law is not determinative of whether the requirements underlying
those violations are substantially similar; rather, this inquiry turns
on the nature of the violation and underlying obligation itself.
The same or substantially similar other violation(s) must be reflected
in one or more civil judgments, arbitral awards or decisions, or
adjudicated or uncontested administrative merits determinations issued
within the last three years, and must be the subject of one or more
separate investigations or proceedings. Repeated violations may be
considered on an enterprise-wide basis; thus, a prior violation by any
establishment of a multi-establishment enterprise can render subsequent
violations repeated, provided the other relevant criteria are
satisfied.
The guidance provides further detail on the meaning of an "adjudicated
or uncontested" administrative merits determination, what constitutes
a "substantially similar" violation, and other aspects of the
definition.
When evaluating Labor Laws violations, Labor Compliance Advisors and
contracting officers, and contractors when evaluating subcontractors,
will review the full definition to determine whether a violation is
repeated. The examples below are intended to illustrate how the
definition may be applied in different contexts, but a violation can be
deemed repeated as long as it meets the criteria set forth in the
guidance.
------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Labor law Example of repeated violation
----------------------------------------------------------------------------------------------------------------
Fair Labor Standards Act (FLSA).................................. The Wage and Hour Division (WHD) found that a
software company violated overtime
provisions of the FLSA after misclassifying
employees at one facility as independent
contractors. The company did not dispute the
violation and agreed to pay back wages by
signing a Form WH-56. A year later, the
Secretary filed a complaint in federal court
stating that an investigation of a different
facility of the same company disclosed
violations of the FLSA minimum wage
provision.
The second violation is a repeated violation
because it is substantially similar to a
prior violation reflected in an uncontested
administrative merits determination. The
first violation is "uncontested" because
the company did not dispute the violation.
The violations are substantially similar
because even though the first violation
involved overtime and the second involved
minimum wage, both violations involved
failure by the same company to pay workers
their proper wages. Conversely, had one of
the two violations instead involved, for
example, the company's failure to follow the
FLSA's requirements to provide break time
for nursing mothers, the violations would
not be substantially similar and the second
violation therefore would not be repeated.
Occupational Safety and Health (OSH) Act......................... OSHA issued a citation to a contractor for
failing to provide fall protection on a
residential construction site. The citation
was later affirmed by an administrative law
judge (ALJ) at the Occupational Safety and
Health Review Commission (OSHRC). OSHA later
issued a second citation against the same
contractor for failing to provide fall
protection at a commercial construction
site.
The second violation is a repeated violation
because it is substantially similar to a
prior violation reflected in an adjudicated
administrative merits determination. The
first citation is an "adjudicated"
administrative merits determination once it
is affirmed by the ALJ, because the
contractor had an opportunity to contest the
citation and present its case before the
ALJ. Had the ALJ reversed the first
citation, the second violation would not be
a repeated violation. (Had the employer not
contested the first violation at all, it
would be an "uncontested" administrative
merits determination and the second
violation would be "repeated" for that
reason.) The second violation is
substantially similar to the first because
even though residential and commercial
construction sites have different regulatory
standards for fall protection, the hazards
involved are substantially similar.
Conversely, had one of the two violations
instead involved, for example, the
contractor's failure to properly store
hazardous materials, the violations would
not be substantially similar and the second
violation therefore would not be repeated.
Migrant and Seasonal Agricultural Worker Protection Act (MSPA)... A district court issued an order enjoining a
farm labor contractor's practice of
requiring workers to purchase goods or
services solely from a particular company,
in violation of MSPA. Later, the Wage and
Hour Division assessed civil monetary
penalties after finding that the farm labor
contractor failed to pay MSPA-covered
workers their wages when due.
The second violation is a repeated violation
because it is substantially similar to a
prior violation reflected in a civil
judgment. Even though the violations are not
identical, under MSPA, multiple violations
of the statute's requirements pertaining to
wages, supplies, and working arrangements
are substantially similar. (Likewise, under
MSPA, any two violations of any of MSPA's
requirements related to health and safety
are substantially similar to each other. The
same is true for any two violations of the
statute's disclosure and recordkeeping
requirements, or any two violations related
to its registration requirements.)
