[Federal Register Volume 80, Number 102 (Thursday, May 28, 2015)]
[Notices]
[Pages 30574-30604]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-12562]



[[Page 30573]]

Vol. 80

Thursday,

No. 102

May 28, 2015

Part III





Department of Labor





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Office of the Secretary





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Guidance for Executive Order 13673, ``Fair Pay and Safe Workplaces''

  Federal Register / Vol. 80, No. 102 / Thursday, May 28, 2015 / 
Notices  

[[Page 30574]]


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DEPARTMENT OF LABOR

Office of the Secretary

ZRIN 1290-ZA02


Guidance for Executive Order 13673, ``Fair Pay and Safe 
Workplaces''

AGENCY: Department of Labor.

ACTION: Proposed guidance.

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SUMMARY: The Department of Labor is proposing guidance to assist 
federal agencies in the implementation of Executive Order 13673, Fair 
Pay and Safe Workplaces (the Order). The Order was signed by President 
Barack Obama on July 31, 2014, and it contains several new requirements 
designed to improve the federal contracting process. The Order seeks to 
increase efficiency and cost savings in the work performed by parties 
that contract with the Federal Government by ensuring that the parties 
are responsible and comply with labor laws. The Order requires federal 
contractors to report whether there has been any administrative merits 
determination, civil judgment, or arbitral award or decision rendered 
against them during the preceding three-year period for violations of 
any of 14 identified federal labor laws and executive orders or 
equivalent State laws.\1\ Contracting officers and Labor Compliance 
Advisors will assess these types of reported violations (considering 
whether the violations are serious, repeated, willful, or pervasive) as 
part of the determination of whether a contractor has a satisfactory 
record of integrity and business ethics. Labor Compliance Advisors will 
be available to consult with contractors that report these types of 
violations and will coordinate assistance with the relevant enforcement 
agencies. Contractors will require their subcontractors to report these 
types of violations of the identified labor laws and will similarly 
assess reported violations.\2\ And to achieve further paycheck 
transparency for workers, contractors and subcontractors will be 
required to provide their workers on federal contracts with information 
each pay period regarding how their pay is calculated (a wage 
statement) and provide notice to those workers whom they treat as 
independent contractors.
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    \1\ The Department will publish in the Federal Register at a 
future date a second proposed guidance addressing which State laws 
are equivalent to the 14 Federal labor laws and executive orders 
identified in the Order.
    \2\ The Department recognizes that the Federal Acquisition 
Regulatory Council is considering allowing contractors to direct 
their subcontractors to report violations to the Department, which 
would then assess the violations.
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    The Order directs the Department of Labor to develop guidance to 
assist federal agencies in implementing the Order's requirements. 
Consistent with that direction, this proposed guidance, when final, 
will: define ``administrative merits determination,'' ``civil 
judgment,'' and ``arbitral award or decision,'' and provide guidance on 
what information related to these determinations must be reported by 
contractors and subcontractors; define ``serious,'' ``repeated,'' 
``willful,'' and ``pervasive'' violations and provide guidance to 
contracting officers (or contractors with respect to their 
subcontractors) and Labor Compliance Advisors for assessing reported 
violations, including mitigating factors to consider; and provide 
guidance on the Order's paycheck transparency provisions, including 
identifying those States whose wage statement laws are substantially 
similar to the Order's wage statement requirement such that providing a 
worker with a wage statement that complies with any of those State laws 
satisfies the Order's requirement.
    The Order builds on the existing procurement system, and changes 
required by the Order fit into established contracting practices that 
are familiar to both procurement officials and the contracting 
community. In addition, the Department of Labor will provide support 
directly to contractors and subcontractors so that they understand 
their obligations under the Order and can come into compliance with 
federal labor laws without holding up their contract bids. Finally, the 
Department will work with Labor Compliance Advisors across agencies to 
minimize the amount of information that contractors have to provide and 
to help ensure efficient, accurate, and consistent decisions across the 
government.
    The objective of the Order is to help contractors come into 
compliance with federal labor laws, not to deny them contracts. To this 
end, this proposed guidance, when final, will provide a roadmap to 
contracting officers, Labor Compliance Advisors, and the contracting 
community for assessing contractors' history of labor law compliance 
with regard to their business integrity and ethics and considering 
mitigating factors, most notably efforts to remediate any reported 
labor law violations, including agreements entered into by contractors 
with enforcement agencies.

DATES: Comments must be received on or before July 27, 2015.

