New Federal "Fair Play" (aka "Contractor Blacklisting") Rules Released

CHARLOTTE, N.C., Aug. 26, 2016 /PRNewswire-USNewswire/ -- On August 24, the White House released final regulations and guidance on the so-called "contractor blacklisting" rules. The final rules are being issued by Federal agencies, including the U.S. Department of Labor (DOL), to implement Fair Pay and Safe Workplaces Executive Order, which President Obama signed in July 2014. Based on the White House's summary published on its website, here is what Carolinas AGC (CAGC)—the commercial construction trade association covering North Carolina and South Carolina—has confirmed about the contours of the final rules:

Effective Date. The final rules will take effect on a phased-in schedule starting on October 25, 2016. 

1. Pre-Dispute Arbitration Agreements: Prohibitions against requiring employees to enter into pre-dispute agreements to arbitrate claims brought under Title VII of the Civil Rights Act of 1964 or tort claims arising from sexual assaults or harassment will take effect on October 25, 2016. The White House indicates that this prohibition will not apply "where valid contracts already exist and remain unmodified."
2. Paycheck Transparency: Paycheck transparency provisions of the final rules will become effective on January 1, 2017.
3. One-Year Delay for Subcontractor Disclosures: For the one-year period beginning October 25, 2016, disclosures of labor law violations will be required only for prime contractors. Subcontractor disclosures will not be required until October 25, 2017.
4. Contract Thresholds: For the first six months after October 25, 2016, the requirement for prime contractors to disclose labor law violations will apply only on solicitations valued at $50 million or more. Starting on April 25, 2017, solicitations valued at or above $500,000 will be covered. 
5. Three-Year Lookback Window: The three-year lookback period for disclosures will be phased in gradually. Initially, the period of time covered by the disclosure obligation will be limited to one year preceding the date on which a contractor submits a bid on a covered solicitation. Presumably, that window will increase from one to two years as of October 25, 2017, and then to the full three-year window as of October 25, 2018.
6. DOL to Handle Subcontractor Disclosures: Once subcontractor disclosures are required, the DOL will be responsible for determining whether and how labor law violations will affect subcontractor access to work on covered federal contracts. Subcontractors will make their disclosures directly to the DOL, rather than to prime contractors; and prime contractors will be able to rely on the DOL's review. 
7. Equivalent State Laws: The final rules do not contain any timeframe for rulemaking concerning labor law violations involving "equivalent" state laws. The White House indicates that this requirement will be "phased in at a later time" (with the exception for OSHA-approved state plans, which will take effect in accordance with the above schedule).
8. Early Assessment Opportunities: Starting September 12, 2016, the DOL will offer a pre-assessment" process, which will allow contractors to come forward to the DOL "to discuss their history of compliance with labor laws" and secure guidance on whether "additional compliance measures are necessary." 
9. Helpful Citizens: The White House fact sheet highlights the opportunity for the public to make reports to contracting agencies, a point that largely has escaped notice until now. According to the White House, Agency Labor Compliance Advisors "will also be available to members of the public who have information they feel that prospective contractors should have disclosed about their labor violations."

In response to the release of the final regulations and guidance, Stephen Sandherr, CEO of AGC of America, issued the following statement:

"Few other organizations have fought harder, for longer, or more successfully than the Associated General Contractors of America to make sure honest firms aren't forced to compete with bad firms. The last thing any of our members want is to compete against a firm that cuts corners on safety or fails to properly compensate hard working craft people. That is one reason we have worked so hard to make sure the federal government has a robust, clear-cut and fairly-administered suspension and debarment program to deal with the extremely small number of federal contractors that do not operate in good faith.

"Unfortunately this new Obama administration rule is a step in the wrong direction when it comes to weeding out the very few unfair and unscrupulous federal contractors. In addition to the already substantial consequences firms currently face, this new measure permits unelected federal bureaucrats to make arbitrary decisions about which other firms will be singled out for punishment. Even worse, this new rule gives those same federal officials broad latitude to impose separate and inconsistent consequences on those firms.

"While there are many flaws with this new measure, one of its biggest is that it gives federal officials enormous discretion to decide which firms should be singled out for punishment.  For example, it allows a federal contracting official to give greater weight to the same safety violations depending on which firm was accused of committing them. Such subjective criteria opens the door to punishing federal contractors based on which political, social or labor causes they support, instead of their safety performance or treatment of workers.

"This new rule will make it extremely difficult for many firms, particularly smaller ones, to continue working with the federal government. While all federal contractors will face difficulties finding ways to deal with the added new compliance and risk costs, smaller firms especially will likely decide the risks far outweigh the reward. As a result, an administration that frequently claims to champion the cause of smaller business will have yet again made it difficult for them to perform federal work.

"Needless to say, we will explore all possible legislative and legal measures for undoing this deeply troubling and unnecessary new federal mandate."

Stay tuned, Carolinas AGC will keep you posted on these regulations as they are rolled out and what they mean to the Carolinas' construction industry.  For more information, contact CAGC's Allen Gray 704-609-0760 or [email protected].

Carolinas AGC is the construction industry association in the Carolinas, bringing value to our thousands of members through networking, government relations, job leads, meetings with owners/designers, education and training involving such issues as safety and open shop, and community development. Visit us at www.cagc.org, connect with us on Twitter, Facebook, YouTube, and LinkedIn.

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SOURCE Carolinas Associated General Contractors

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http://www.cagc.org