Conversely, had the contractor, for example,
committed one MSPA violation for requiring
workers to purchase goods or services solely
from a particular company, and a second MSPA
violation for failure to comply with MSPA's
transportation safety standards, the
violations would not be substantially
similar and the second violation therefore
would not be repeated.
National Labor Relations Act (NLRA).............................. An National Labor Relations Board (NLRB)
Administrative Law Judge (ALJ) issued a
decision finding that a contractor violated
section 8(a)(3), which prohibits employers
from discriminating against employees for
engaging in or refusing to engage in union
activities, by discharging employees who led
a union organizational campaign. Two years
later, a Regional Director issued a
complaint under section 8(a)(3) against the
same contractor at a different location for
discharging two union representatives at a
plant after they organized a one-day strike
to protest low wages.
The second violation is a repeated violation
because it is substantially similar to a
prior violation reflected in an adjudicated
administrative merits determination. The
first violation is an "adjudicated"
administrative merits determination because
the contractor had an opportunity to contest
the violation and present its case before
the ALJ. The violations are substantially
similar because both involved discharges
under section 8(a)(3) of the NLRA.
Conversely, had one of the two violations
been a violation of section 8(a)(2), which
prohibits an employer from dominating or
interfering with the formation nor
administration of a labor union through
financial support or otherwise--for example,
had the contractor offered assistance to one
union but not to another during an
organizational campaign--the two violations
would not be substantially similar and the
second violation would therefore not be
repeated.
Davis-Bacon Act (DBA)............................................ A federal district court granted a
preliminary injunction enjoining a
contractor from further violations of the
overtime provisions of the FLSA.
Subsequently, WHD sent the contractor a
letter finding that the contractor violated
the DBA by failing to pay workers at a
different worksite their prevailing wages.
The second violation is a repeated violation
because it is substantially similar to a
prior violation reflected in a civil
judgment. Even though the contractor
violated two different statutes, the
violations are substantially similar because
both involve the practice of failing to pay
wages required by law. Conversely, had the
first violation instead involved, for
example, the contractor's failure to provide
a reasonable accommodation to an employee
with a disability under the ADA, the two
violations would not be substantially
similar and the second violation would
therefore not be repeated.
Service Contract Act (SCA)....................................... The Department's Administrative Review Board
(ARB) issued an order finding that a
contractor failed to pay workers covered by
Executive Order 13658 the minimum wage of
$10.10 per hour. Subsequently, WHD issued a
letter indicating that an investigation
disclosed a violation of the SCA because the
contractor failed to pay service workers
their required amount of fringe benefits.
The second violation is a repeated violation
because it is substantially similar to a
prior violation reflected in an adjudicated
administrative merits determination. The
first violation is an "adjudicated"
administrative merits determination because
the contractor had an opportunity to contest
the violation and present its case before
the ARB. Even though the contractor violated
two different Labor Laws, the violations are
substantially similar because both involve
the practice of failing to pay wages
required by law. Conversely, if the first
violation was the subject of a determination
by the Department's Wage and Hour Division
that the contractor challenged before an
ALJ, and the ALJ proceeding was still
pending at the time of the second violation,
the second violation would not be a repeated
violation because the first violation would
not be an adjudicated or uncontested
administrative merits determination.
Executive Order 11246 (Equal Employment Opportunity)............. An arbitrator found that a contractor created
a hostile work environment for African-
American workers in violation of Title VII.
Subsequently, OFCCP issued a show cause
notice finding that the same contractor
failed to comply with the nondiscrimination
requirements of Executive Order 11246 by
failing to hire qualified Asian workers.
The second violation is a repeated violation
because it is substantially similar to a
prior violation reflected in an arbitral
award. These violations are substantially
similar because violations of Title VII,
Section 503, the ADA, the ADEA, the Equal
Pay Act, Executive Order 11246, and VEVRAA
are substantially similar when they involve
the same or an overlapping protected status.
