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On July 13, 2014, President Obama executed Executive Order 1376: Fair Pay and Safe Workplaces.

On May 28, 2015, the Federal Acquisition Regulation (FAR) Council (composed of the Defense Department, the General Services Administration and NASA), proposed a rule to amend the FAR to implement the order.

Meanwhile, the Department of Labor issued proposed guidance to help federal agencies implement the order and rule.

Here's a heads-up:

If promulgated as proposed, the revised regulations and guidance will have a severe impact on any employer that intends to bid for, or already engages in, government contracting and receives a contract of more than $500,000.

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If promulgated as proposed, Executive Order 1376:  Fair Pay and Safe Workplaces will have a severe impact on any employer.

All subcontractors bidding for or receiving a subcontract valued over $500,000 would also be affected, unless the subcontract is for commercially available off-the shelf items.

With a July 27 deadline looming for public comments on both the proposed rule and proposed guidance, here are some things employers should know.

What They'll Want to Know

The proposed rule and guidance would require affected contractors to inform the government contracting agency about labor-law violations—even allegations not proved—issued within the preceding three years under 14 identified federal and state labor laws.

The information disclosed will be publicized.

The information can also result in disqualification from the bidding process, debarment or suspension from contracting with the federal government. It may also impact the contractor’s ability to retain or have options exercised under an existing contract.

The White House

President Obama signed Executive Order 1376 in July 2014. Subsequent proposed rules and guidance have clarified the implementation.

Implementation of these broad reporting requirements as currently defined may unfairly and significantly jeopardize a contractor’s ability to obtain and retain government contracts, even though it has not committed illegal labor practices.      

Reporting Records

All state and federal OSHA citations, except those classified as “Other than Serious” (generally minor paperwork violations), are among the findings that must be reported during the bid process and every six months during the life of a covered contract or subcontract.

Although the Proposed Rule is purportedly intended to focus “on those violations that are most concerning and have the greatest bearing on an assessment of a contractor’s integrity and business ethics,” OSHA enforcement data from 2009-13 indicates that well over 75 percent of the citations issued will be reportable, even if the employer contests them.

That is true even though a majority of these citations are ultimately withdrawn or amended through settlements or adjudication by the OSH Review Commission.

New Authority

The Proposed Rule also vests authority in a new position.

So-called Agency Labor Compliance Advisors (ALCAs) will evaluate whether reported violations are serious, repeated, willful or pervasive and make a recommendation to the Contracting Officer regarding the contractor’s “integrity” and possible disqualification.

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OSHA citations must be reported, and will be publicized, even before adjudication.

These new advisors, however, will have little to no background or training in OSHA requirements or any significant experience in making determinations on contractor integrity.

Thus, they will no doubt defer to the issuing enforcement agency, essentially rendering it the arbiter of violations it has alleged.

Strong-Arming Compliance

Perhaps even more troubling, it appears that the only way for contractors to avoid negative consequences from reportable OSHA allegations is to enter into a “Labor Compliance Agreement” and agree to remedial measures.

Thus, the employer persuades the ALCA to deem the contractor’s behavior satisfactory.

Among other concerns, this allows OSHA to circumvent the long-standing process of staying abatement pending full adjudication of the alleged violations.

Thus, the Proposed Rule essentially imposes a de facto requirement on a contractor to abate the condition, even though the employer may ultimately prevail in a legal determination.

We also see the Labor Compliance Agreement as a “back door” requirement to adopt an Injury & Illness Prevention Program (I2P2)—a mandate too controversial for OSHA to advance through the rulemaking process.

Lengthy Process

Furthermore, because reporting is triggered not only by the issuance of a citation, but also by subsequent steps of the dispute process, violations that occurred long before the three-year reporting window will be pulled into the reporting process.

The only way for contractors to avoid negative consequences from reportable OSHA allegations is to enter into a “Labor Compliance Agreement” and agree to remedial measures—upending a long-standing practice of staying abatement until the case is decided.

Of course, these successive reporting triggers punish employers who choose to exercise their rights to challenge flawed citations, because the appeal keeps the matters alive for purposes of reporting.

Likewise, the Proposed Rule separately defines as a serious reportable violation an act that OSHA considers interfering with its investigation.

This is another way for the Department of Labor to punish employers for their free exercise of rights, such as demanding a subpoena or warrant in the face of an unreasonable inspection.    

What About Due Process?

From a legal perspective, the Proposed Rule potentially poses serious due-process problems.

The DOL guidance is incorporated into the FAR regulations, giving it the force and effect of law.  But because it is “guidance” rather than a regulation, the department will be free to revise as it sees fit—whenever and however it chooses, without regard for the Administrative Procedure Act requiring public participation.

That allows future revisions of the proposed rule without the ability for stakeholders to provide input in the process.

Last, but not least, is the proposed rule's application company wide, That raises questions about how alleged violations by one corporate entity may impact related, but separate, corporate entities—even successors.

ABOUT THE THE BLOGGER Eric J. Conn Eric J. Conn is a founding partner of Conn Maciel Carey and Chair of the firm’s national OSHA • Workplace Safety Group. His practice focuses exclusively on issues involving occupational safety and health law. OSHA Watch offers general information but should not be construed as legal advice. Employers are always advised to seek appropriate counsel for individual issues. Contact Eric. SEE ALL CONTENT FROM THIS CONTRIBUTOR