Government rulemakingAn Executive Order (EO) signed by President Obama July 31st requires companies competing for new federal contracts to self-report safety and other labor law violations.

“While the vast majority of federal contractors play by the rules, every year tens of thousands of American workers are denied overtime wages, not hired or paid fairly because of their gender or age, or have their health and safety put at risk by corporations contracting with the federal government that cut corners,” according to a statement by the White House. “Taxpayer dollars should not reward corporations that break the law, so today President Obama is cracking down on federal contractors who put workers’ safety and hard-earned pay at risk. “

A study released by the Senate last year found that almost 30 percent of the top violators of federal safety and wage laws are current federal contractors.

Under the Fair Pay and Safe Workplace Executive Order, bidders would be required to report violations of the OSH Act, the Migrant and Seasonal Agricultural Worker Protection Act, the Americans with Disabilities Act and others that they were cited for during the three years prior to the bidding process.

The EO covers federal government contracts valued at more than $500,000 and does not affect contracts which are already in place. Companies with violations will still be eligible to receive contracts, but their violations will be factored into the decision-making process. Additionally, the EO will help identify repeat offenders.

According to a White House Fact Sheet, the order would:

  • Require potential contractors to disclose labor law violations from the past three years and to collect similar information from many of their subcontractors;
  • Give agencies better tools to evaluate egregious or repeat violations;
  • Promote efficient federal contracting;
  • Protect responsible contractors and build on the existing procurement system so it will be familiar to contractors and fit into established contracting practices;
  • Help companies improve by providing early guidance to violators on whether their violations are potentially problematic and on how to remedy them;
  • Give victims of sexual assault and civil-rights violations their day in court, by forbidding companies with federal contracts of $1 million or more from requiring employees to enter into predispute arbitration agreements;
  • Provide better, clearer information on paychecks; and
  • Streamline implementation and reporting by developing a single website for contractors to meet  reporting requirements.

Approximately one in five workers in the U.S. is employed by a company that has a federal contract.