ADDRESSES: You may submit comments, identified by ZRIN 1290-ZA02, by 
either of the following methods:
    Electronic comments: Comments may be sent via http://www.regulations.gov, a Federal E-Government Web site that allows the 
public to find, review, and submit comments on documents that agencies 
have published in the Federal Register and that are open for comment. 
Simply type in ``guidance on fair pay and safe workplaces'' (in quotes) 
in the Comment or Submission search box, click Go, and follow the 
instructions for submitting comments.
    Mail: Address written submissions to Tiffany Jones, U.S. Department 
of Labor, Room S-2312, 200 Constitution Avenue NW., Washington, DC 
20210.
    Instructions: Please submit only one copy of your comments by only 
one method. All submissions must include the agency name and ZRIN, 
identified above, for this document. Please be advised that comments 
received will become a matter of public record and will be posted 
without change to http://www.regulations.gov, including any personal 
information provided. Comments that are mailed must be received by the 
date indicated for consideration. For additional information on 
submitting comments and the guidance process, see the ``Invitation to 
Comment'' section of the SUPPLEMENTARY INFORMATION provided later in 
this document.
    Docket: For access to the docket to read background documents or 
comments, go to http://www.regulations.gov. Docket name: Fair Pay and 
Safe Workplaces. Docket ID: DOL-2015-0002.

FOR FURTHER INFORMATION CONTACT: Contact Kathleen E. Franks, Director, 
Office of Regulatory and Programmatic Policy, U.S. Department of Labor, 
Room S-2312, 200 Constitution Avenue NW., Washington, DC 20210; 
telephone: (202) 693-5959 (this is not a toll-free number). Copies of 
this proposed guidance may be obtained in alternative formats (large 
print, Braille, audio tape or disc), upon request, by calling (202) 
693-5959 (this is not a toll-free number). TTY/TDD callers may dial 
toll-free [1-877-889-5627] to obtain information or request materials 
in alternative formats.

SUPPLEMENTARY INFORMATION: 

Background

    Although most federal contractors comply with applicable laws and 
provide quality goods and services to the government and taxpayers, a 
small

[[Page 30575]]

number of federal contractors have been responsible for a significant 
number of labor law violations in the last decade. In 2010, the 
Government Accountability Office issued a report that found that almost 
two-thirds of the 50 largest wage-and-hour violations and almost 40 
percent of the 50 largest workplace health-and-safety penalties issued 
between FY 2005 and FY 2009 occurred at companies that later received 
government contracts.\3\ In 2013, Senate Health, Education, Labor, and 
Pensions Committee Chairman Tom Harkin issued a report which revealed 
that dozens of contractors with significant health-and-safety and wage-
and-hour violations continued to receive federal contracts.\4\ Between 
2007 and 2012, 49 federal contractors were cited for 1,776 separate 
federal labor law violations and paid $196 million in damages and 
penalties.\5\ In FY 2012, these same companies were awarded $81 billion 
in federal contracts.\6\
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    \3\ U.S. Government Accountability Office, GAO-10-1033, Federal 
Contracting: Assessments and Citations of Federal Labor Law 
Violations by Selected Federal Contractors, Report to Congressional 
Requesters (2010), available at http://www.gao.gov/new.items/d101033.pdf.
    \4\ Majority Staff of Senate Committee on Health, Education, 
Labor, and Pensions, Acting Responsibly? Federal Contractors 
Frequently Put Workers' Lives and Livelihoods at Risk, 1 (2013), 
available at http://www.help.senate.gov/imo/media/doc/Labor%20Law%20Violations%20by%20Contractors%20Report.pdf.
    \5\ Id.
    \6\ Id.
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    Beyond their human cost, these violations create risks to the 
timely, predictable, and satisfactory delivery of goods and services to 
the Federal Government, and federal agencies risk poor performance by 
awarding contracts to companies with histories of labor law violations. 
Poor workplace conditions lead to lower productivity and creativity, 
increased workplace disruptions, and increased workforce turnover. For 
contracting agencies, this means receipt of lower quality products and 
services, and increased risk of project delays and cost overruns.
    Contracting agencies can reduce execution delays and avoid other 
complications by contracting with contractors with track records of 
labor law compliance--and by helping to bring contractors with past 
violations into compliance. Contractors that consistently adhere to 
labor laws are more likely to have workplace practices that enhance 
productivity and to deliver goods and services to the Federal 
Government in a timely, predictable, and satisfactory fashion.
    Moreover, by ensuring that its contractors are in compliance, the 
Federal Government can level the playing field for contractors who 
comply with the law. Those contractors who invest in their workers' 
safety and maintain a fair and equitable workplace should not have to 
compete with contractors who offer slightly lower bids--based on 
savings from skirting labor laws--and then ultimately deliver poor 
performance to taxpayers. By contracting with employers who are in 
compliance with labor laws, the Federal Government can ensure that 
taxpayers' money supports jobs in which workers have safe workplaces, 
receive the family leave they are entitled to, get paid the wages they 
have earned, and do not face unlawful workplace discrimination.