In this case, both violations involved
discrimination on the basis of race.
Conversely, if the first violation had
instead involved discrimination by the
contractor on the basis of gender, the two
violations would not be substantially
similar and the second violation would
therefore not be repeated.
Section 503 of the Rehabilitation Act............................ A federal district court granted a private
plaintiff summary judgment in a claim
against a contractor under the ADA alleging
constructive discharge and the failure to
provide a reasonable accommodation for the
plaintiff's disability. Subsequently, the
ARB affirmed an ALJ order directing the same
contractor to change a practice of medical
screenings that discriminated against job
applicants with disabilities in violation of
Section 503 of the Rehabilitation Act.
The second violation is a repeated violation
because it is substantially similar to a
prior violation reflected in a civil
judgment. These violations are substantially
similar because violations of Title VII,
Section 503, the ADA, the ADEA, the Equal
Pay Act, Executive Order 11246, and VEVRAA
are substantially similar when they involve
the same or an overlapping protected status.
In this case, both violations involved
discrimination on the basis of a disability.
Conversely, if the first violation had
instead involved the contractor's failure to
provide a reasonable accommodation of an
employee's religious beliefs under Title
VII, the two violations would not be
substantially similar and the second
violation would therefore not be repeated.
Vietnam Era Veterans' Readjustment Assistance Act (VEVRAA)....... An ALJ issued an order finding that the
contractor violated VEVRAA by discriminating
against protected veterans during the hiring
process. Subsequently, in a separate
compliance evaluation, OFCCP issued a show
cause notice indicating that the same
contractor failed to promote employees who
were protected veterans to higher-level
positions.
The second violation is a repeated violation
because it is substantially similar to a
prior violation reflected in an adjudicated
administrative merits determination. The
first violation is an "adjudicated"
administrative merits determination because
the contractor had an opportunity to contest
the violation and present its case before
the ALJ. These violations are substantially
similar because violations of Title VII,
Section 503, the ADA, the ADEA, the Equal
Pay Act, Executive Order 11246, and VEVRAA
are substantially similar when they involve
the same or an overlapping protected status.
In this case, both violations involved
discrimination on the basis of protected
veterans' status. Conversely, if the first
violation had instead involved
discrimination on the basis of race under
Executive Order 11246, the two violations
would not be substantially similar and the
second violation would therefore not be
repeated.
Family and Medical Leave Act (FMLA).............................. A court found that a contractor had failed to
reinstate an employee to the same or an
equivalent position after the employee took
FMLA leave. Subsequently, the Wage and Hour
Division, after an investigation, filed suit
against the employer challenging the
employer's denial of another employee's
request for FMLA leave.
The second violation is repeated because it
is substantially similar to a prior
violation that was reflected in a civil
judgment. Although the violations are not
identical, under the FMLA, any two
violations would generally be considered
substantially similar to each other, with
the exception of violations of the notice
requirements. Conversely, had the first
violation involved the contractor's failure
to provide notice to employees of their FMLA
rights and the second involved either denial
of leave or failure to reinstate an
employee, the two violations would not be
substantially similar and the second
violation would therefore not be repeated.
Title VII of the Civil Rights Act of 1964........................ OFCCP issued a show cause notice finding that
the contractor violated Executive Order
11246 by systemically paying women at one of
its locations less than similarly situated
men. The contractor did not contest the show
cause notice and eventually settles the
matter. Subsequently, the EEOC issued a
letter of determination that reasonable
cause existed to believe that the same
contractor had engaged in unlawful
harassment against women at another one of
its locations.
The second violation is a repeated violation
because it is substantially similar to a
prior violation reflected in an uncontested
administrative merits determination. The
first violation is "uncontested" because
the company did not dispute the violation.
