The following post was authored by Compliance Advisory Board member and employment law expert, Jon Zimring of Greenberg Traurig LLP. This is the third and final post in a series that takes a deep dive into what federal contractors need to know about Executive Order 13673, or “Fair Pay and Safe Workplaces.” Learn more about Executive Order 13673 by reading post one and post two in the series.

Parts 1 and 2 of this post explained the operating structure and implications of President Obama’s Executive Order 13673, titled “Fair Pay and Safe Workplaces.” As noted, this Executive Order requires federal contractors to self-report on their own and their subcontractors’ records of compliance with a broad spectrum of labor laws, including non-adjudicated, low level agency determinations. The results of these reports are then to be used by federal acquisition officers in consultation with newly created “labor compliance advisors” from DOL’s Wage and Hour Division, OSHA, OFCCP, EEOC and NLRB, to determine whether the self-reported records should matter to the award of high dollar federal contracts. This final part 3 will explore the practical implications of Executive Order 13673 and its scheme.

Not surprisingly, Executive Order 13673 has met with withering criticism from both the contracting community and congress. At present, its full implementation has been essentially thwarted by a lack of funding for the “labor compliance advisor” positions contemplated by the Executive Order. Even if this roadblock is somehow overcome, the contracting community and various business and political groups have promised numerous court challenges. In light of President Obama’s short time left in office, it may be tempting to write off Executive Order 13673 as a political anomaly having little chance of bringing any lasting effects.

Such a perspective, however, would likely be short-sighted. Even if Executive Order 13673 itself is never implemented as written, its basic premise, i.e., that procurement of government contracts should be tied to contractors’ labor law compliance as measured by their records of labor law violations, is likely to be carried forward, in some form, sooner or later. With information about such labor law compliance becoming more and more accessible, and government agencies increasingly able to share such information, it is very reasonable to expect that regardless of Executive Order 13673’s specific prospects, the reality is that some form of its requirement will likely eventually be imposed. Wise contractors will take heed now and begin to focus on what Executive Order 13673 compliance has revealed about their readiness and ability to stay ahead of any future procurement regime which takes into account their labor law compliance.

If Executive Order 13673 demonstrates anything, it is that the U.S. Government is moving rapidly toward becoming very internally coordinated in tying procurement decisions to records of labor law compliance. Remaining on the better side of this trend requires government contractors to match the government’s internal coordination with their own. The corporate professionals who will be involved and impacted if procurement is eventually tied to labor law compliance will be those in procurement, labor legal, compliance, human resources, industrial safety and information technology.

Unfortunately, today’s most common corporate structures generally house these six disciplines within vastly different portions of the company. At best, they usually have little to do with each other, and in many places even the seemingly simple act of compiling records of labor law compliance presents a significant challenge. At worst, they are often internally and/or bureaucratically incompatible with or isolated from each other. Specifically, procurement officers rarely have ready access to information about labor law violations. Labor legal, industrial safety, compliance and human resources professionals, while sometimes internally coordinated (albeit often not to a desirable extent), are generally unaccustomed to considering, and lack the mechanisms to coordinate, the impacts of their decisions defending and/or resolving health and safety or contentious labor and employment issues with procurement. Finally, information technology professionals, who in most cases hold the key to establishing effective internal record-keeping, communication and coordination among the necessary disciplines, are often oblivious to the need.

Whatever Executive Order 13673’s prospects, it has therefore demonstrated a weakness in most corporate structures, making them ill-suited for any regulatory regime where labor law compliance matters to procurement. Remedying this weakness will require, at a minimum, a retooling of corporate communication and record-keeping abilities to tie together the necessary disciplines and allow them to coordinate their efforts. Decisions made by corporate professionals in labor legal, compliance, human resources and industrial safety should all, at a minimum, be gathered and kept to enable internal self-assessment. Ideally, all of these individuals should also begin to consult internally so that strategic decisions about such things as how best to deal with an aggressive or contentious agency official or whether and how to resolve a difficult employment law case are made with eyes open to their eventual potential impact on the company’s future ability to secure lucrative and/or important federal government contracts.

The blueprint of Executive Order 13673 also underscores the fact that, as a general rule, the government will consider the best federal contractor to be a “clean” federal contractor in terms of labor law compliance. This means, as a practical matter, that for companies that value and/or rely on federal government contracts, securing the future involves present-day focus on things that will matter to the NLRB, EEOC and DOL, including OSHA and OFCCP, and their state counterparts. For those with unions, maintaining positive labor relations will be an advantage. For all, devoting the resources to proactively manage to avoid conflict and resolve employment issues internally will be to their benefit. Similarly, a strong and demonstrable commitment to industrial safety, close attention to proper and well-documented leave administration and reasonable accommodation of disabilities, and sound and responsible worker classification, payroll practices and wage and hour record-keeping should all stand government contractors in good stead. Finally, use of affirmative action programs as a “management tool” for equal employment opportunity rather than as the paper exercise that it has often become will bear dividends not just as sound compliance, but also to maintain a competitive edge in procurement. All of this is the vision behind Executive Order 13673. Those who wish to be visionary will pay heed not just to the politics, but to the reality.

ZIMRINGJJon Zimring practices management side labor and employment law, representing clients before both the courts and administrative agencies, including the U.S. Department of Labor (DOL), the Office of Federal Contract Compliance Programs (OFCCP), the National Labor Relations Board (NLRB), the Equal Employment Opportunity Commission (EEOC), numerous state and local counterparts to these agencies, and additional other federal, state, and local agencies that investigate, audit compliance with, and enforce labor and employment laws. Drawing on this experience, he also has an active practice assisting employers with prevention through proactive audits, compensation analyses, investigations and consultation, and the development of policies, procedures, systems and training. Jon’s practice includes the representation of employers through virtually all workplace issues, including traditional labor relations with unions, affirmative action compliance, wage and hour, leave and disability, and all forms of discrimination, harassment, and retaliation.


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