Overview of Guidance

    The Order instructs federal agencies to work together to implement 
new contracting requirements and processes. The Order creates detailed 
implementation roles for the Federal Acquisition Regulatory Council 
(FAR Council), the Department of Labor (Department), the Office of 
Management and Budget (OMB), and the General Services Administration 
(GSA). These agencies will implement the Order in stages, on a 
prioritized basis.
    The Order gives the Department several specific implementation and 
coordination duties. The Order directs the Secretary of Labor (the 
Secretary) to develop guidance that defines the ``administrative merits 
determinations,'' ``civil judgments,'' and ``arbitral awards or 
decisions'' that contractors and subcontractors must report, see Sec.  
2(a)(i); identifies the State laws that are ``equivalent'' to the 14 
federal labor laws and executive orders for which violations must be 
reported, see Sec.  2(a)(i)(O); assists contracting agencies (and 
contractors with respect to their subcontractors) in determining if 
reported violations are ``serious,'' ``repeated,'' ``willful,'' or 
``pervasive,'' see Sec.  4(b)(i); and specifies which State wage 
statement requirements are substantially similar to the Order's 
requirement such that providing a worker with a wage statement in 
compliance with one of those State's requirements satisfies the Order's 
wage statement requirement, see Sec.  5(a). The Order also directs the 
Secretary to develop processes for coordination between newly 
designated Labor Compliance Advisors in each contracting agency and the 
Department and processes by which contracting officers and Labor 
Compliance Advisors may give appropriate consideration to 
determinations and agreements made by the Department and other 
enforcement agencies. See Sec.  4(b)(ii).\7\
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    \7\ The Department will set up a structure within the Department 
to consult with Labor Compliance Advisors in carrying out their 
responsibilities and duties and to help ensure efficient, accurate, 
and consistent decisions across the government. In addition, the 
Department will be available to consult with contractors and 
subcontractors to assist them in fulfilling their obligations under 
the Order. Contractors and subcontractors, before bidding, will also 
be offered the opportunity to receive early guidance from the 
Department and other enforcement agencies on whether any of their 
violations of the labor laws are potentially problematic, as well as 
the opportunity to remedy any problems.
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    This proposed guidance satisfies most of the Department's 
responsibilities for issuing guidance, and the Department will publish 
at a later date a second guidance that satisfies its remaining 
responsibilities. Section I below discusses the reasons for the Order 
and summarizes its requirements. Section II defines the terms 
``administrative merits determination,'' ``civil judgment,'' and 
``arbitral award or decision,'' and provides guidance regarding the 
types of information that contractors and subcontractors should report 
under the Order. Section III defines the terms ``serious,'' 
``repeated,'' ``willful,'' and ``pervasive.'' It also provides guidance 
on how reported violations should be assessed and what mitigating 
factors should be considered. Section IV provides guidance on the 
Order's paycheck transparency provisions. It identifies and solicits 
comment on two options for determining those States whose wage 
statement laws are substantially similar to the Order's wage statement 
requirement. Section V is an invitation to comment, and Section VI 
describes next steps.
    This proposed guidance also provides guidelines for how contracting 
officers and Labor Compliance Advisors may give appropriate 
consideration to determinations and agreements made between contractors 
and enforcement agencies. In addition, the Department will publish in 
the Federal Register at a future date a second proposed guidance 
addressing which State laws are equivalent to the 14 federal labor laws 
and executive orders identified in the Order for which contractors and 
subcontractors must report violations. For purposes of this initial 
proposed guidance, however, State plans approved by the Department's 
Occupational Safety and Health Administration (OSHA-approved State 
Plans) are equivalent State laws (see discussion below).
    As part of the development of this proposed guidance, the 
Department has engaged with a range of interested parties (including 
contractors,

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contracting agencies, and unions) to solicit their views on the Order. 
The White House hosted four listening sessions to hear their views, 
ideas, and concerns regarding the provisions of the Order. The 
Department found these listening sessions helpful and considered 
relevant information raised during those sessions in developing this 
proposed guidance.
    Consistent with its efforts to engage with interested parties 
regarding the Order, the Department, in its discretion, is soliciting 
public comment on this proposed guidance in the manner and before the 
date specified above. Agencies are not required to provide notice and 
an opportunity for public comment on guidance documents before they are 
adopted, as is generally required for formal legislative rulemaking and 
other regulatory action.

I. Purpose and Summary of the Order

    The Order states that the Federal Government will promote economy 
and efficiency in procurement by contracting with responsible sources 
that comply with labor laws. See Sec.  1. The Order seeks to increase 
efficiency and cost savings in the work performed by parties that 
contract with the Federal Government by ensuring that they understand 
and comply with labor laws. Id.