These violations are substantially similar
because violations of Title VII, Section
503, the ADA, the ADEA, the Equal Pay Act,
Executive Order 11246, and VEVRAA are
substantially similar when they involve the
same protected status. In this case, both
violations involved discrimination on the
basis of gender. Conversely, if the
contractor had challenged the first notice
before an ALJ and if the proceeding was
still pending at the time of the second
violation, the second violation would not be
a repeated violation because the first
violation would not be an adjudicated or
uncontested administrative merits
determination.
Americans with Disabilities Act of 1990 (ADA).................... The ARB affirmed an ALJ order under Section
503 of the Rehabilitation Act directing the
contractor to grant reasonable
accommodations to employees with visual
impairments. Subsequently, a federal
district court granted a private plaintiff
summary judgment in her ADA claim of
constructive discharge.
The second violation is a repeated violation
because it is substantially similar to a
prior violation reflected in an adjudicated
administrative merits determination. The
first violation is an "adjudicated"
administrative merits determination because
the contractor had an opportunity to contest
the violation and present its case before
the ALJ. These violations are substantially
similar because violations of Title VII,
Section 503, the ADA, the ADEA, the Equal
Pay Act, Executive Order 11246, and VEVRAA
are substantially similar when they involve
the same protected status. In this case,
both violations involved discrimination on
the basis of a disability. Conversely, had
one of the two violations involved, for
example, failure to grant FMLA leave to an
employee for birth of a child, the two
violations would not be substantially
similar and the second violation would
therefore not be repeated.
Age Discrimination in Employment Act of 1967 (ADEA).............. An arbitrator found that a contractor
violated the ADEA by constructively
discharging several employees over the age
of 60. Subsequently, in an ADEA private
action brought in federal district court,
the court found that the contractor
unlawfully discriminated against the
plaintiff on the basis of age when it failed
to hire him.
The second violation is a repeated violation
because it is substantially similar to a
prior violation reflected in an arbitral
award. These violations are substantially
similar because violations of Title VII,
Section 503, the ADA, the ADEA, the Equal
Pay Act, Executive Order 11246, and VEVRAA
are substantially similar when they involve
the same protected status. In this case,
both violations involved discrimination on
the basis of age. Conversely, had one of the
two violations involved, for example,
discrimination on the basis of the
employee's status as a protected veteran,
the two violations would not be
substantially similar and the second
violation would therefore not be repeated.
Executive Order 13658 (Minimum Wage for Contractors)............. In a private action, a federal court of
appeals affirmed a finding that the
contractor was liable for failing to pay
wages due under the FLSA. Subsequently, WHD
issued an Investigative Findings Letter
stating that an investigation disclosed a
violation of Executive Order 13658.
The second violation is a repeated violation
because it is substantially similar to a
prior violation reflected in a civil
judgment. Even though the contractor
violated two different Labor Laws, the
violations are substantially similar because
both involve the practice of failing to pay
wages required by law. Conversely, had one
of the two violations involved, for example,
the contractor's violation of the OSH Act
for failure to properly abate workplace
hazards, the two violations would not be
substantially similar and the second
violation would therefore not be repeated.
----------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------
-------------------------------------------------------------------------
Appendix D: Examples of Pervasive Violations
------------------------------------------------------------------------
All violations of federal labor laws are serious, but in the context of
Executive Order 13673, Fair Pay and Safe Workplaces, the Department of
Labor has identified certain violations as "serious," "willful,"
"repeated," and "pervasive." This subset of all labor violations
represents the violations that are most concerning and bear on the
assessment of a contractor or subcontractor's integrity and business
ethics. The Department has purposely excluded from consideration
violations that could be characterized as inadvertent or minimally
impactful. Ultimately, each contractor's disclosed violations of Labor
Laws will be assessed on a case-by-case basis in light of the totality
of the circumstances, including the severity of the violation or
violations, the size of the contractor, and any mitigating factors. In
most cases, even for violations subject to disclosure and consideration
under the Order, a single violation of one of the Labor Laws will not
give rise to a determination of lack of responsibility.
