President Obama Orders Contractors To Disclose Labor Violations, Stop Mandatory Arbitration

In a gutsy and controversial move, President Obama signed an executive order placing new tough restrictions on federal contractors. If your employer contracts with the federal government it may have to disclose all labor violations in order to bid, and also have to stop mandating arbitration of employment disputes.

The pre-bid disclosure language is tough. It requires anyone bidding for a contract of $500,000 or greater to disclose:

[A]ny administrative merits determination, arbitral award or decision, or civil judgment, as defined in guidance issued by the Department of Labor, rendered against the offeror within the preceding 3-year period for violations of any of the following labor laws and
Executive Orders (labor laws):
(A) the Fair Labor Standards Act;
(B) the Occupational Safety and Health Act of
1970;
(C) the Migrant and Seasonal Agricultural Worker
Protection Act;
(D) the National Labor Relations Act;
(E) 40 U.S.C. chapter 31, subchapter IV, also known as the Davis-Bacon Act;
(F) 41 U.S.C. chapter 67, also known as the Service Contract Act;
(G) Executive Order 11246 of September 24, 1965
(Equal Employment Opportunity);
(H) section 503 of the Rehabilitation Act of
1973;
(I) 38 U.S.C. 3696, 3698, 3699, 4214, 4301-4306, also known as the Vietnam Era Veterans' Readjustment Assistance Act of 1974;
(J) the Family and Medical Leave Act;
(K) title VII of the Civil Rights Act of 1964;
(L) the Americans with Disabilities Act of 1990;
(M) the Age Discrimination in Employment Act of
1967;
(N) Executive Order 13658 of February 12, 2014
(Establishing a Minimum Wage for Contractors); or
(O) equivalent State laws, as defined in guidance issued by the Department of Labor.

This means employers won't be able to hide under the confidentiality of arbitrations any longer. They'll have to disclose safety violations, unpaid wages and discrimination/retaliation violations. Employers won't have to disclose settlements, so this will be an extra incentive for them to resolve claims quickly.

The arbitration language will be pretty easy for employers to get around. It only applies if the bid is for a contract of $1 million or more, and it doesn't apply if the employee has an arbitration agreement in place before the bid is made. You can expect employers to start racing around demanding employees sign arbitration agreements right before the bid goes out. However, employers whose contracts say they can change the terms of the contract (which most of them say) will still be out of luck on mandatory arbitration, so you may still be able to force them into court.

There are some other nice provisions of this order, like paycheck transparency and providing guidance to contractors to help them improve, so if you want to see the whole order, it's here.

This order comes on the heels of orders requiring contractors to pay a minimum of $10.10/hour, stop discriminating based on sexual orientation, and stop retaliating against employees who compare and discuss pay.

The message is clear: the United States is going to stop wasting taxpayer dollars on companies that don't comply with U.S. laws. It's about time.