A. Existing Requirements for Contracting With Responsible Sources

    By statute, contracting agencies are required to award contracts to 
responsible sources. See 10 U.S.C. 2405(b); 41 U.S.C. 3703. A 
``responsible source'' means a prospective contractor that, among other 
things, ``has a satisfactory record of integrity and business ethics.'' 
41 U.S.C. 113.
    Part 9 of the Federal Acquisition Regulation (FAR) implements this 
statutory ``responsibility'' requirement. The FAR states that 
``[p]urchases shall be made from, and contracts shall be awarded to, 
responsible prospective contractors only.'' 48 CFR 9.103(a). In 
accordance with the statutory definition of ``responsible source,'' the 
FAR states that ``[t]o be determined responsible, a prospective 
contractor must . . . [h]ave a satisfactory record of integrity and 
business ethics. . . .'' 48 CFR 9.104-1. In addition, the FAR requires 
contractors on certain contracts to disclose to contracting officers 
any ``credible evidence'' that the agents of the contractor or any of 
its subcontractors have committed violations of federal criminal laws 
involving fraud, conflict of interest, bribery, or gratuities or of the 
civil False Claims Act in connection with the contract. 48 CFR 52.203-
13; see also 48 CFR 52.209-5 and 52.209-7 (requiring disclosures). The 
FAR also provides that, generally, prospective prime contractors are 
responsible for determining the responsibility of their prospective 
subcontractors. See 48 CFR 9.104-4.

B. Legal Authority

    The President issued the Order, as stated therein, pursuant to his 
authority under ``the Constitution and the laws of the United States,'' 
expressly including the Federal Property and Administrative Services 
Act (Procurement Act), 40 U.S.C. 101 et seq. The Procurement Act 
authorizes the President to ``prescribe policies and directives that 
the President considers necessary to carry out'' the statutory purposes 
of ensuring ``economical and efficient'' government procurement and 
administration of government property. 40 U.S.C. 101, 121(a). The Order 
establishes that the President considers the requirements included in 
the Order to be necessary to economy and efficiency in federal 
contracting (noting that ``[c]ontractors that consistently adhere to 
labor laws are more likely to have workplace practices that enhance 
productivity and increase the likelihood of timely, predictable, and 
satisfactory delivery of goods and services to the Federal Government'' 
and that ``[h]elping executive departments and agencies (agencies) to 
identify and work with contractors with track records of compliance 
will reduce execution delays and avoid distractions and complications 
that arise from contracting with contractors with track records of 
noncompliance''). See Sec.  1. The Order directs the Secretary to 
define certain terms used in the Order and to develop guidance ``to 
assist agencies'' in implementing the Order's requirements. See 
Sec. Sec.  2(a)(i), 4(b).

C. Summary of the Order's Requirements and Interaction With Existing 
Requirements

    The Order builds on the existing procurement system by instructing 
contracting officers to consider a contractor's history of labor laws 
violations, if any, as a factor in determining if the contractor has a 
satisfactory record of integrity and business ethics and may therefore 
be found to be a responsible source eligible for contract award. See 
Sec. Sec.  2(a)(ii)-(iii). To facilitate this determination, the Order 
provides that, for procurement contracts for goods and services, 
including construction, where the estimated value of the supplies 
acquired and services required exceeds $500,000, each agency shall 
ensure that provisions in solicitations require that the contractor 
represent, to the best of its knowledge and belief, whether there has 
been any administrative merits determination, civil judgment, or 
arbitral award or decision rendered against it within the preceding 
three-year period for violations of any of 14 identified federal labor 
laws or executive orders or any equivalent State laws (the Labor Laws). 
See Sec.  2(a)(i). The 14 federal labor laws or executive orders 
identified in the Order are:
     The Fair Labor Standards Act (the FLSA);
     the Occupational Safety and Health Act of 1970 (the OSH 
Act);
     the Migrant and Seasonal Agricultural Worker Protection 
Act (MSPA);
     the National Labor Relations Act (the NLRA);
     40 U.S.C. chapter 31, subchapter IV, also known as the 
Davis-Bacon Act (the DBA);
     41 U.S.C. chapter 67, also known as the Service Contract 
Act (the SCA);
     Executive Order 11246 of September 24, 1965 (Equal 
Employment Opportunity);
     section 503 of the Rehabilitation Act of 1973;
     the Vietnam Era Veterans' Readjustment Assistance Act of 
1972 and the Vietnam Era Veterans' Readjustment Assistance Act of 1974; 
\8\
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    \8\ Identifying these two statutes in their entirety reflects 
the Order as amended by section 3 of Executive Order 13683, 
Amendments to Executive Orders 11030, 13653, and 13673 (Dec. 11, 
2014).
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     the Family and Medical Leave Act (the FMLA);
     title VII of the Civil Rights Act of 1964 (Title VII);
     the Americans with Disabilities Act of 1990 (the ADA);
     the Age Discrimination in Employment Act of 1967 (the 
ADEA); and
     Executive Order 13658 of February 12, 2014 (Establishing a 
Minimum Wage for Contractors).
    Prior to making an award, contracting officers shall, as part of 
the responsibility determination, provide contractors with an 
opportunity to disclose any steps taken to correct any reported 
violations or improve compliance with the Labor Laws, including any 
agreements entered into with an enforcement agency. See Sec.  2(a)(ii). 
Contracting officers, in consultation with the relevant Labor 
Compliance Advisor (LCA), shall then consider the information in 
determining if a contractor is a responsible source with a satisfactory 
record of integrity and business ethics. See Sec.  2(a)(iii).