The chart below includes a non-exhaustive list of examples of Labor Laws
violations that may be found to be "pervasive" under the Department's
proposed guidance for Executive Order 13673. These are examples only:
they are not minimum requirements, nor are they exclusive of other
violations under each Labor Law that may be pervasive. The chart does
not include violations of "equivalent state laws," which are also
covered by the Order, but (with the exception of OSHA State Plans,
which are addressed in the current proposed guidance) will be addressed
in future guidance.
------------------------------------------------------------------------
Summary of Definition of "Pervasive Violation"
------------------------------------------------------------------------
The full definition of a "pervasive violation" is set forth in section
III.D of the Department of Labor's proposed guidance. When evaluating
violations, Labor Compliance Advisors and contracting officers, and
contractors when evaluating subcontractors, should refer to the full
definition in the proposed guidance.
In summary, the guidance provides that violations of the Labor Laws are
"pervasive" if they reflect a basic disregard by the contractor or
subcontractor for the Labor Laws as demonstrated by a pattern of
serious or willful violations, continuing violations, or numerous
violations. Violations must be multiple to be pervasive, although the
number of violations necessarily depends on the size of the contractor
or subcontractor, because larger employers, by virtue of their size,
are more likely to have multiple violations. To be pervasive, the
violations need not be of the same or similar requirements of the Labor
Laws. Pervasive violations may exist where the contractor or
subcontractor commits multiple violations of the same Labor Law,
regardless of their similarity, or violations of more than one of the
Labor Laws. This category is intended to identify those contractors and
subcontractors whose numerous violations of Labor Laws indicate that
they may view sanctions for their violations as merely part of the
"cost of doing business," an attitude that is inconsistent with the
level of responsibility required by the FAR.
When evaluating Labor Laws violations, Labor Compliance Advisors and
contracting officers, and contractors when evaluating subcontractors,
will review the full definition to determine whether a violation is
pervasive. Additionally, Labor Compliance Advisors, and contractors
evaluating subcontractors, are strongly encouraged to consult with the
Department of Labor when determining whether violations are pervasive.
The examples below are intended to illustrate how the definition may be
applied in different contexts, but a violation can be deemed pervasive
as long as it meets the criteria set forth in the guidance.
------------------------------------------------------------------------
Examples of Pervasive Violations (not specific to any particular
statute)
------------------------------------------------------------------------
A medium-sized company that provides janitorial services at federal
facilities was found to have violated the SCA for failure to pay
workers their required wages, Title VII for discrimination in hiring on
the basis of national origin, the NLRA for demoting workers who are
seeking to organize a union, and the FMLA for denying workers unpaid
leave for serious health conditions.
These violations are pervasive because while the violations are
substantively different from each other, a medium-sized employer that
violates so many Labor Laws is demonstrating a basic disregard for its
legal obligations to its workers and is committing pervasive
violations.
A 100-employee IT consulting company was found to have violated EO 11246
for systematically failing to promote women to managerial positions,
the FLSA for failing to pay workers overtime after misclassifying them
as independent contractors, and the ADEA for constructively discharging
employees who were age 60 or over.
These violations are pervasive because while substantively different
from each other, a small employer that violates Labor Laws to this
degree is demonstrating a basic disregard for its legal obligations to
its workers and is committing pervasive violations.
The Wage and Hour Division issued several Form WH-103 "Employment of
Minors Contrary to The Fair Labor Standards Act" notices finding that
a clothing manufacturer that provides custom-made uniforms for federal
employees employed numerous underage workers in violation of the child
labor provisions of the FLSA. Despite receiving these notices, the
contractor failed to make efforts to change its practices and continued
to violate the FLSA's child labor provisions repeatedly.
These violations are pervasive because they are a series of repeated
violations in which the contractor, despite knowledge of its violations
and several repeated notices from WHD, failed to make efforts to change
its practices and continued to violate the law repeatedly.
