Final 'Blacklisting' Rule Released

Late last month, the final regulations and guidance were issued by the Federal Acquisition Regulatory Council (FAR Council) and the Department of Labor (DOL) to implement Executive Order 13673, Fair Pay and Safe Workplaces, which President Obama signed in July 2014. Commonly known as “blacklisting,” the proposed rule required prime contractors and subcontractors with government contracts worth $500,000 or more to acknowledge all their violations and alleged violations of 14 different labor and employment laws and their “state equivalents” over the past three years in order for a labor compliance advisor to determine if the contractors are “responsible” enough to do business with the federal government. This reporting process would continue every six months for the life of the contract. 

The DOL’s final rule establishes a phased-in approach, beginning on October 25, 2016. For the first six months, only prime contractors are required to disclose labor law violations and alleged violations on contracts over $50 million; after which, contracts over $500,000 will be covered. Subcontractors will not be required to disclose their violations until October 25, 2017, and instead of reporting to the prime contractor, they will disclose them directly to the DOL. The final rule also phases-in the three-year lookback period for covered violations, requiring contractors to report violations over the past year, with the window increasing to two years as of October 25, 2017, and then three years as of October 25, 2018. Lastly, the final rule delays the implementation of paycheck transparency requirements until January 1, 2017. 

IEC continues to work in coalition with affected companies and associations against this rule. Currently, provisions in the National Defense Authorization Act (NDAA) would limit the impact blacklisting rule would have on Department of Defense (DOD) contractors. It is believed that Congress will continue debate over the NDAA upon returning next week from its summer recess.