[[Page 30577]]

    Similar requirements apply to subcontractors where the estimated 
value of the supplies acquired and services required in the subcontract 
exceeds $500,000 and the subcontract is not for commercially available 
off-the-shelf items. Under the Order, contracting officers must require 
that, at the time of execution of the contract, contractors represent 
that they will require subcontractors performing covered subcontracts 
to disclose any administrative merits determination, civil judgment, or 
arbitral award or decision rendered against the subcontractor within 
the preceding three-year period for violations of any of the Labor 
Laws. See Sec.  2(a)(iv). The contractor will (in most cases, before 
awarding the subcontract) consider the information submitted by the 
subcontractor in determining whether the subcontractor is a responsible 
source that has a satisfactory record of integrity and business ethics. 
Id. And the contractor will incorporate into covered subcontracts the 
requirement that the subcontractor disclose to the contractor any 
administrative merits determinations, civil judgments, or arbitral 
awards or decisions rendered against the subcontractor within the 
preceding three-year period for violations of any of the Labor Laws. 
Id.\9\
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    \9\ The Department recognizes that the FAR Council is 
considering allowing contractors to direct their subcontractors to 
report violations to the Department, which would then assess the 
violations.
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    The Order's reporting requirement continues after an award is made. 
Semi-annually during the performance of the contract, contracting 
agencies shall require contractors to update the information provided 
about their own Labor Laws violations and to obtain the required 
information for covered subcontracts. See Sec.  2(b)(i). If a 
contractor reports information regarding Labor Laws violations during 
contract performance, or similar information is obtained through other 
sources, a contracting officer, in consultation with the LCA, shall 
consider whether action is necessary. See Sec.  2(b)(ii). Such action 
may include entering into agreements requiring appropriate remedial 
measures and measures to avoid further violations, as well as declining 
to exercise an option on a contract, contract termination in accordance 
with relevant FAR provisions, or referral to the agency suspending and 
debarring official. Id. If information regarding Labor Laws violations 
by a contractor's subcontractor is brought to the attention of the 
contractor, then the contractor shall similarly consider whether action 
is necessary. See Sec.  2(b)(iii).
    The Order requires each contracting agency to designate a senior 
agency official to be an LCA to provide consistent guidance on whether 
contractors' actions rise to the level of a lack of integrity or 
business ethics. See Sec.  3. As a general matter, LCAs will coordinate 
assistance for contractors that seek help in addressing and preventing 
Labor Laws violations. See Sec. Sec.  3(b)-(c). And in consultation 
with the Department and other agencies responsible for enforcing the 
Labor Laws, LCAs will help contracting officers to: Review information 
regarding violations reported by contractors; assess whether reported 
violations are serious, repeated, willful, or pervasive; review the 
contractor's remediation of the violation and any other mitigating 
factors; and determine if the violations identified warrant remedial 
measures, such as a labor compliance agreement. See Sec.  3(d). For 
purposes of this proposed guidance, a ``labor compliance agreement'' is 
an agreement entered into between an enforcement agency (defined below) 
and a contractor or subcontractor to address appropriate remedial 
measures, compliance assistance, steps to resolve issues to increase 
compliance with labor laws, or other related matters. See Sec.  
2(a)(ii).
    The Order directs the FAR Council to propose such rules and 
regulations and issue such orders as are deemed necessary and 
appropriate to carry out the Order. See Sec.  7. Specifically, the FAR 
Council will promulgate regulations for contracting agencies and 
contractors (with respect to their subcontractors) to apply when 
determining whether certain types of Labor Laws violations demonstrate 
a lack of integrity or business ethics. See Sec.  4(a). The regulations 
will: Provide that, subject to the determination of the contracting 
agency, ``in most cases a single violation of [a Labor Law] may not 
necessarily give rise to a determination of lack of responsibility, 
depending on the nature of the violation;'' ensure appropriate 
consideration is given to any remedial measures or mitigating factors, 
including any agreements by contractors or other corrective action 
taken to address violations; and ensure that contracting officers and 
LCAs send information, as appropriate, to the agency suspending and 
debarring official, in accordance with agency procedures. Id. And as 
discussed above, the Order directs the Secretary to define certain 
terms used in the Order and to develop guidance to assist contracting 
agencies in implementing the Order's requirements.
    The Order also contains two paycheck transparency requirements. 
First, the Order requires contracting agencies to ensure that, for 
contracts subject to the Order, provisions in solicitations and clauses 
in contracts shall provide that, in each pay period, contractors 
provide all individuals performing work under the contract for whom 
they are required to maintain wage records under the FLSA, DBA, SCA, or 
equivalent State laws, with a document with information concerning that 
individual's hours worked, overtime hours, pay, and any additions made 
to or deductions made from pay (i.e., a wage statement). See Sec.  
5(a). Contracting agencies shall also require that contractors 
incorporate this same requirement into covered subcontracts. Id. 
However, the Order instructs that the wage statement provided to 
individuals exempt from the overtime compensation requirements of the 
FLSA need not include a record of hours worked if the contractor or 
subcontractor informs the individuals of their exempt status. Id. The 
Order's wage statement requirement will be deemed satisfied for workers 
to whom the contractor or subcontractor provides a wage statement that 
complies with an applicable State or local wage statement requirement 
that the Secretary has determined is substantially similar to the 
Order's wage statement requirement. Id. Second, the Order provides that 
if a contractor or subcontractor is treating an individual performing 
work under a covered contract as an independent contractor, and not an 
employee, it must provide a document informing the individual of this 
status. See Sec.  5(b).\10\
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    \10\ The Order further requires contracting agencies to ensure 
that for all contracts where the estimated value of the supplies 
acquired and services required exceeds $1 million, provisions in 
solicitations and clauses in contracts shall provide that 
contractors agree that the decision to arbitrate claims arising 
under Title VII or any tort related to or arising out of sexual 
assault or harassment may only be made with the voluntary consent of 
employees or independent contractors after such disputes arise, 
subject to certain exceptions. See Sec.  6. Contracting agencies 
must require contractors to incorporate this same requirement into 
subcontracts where the estimated value of the supplies acquired and 
services required exceeds $1 million, subject to certain exceptions. 
Id. The Order does not direct the Secretary to address this 
requirement.
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    Finally, the Order requires that, in developing the guidance and 
proposing to amend the FAR, the Secretary and the FAR Council shall 
minimize, to the extent practicable, the burden of complying with the 
Order for federal contractors and subcontractors and in particular 
small entities, including small businesses, as defined in section