OSHA cited a small tools manufacturer with a single location multiple
times for a variety of serious violations in the same investigation--
once for improper storage of hazardous materials, once for failure to
provide employees with protective equipment, once for inadequate
safeguards on heavy machinery, once for lack of fall protection, once
for insufficient ventilation, once for unsafe noise exposure, and once
for inadequate emergency exits. The manufacturer does not have a
process for identifying and eliminating serious health hazards.
These violations are pervasive because such a high number of serious
workplace safety and health violations relative to the size of a small
company with only a single location and the lack of an effective
process to identify and eliminate serious violations (hazards) in its
workplace constitute basic disregard by the contractor for worker
safety and health. Even though these violations would not be
"repeated" because they arose during the same investigation and
because they do not involve substantially similar hazards, they would
be considered pervasive.
An ALJ at OSHRC found that although the chief safety officer at a
chemical plant fielded complaints from workers about several unsafe
working conditions, he failed to take action to remedy the unsafe
conditions, resulting in numerous willful OSH Act violations.
These violations are pervasive because the dangerous working conditions
were willfully sanctioned by a high-level company official and were
evident throughout the chemical plant. When Labor Laws are violated
with either the explicit or implicit approval of higher-level
management, such approval signals that future violations will be
tolerated or condoned, and may dissuade workers from reporting
violations or raising complaints. Such violations also indicate that
the company does not voluntarily eliminate hazards, but instead views
penalties for such violations as "the cost of doing business," rather
than as indicative of significant threats to its workers' health and
safety that must be addressed. Thus, to the extent that higher-level
management officials were involved in violations themselves, or knew of
violations and failed to have an effective process to identify and
correct serious violations in their workplace, the violations are more
likely to be deemed pervasive.
A large company that provides laundry services to military bases in
several states is cited 50 times for serious OSHA violations over the
span of one year. The violations affect most of its locations, and a
number of the citations are for high gravity serious failures to abate
dangerous conditions that OSHA had cited previously. As a result, the
company is placed on OSHA's Severe Violator Enforcement Program.
These violations are pervasive, notwithstanding the large size of the
contractor, because the sheer number of high gravity serious violations
over such a short period of time is evidence that the company is
ignoring persistent threats to workers' safety, fails to treat safety
as a serious problem, and is acting in disregard of its legal
obligations. Conversely, if the violations affected only a few of the
company's facilities, or if the company had acted quickly to abate any
violations, the violations might not necessarily be considered
pervasive.
A federal district court decision in a class-action lawsuit included a
finding that the vice president of a construction company directed a
foreman not to hire Native American workers, and as a result, the
company is found to have committed numerous Title VII violations
against job applicants.
These violations are pervasive because a high-level company official
actively participated in the discriminatory conduct, resulting in
numerous violations. Even though these violations would not be
"repeated" because they arose during the same proceeding, they would
be considered pervasive. While violations must be multiple to be
pervasive, a single liability determination in a class proceeding may
be considered "multiple" violations for a determination of
pervasiveness.
While a union was conducting an organizational campaign at a large
manufacturer, the contractor held several captive-audience speeches for
all of its workers at each of its factories for an extended period of
time, threatening the workers with disciplinary measures if they voted
to join the union in violation of the National Labor Relations Act
(NLRA). In addition, the Wage and Hour Division finds that the company
failed to pay overtime to its workers at the vast majority of its
locations in violation of the Fair Labor Standards Act.
These violations are pervasive, notwithstanding the large size of the
contractor, because the contractor committed multiple serious
violations affecting significant numbers of its workers. Conversely, if
the contractor made its threatening remarks to only a few of its
workers, or if the overtime violations only existed at a few of the
contractor's locations, the violations might not necessarily be
considered pervasive.
The Department of Labor's Office of Federal Contract Compliance Programs
finds, through enterprise-wide enforcement, that a large contractor
that provides food services at federal agencies nationwide used pre-
employment screening tests for most jobs at the company's facilities
that resulted in Hispanic workers being hired at a significantly lower
rate than non-Hispanic workers over a 5-year period. In addition, the
Wage and Hour Division finds that the company failed to comply with the
Service Contract Act's requirements to pay its workers prevailing wages
at many of its locations.