[[Page 30578]]

3 of the Small Business Act (15 U.S.C. 632), and small nonprofit 
organizations. See Sec.  4(e). The intent of the Order is to minimize 
additional compliance burdens and to increase economy and efficiency in 
federal contracting by helping more contractors and subcontractors come 
into compliance with workplace protections, not by denying them 
contracts. Toward that end, the Order provides that a single Web site 
will serve as the portal for all reporting requirements related to the 
Order and that LCAs and the Department will be available for 
consultation with contractors regarding the Order's requirements. See 
Sec. Sec.  2(a)(vi), 3(c), 4(d). As part of the responsibility 
determination in FAR 9.1, Responsible Prospective Contractor, 
contracting officers (and contractors for their subcontractors) will 
take into account any remedial actions and other mitigating factors, 
including adherence to any agreements with enforcement agencies. The 
Order's goals are to provide contractors and subcontractors with 
additional incentives to come into compliance with Labor Laws and to 
help ensure that contracts are awarded to responsible entities. This 
will help prevent delays and waste of taxpayer money.

II. Disclosure Requirements

    For all covered procurement contracts (defined below), the Order 
requires contracting agencies to include provisions in their 
solicitations requiring that the contractor represent, to the best of 
its knowledge and belief, whether there have been any administrative 
merits determinations, civil judgments, or arbitral awards or decisions 
rendered against it within the preceding three years for violations of 
the Labor Laws. Contracting agencies shall further require contractors, 
at or before execution of the covered procurement contract, to 
represent that they will require each subcontractor performing a 
covered subcontract (also defined below) to report whether there have 
been any administrative merits determinations, civil judgments, or 
arbitral awards or decisions rendered against the subcontractor within 
the preceding three years for violations of the Labor Laws. During the 
performance of the covered contract, the Order requires contractors to 
update their disclosures semi-annually and obtain similarly updated 
information from their subcontractors.
    The Order requires the Department to define in guidance the meaning 
of ``administrative merits determination,'' ``civil judgment,'' and 
``arbitral award or decision.'' This section of the proposed guidance 
defines those terms and provides guidance on who must report Labor Laws 
violations under the Order, what triggers the reporting obligations, 
and what particular categories of information must be reported under 
the Order.

A. Who Must Make Disclosures Under the Order

    The FAR Council's proposed regulations would require any contractor 
that responds to a solicitation for a covered procurement contract to 
represent whether it has any Labor Laws violations reportable under the 
Order. The FAR Council's proposed regulations would further require 
prospective contractors for whom a contracting officer has initiated 
the responsibility determination process, and who have represented that 
they have Labor Laws violation(s), to disclose additional information 
about the violation(s). For purposes of this proposed guidance and 
coextensive with section 2(a)(i) of the Order, a ``covered procurement 
contract'' is a procurement contract for goods and services, including 
construction, where the estimated value of the supplies acquired and 
services required exceeds $500,000.\11\ Additionally, the Order 
requires contractors to require their subcontractors performing covered 
subcontracts to disclose Labor Laws violations reportable under the 
Order. See Sec.  2(a)(iv). For purposes of this proposed guidance and 
coextensive with section 2(a)(iv) of the Order, ``covered subcontract'' 
means any contract awarded to a subcontractor that would be a covered 
procurement contract except for contracts for commercially available 
off-the-shelf items.\12\ This proposed guidance uses ``covered 
contracts'' to include both covered procurement contracts and covered 
subcontracts.
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    \11\ See 48 CFR 1.108(c) (dollar thresholds under the FAR).
    \12\ The FAR, 48 CFR 2.101, defines ``commercially available 
off-the-shelf item.''
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    The Order applies to contracting activities by executive agencies. 
See Sec.  1. The term ``executive agency'' is defined under the FAR as 
``an executive department, a military department, or any independent 
establishment within the meaning of 5 U.S.C. 101, 102, and 104(1), 
respectively, and any wholly owned Government corporation within the 
meaning of 31 U.S.C. 9101.'' 48 CFR 2.101. This proposed guidance 
generally uses the term ``contracting agencies'' to refer to executive 
agencies, as defined in the FAR, that are engaged in contracting.
    As used in this proposed guidance, the term ``contract'' has the 
same meaning as it has under the FAR, 48 CFR 2.101.\13\ Thus, the term 
``contract'' means a procurement contract and does not include grants 
and cooperative agreements (which are not subject to the Order's 
requirements).
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    \13\ 48 CFR 2.101 states: ``Contract means a mutually binding 
legal relationship obligating the seller to furnish the supplies or 
services (including construction) and the buyer to pay for them. It 
includes all types of commitments that obligate the Government to an 
expenditure of appropriated funds and that, except as otherwise 
authorized, are in writing. In addition to bilateral instruments, 
contracts include (but are not limited to) awards and notices of 
awards; job orders or task letters issued under basic ordering 
agreements; letter contracts; orders, such as purchase orders, under 
which the contract becomes effective by written acceptance or 
performance; and bilateral contract modifications. Contracts do not 
include grants and cooperative agreements covered by 31 U.S.C. 6301, 
et seq.''
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    In this proposed guidance, references to ``contractors'' and 
``subcontractors'' include entities that hold covered contracts as well 
as ``offerors,'' meaning any entity that bids for a covered contract. 
The term ``entity'' is properly understood to include both 
organizations and individuals that apply for and receive covered 
contracts.

B. What Triggers the Disclosure Obligations

    The Order creates disclosure requirements for contractors and 
subcontractors performing or bidding on covered contracts. Under the 
Order, contractors and subcontractors must report administrative merits 
determinations, civil judgments, and arbitral awards or decisions that 
have been rendered against them within the previous three years for a 
violation of the Labor Laws.
    The relevant three-year period is the three-year period preceding 
the date of the offer (i.e., the contract bid or proposal). Therefore, 
administrative merits determinations, civil judgments, and arbitral 
awards or decisions rendered during that three-year period must be 
reported even if the underlying conduct that violated the Labor Laws 
occurred more than three years prior to the date of the report. See 
Sec. Sec.  2(a)(i), 2(a)(iv)(A).
    The Order's reporting requirements apply to administrative merits 
determinations, civil judgments, and arbitral awards or decisions 
``rendered against the [offeror or subcontractor] within the preceding 
3-year period.'' See Sec. Sec.  2(a)(i), 2(a)(iv)(A). Therefore, it 
requires contractors and subcontractors to report administrative merits 
determinations, civil judgments, and arbitral awards or decisions that 
were

[[Page 30579]]

issued during the relevant three-year period even if they were not 
performing or bidding on a covered contract at the time. For example, 
if the Department's Wage and Hour Division renders an administrative 
merits determination finding that an employer failed to pay overtime 
due under the FLSA and the employer later (within three years of the 
determination) bids for the first time on a covered procurement 
contract, the employer must report the FLSA determination even though 
it was not a contractor or bidding on a covered contract at the time 
when it received the determination.
    Administrative merits determinations, civil judgments, and arbitral 
awards or decisions that must be reported under the Order include those 
issued for violations of State laws equivalent to the fourteen federal 
Labor Laws listed in the Order. See Sec.  2(a)(i)(O). Although the 
Department will identify--in a second guidance to be published in the 
Federal Register at a later date--those equivalent State laws that are 
Labor Laws, OSHA-approved State Plans are equivalent State laws (and 
thus Labor Laws) for purposes of this proposed guidance. This is 
because the OSH Act permits certain States to administer OSHA-approved 
State occupational safety and health plans in lieu of federal 
enforcement of the OSH Act.\14\ Administrative merits determinations or 
civil judgments finding violations under an OSHA-approved State Plan 
are therefore subject to the Order's reporting requirements as soon as 
those requirements become effective, even if the Secretary has not 
published final guidance identifying other State laws that are 
equivalent to the federal Labor Laws.
---------------------------------------------------------------------------