These violations are likely pervasive, notwithstanding the large size of
the contractor, because the contractor's numerous serious violations
spanned most of its locations and affected many of its workers.
Conversely, had the company engaged in these prohibited practices at
only a few of its locations, such violations might not necessarily be
considered pervasive.
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Appendix E: Assessing Violations of the Labor Laws
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Appendices A through D provide summary definitions and examples of Labor
Laws violations that are "serious," "willful," "repeated," and
"pervasive" under Executive Order 13673, Fair Pay and Safe
Workplaces. A Labor Compliance Advisor and contracting officer, or
contractor when evaluating subcontractors, will determine whether
violations reported under the Order fit into these categories, which
represent the violations that are most concerning and bear on an
assessment of a contractor or subcontractor's integrity and business
ethics. The contracting officer with the assistance of the Labor
Compliance Advisor, or the contractor when evaluating subcontractors,
will then assess a contractor or subcontractor's serious, willful,
repeated, and pervasive violations in determining whether the
contractor or subcontractor is a responsible source with a satisfactory
record of integrity and business ethics.
Each contractor or subcontractor's disclosed violations will be assessed
on a case-by-case basis in light of the totality of the circumstances,
including the severity of the violation or violations, the size of the
contractor, and any mitigating factors. The extent to which a
contractor or subcontractor has remediated violations of Labor Laws,
including agreements entered into by contractors or subcontractors with
enforcement agencies, will be given particular weight in this regard.
In most cases, even for violations subject to disclosure and
consideration under the Order, a single violation of one of the Labor
Laws will not give rise to a determination of lack of responsibility.
In contrast, pervasive violations and violations of particular gravity,
for example, will in most cases result in the need for a Labor
Compliance Agreement.
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Violations of Particular Concern
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The following types of violations raise particular concerns regarding
the contractor's or subcontractor's compliance with the Labor Laws:
Pervasive violations. Pervasive violations, by definition,
demonstrate a basic disregard for the Labor Laws. Such disregard of
legal obligations creates a heightened danger that the contractor
or subcontractor may, in turn, disregard its contractual
obligations as well. Additionally, such contractors and
subcontractors are more likely to violate the Labor Laws in the
future, and those violations--and any enforcement proceedings or
litigation that may ensue--may imperil their ability to meet their
obligations under a contract. The fact that a contractor or
subcontractor shows such disregard for the Labor Laws is highly
probative of whether the contractor or subcontractor lacks
integrity and business ethics.
Violations that are serious AND repeated, serious AND
willful, or willful AND repeated. A violation that falls into two
or more these categories, as a general matter, is more likely to be
probative of the contractor's or subcontractor's lack of integrity
and business ethics than a violation that falls into only one of
those categories.
Violations that are reflected in final orders. To the
extent that the judgment, determination, or order finding a Labor
Law violation is final (because appeals and opportunities for
further review have been exhausted or were not pursued), the
violation should be given greater weight. Likewise, where a
violation has not resulted in a final judgment, determination, or
order, it should be given lesser weight.
Violations of particular gravity. Certain Labor Laws
violations that are serious under the Order should be given greater
weight, including:
[cir] Violations related to the death of an employee;
[cir] Violations involving a termination of employment for
exercising a right protected under the Labor Laws;
[cir] Violations that detrimentally impact the working
conditions of all or nearly all of the workforce at a worksite;
and
[cir] Violations where the amount of back wages, penalties, and
other damages awarded is greater than $100,000.
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Mitigating Factors
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Various factors may mitigate the existence of a contractor or
subcontractor's Labor Laws violations. The Department respects the fact
that most employers endeavor to comply with the Labor Laws. The
Department values highly contractors' and subcontractors' good-faith
efforts to comply, and it encourages them to report these efforts,
including workplace policies that foster compliance. The following are
the most common factors that will mitigate the existence of one or more
violations in the context of a responsibility determination. This list
is not exclusive, and contractors and subcontractors are encouraged to
report any factors they believe may mitigate the existence of a
violation:
Remediation of the violation(s), including Labor Compliance
Agreements: Typically the most important factor that can mitigate
the existence of a violation, remediation is an indication that a
contractor or subcontractor has assumed responsibility for a
violation and has taken steps to bring itself into compliance with
the law going forward. In most cases, for remediation to be
considered mitigating, it should involve two components:
[cir] Correction of the violation: The remediation should
correct the violation itself, including by making any affected
workers whole. For example, this could involve abating a
dangerous hazard, paying workers their back wages owed, or
reinstating a wrongfully discharged employee.
[cir] Efforts to prevent similar violations in the future: For
example, if a contractor or subcontractor improperly
misclassified workers as exempt from the FLSA and pays any back
wages due to the workers without reviewing its classifications
of the workers going forward, it will likely commit similar
violations in the future. Particular consideration will be
given where the contractor or subcontractor has implemented
remediation on an enterprise-wide level or has entered into an
enhanced settlement agreement with the relevant enforcement
agency or agencies that goes beyond what is minimally required
under the law to address appropriate remedial or compliance
measures.
One specific type of remediation is a Labor Compliance Agreement,
which is an agreement entered into between an enforcement agency
and a contractor or subcontractor to address appropriate remedial
measures, compliance assistance, steps to resolve issues to
increase compliance with labor laws, or other related matters. A
Labor Compliance Agreement is an important mitigating factor
because it indicates that the contractor or subcontractor
recognizes the importance that the Federal Government places on
compliance with the Labor Laws.
Only one violation: In most cases, a single violation of a
Labor Law may not necessarily give rise to a determination of lack
of responsibility, depending on the nature of the violation.
However, a contracting agency (or contractor evaluating
subcontractors) is not precluded from making a determination of non-
responsibility based on a single violation in the rare
circumstances where it may be merited based on the totality of the
circumstances.
Low number of violations relative to size: Larger
employers, by virtue of their size, are more likely to have
multiple violations than smaller ones. When assessing contractors
or subcontractors with multiple violations, a contracting officer
and Labor Compliance Advisor (or contractor evaluating
subcontractors) should consider the size of the contractor or
subcontractor.
Safety and health programs or grievance procedures:
Implementation of a safety and health management program, such as
OSHA's 1989 Safety and Health Program Management guidelines or any
updates to those guidelines, grievance procedures (including
collectively-bargained ones), monitoring arrangements negotiated as
part of an enhanced settlement agreement, or other compliance
programs foster a corporate culture in which workers are encouraged
to raise legitimate concerns about Labor Laws violations without
the fear of repercussions. Such programs and procedures may prompt
workers to report violations that would, under other circumstances,
go unreported. Therefore, the implementation of such programs or
procedures will be considered a mitigating factor, particularly as
to violations that might otherwise be deemed repeated or pervasive.
Recent legal or regulatory change: To the extent that the
Labor Laws violations can be traced to a recent legal or regulatory
change, that may be a mitigating factor. The change must be recent,
and the violations must not have been violations but for the
change.
Good faith and reasonable grounds: It may be a mitigating
factor if the contractor or subcontractor shows that it made
efforts to ascertain its legal obligations and to follow the law,
and that its actions under the circumstances were objectively
reasonable. For example, if a contractor or subcontractor acts in
reasonable reliance on advice from a responsible official from the
relevant enforcement agency, or an administrative or authoritative
judicial ruling, such reliance will typically demonstrate good
faith and reasonable grounds. This factor may also apply where the
contractor's or subcontractor's legal obligations are unclear, such
as when a new statute, rule, or standard is first implemented.
Significant period of compliance following violations: If,
following one or more violations within the three-year reporting
period, the contractor or subcontractor maintains a steady period
of compliance with the Labor Laws, such compliance may mitigate the
existence of prior violations (e.g., violations were reported from
2\1/2\ years ago and there have been none since).
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[FR Doc. 2015-12562 Filed 5-27-15; 8:45 am]
BILLING CODE P
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