    \14\ Section 18 of the OSH Act encourages States to develop and 
operate their own job safety and health programs, and OSHA approves 
and monitors State Plans and provides up to 50 percent of an 
approved plan's operating costs. OSHA-approved State Plans are 
described and listed in 29 CFR part 1952, and further information 
about such plans can be found at https://www.osha.gov/dcsp/osp/index.html.
---------------------------------------------------------------------------

1. Defining ``Administrative Merits Determination''
    Enforcement agencies issue notices, findings, and other documents 
when they determine that any of the Labor Laws have been violated. For 
purposes of this proposed guidance, ``enforcement agency'' means any 
agency that administers the federal Labor Laws, such as the Department 
and its agencies, the Occupational Safety and Health Review 
Commission,\15\ the Equal Employment Opportunity Commission, and the 
National Labor Relations Board. Enforcement agencies do not include 
other federal agencies who, in their capacity as contracting agencies, 
undertake an investigation of a violation of the federal Labor 
Laws.\16\ For purposes of this proposed guidance, ``enforcement 
agency'' also means those State agencies designated to administer an 
OSHA-approved State Plan, but only to the extent that the State agency 
is acting in its capacity as administrator of such plan. And once the 
Department's second guidance (to be published at a later date) 
identifying the State laws that are equivalent to the federal Labor 
Laws is finalized, ``enforcement agency'' will also include those State 
agencies that enforce those identified equivalent State laws.
---------------------------------------------------------------------------

    \15\ The Occupational Safety and Health Review Commission is an 
independent federal agency that provides administrative trial and 
appellate review in contests of OSH Act citations or penalties.
    \16\ For example, contracting agencies may investigate 
violations of the DBA relating to contracts that they administer, 
but that does not make them enforcement agencies for purposes of the 
Order.
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    For purposes of the Order, the term ``administrative merits 
determination'' means any of the following notices or findings--whether 
final or subject to appeal or further review--issued by an enforcement 
agency following an investigation that indicates that the contractor or 
subcontractor violated any provision of the Labor Laws:

    (a) From the Department's Wage and Hour Division:
     A WH-56 ``Summary of Unpaid Wages'' form;
     a letter indicating that an investigation disclosed a 
violation of sections six or seven of the FLSA or a violation of the 
FMLA, SCA, DBA, or Executive Order 13658;
     a WH-103 ``Employment of Minors Contrary to The Fair 
Labor Standards Act'' notice;
     a letter, notice, or other document assessing civil 
monetary penalties;
     a letter that recites violations concerning the payment 
of special minimum wages to workers with disabilities under section 
14(c) of the FLSA or revokes a certificate that authorized the 
payment of special minimum wages;
     a WH-561 ``Citation and Notification of Penalty'' for 
violations under the OSH Act's field sanitation or temporary labor 
camp standards;
     an order of reference filed with an administrative law 
judge.
    (b) from the Department's Occupational Safety and Health 
Administration (OSHA) or any State agency designated to administer 
an OSHA-approved State Plan:
     A citation;
     an imminent danger notice;
     a notice of failure to abate; or
     any State equivalent;
    (c) from the Department's Office of Federal Contract Compliance 
Programs:
     A show cause notice for failure to comply with the 
requirements of Executive Order 11246, Section 503 of the 
Rehabilitation Act, the Vietnam Era Veterans' Readjustment 
Assistance Act of 1972, or the Vietnam Era Veterans' Readjustment 
Assistance Act of 1974;
    (d) from the Equal Employment Opportunity Commission (the EEOC):
     A letter of determination that reasonable cause exists 
to believe that an unlawful employment practice has occurred or is 
occurring; or
     a civil action filed on behalf of the EEOC;
    (e) from the National Labor Relations Board:
     A complaint issued by any Regional Director;
    (f) a complaint filed by or on behalf of an enforcement agency 
with a federal or State court, an administrative judge, or an 
administrative law judge alleging that the contractor or 
subcontractor violated any provision of the Labor Laws; or
    (g) any order or finding from any administrative judge, 
administrative law judge, the Department's Administrative Review 
Board, the Occupational Safety and Health Review Commission or State 
equivalent, or the National Labor Relations Board that the 
contractor or subcontractor violated any provision of the Labor 
Laws.

    The above definition provides seven categories of documents, 
notices, and findings from enforcement agencies that constitute the 
administrative merits determinations that must be reported under the 
Order. The list is an exhaustive one, meaning that if a document does 
not fall within one of categories (a) through (g) above, the Department 
does not consider it to be an ``administrative merits determination'' 
for purposes of the Order.
    In addition, the Department will publish at a later date a second 
proposed guidance that identifies an eighth category of administrative 
merits determinations: The documents, notices, and findings issued by 
State enforcement agencies when they find violations of the State laws 
equivalent to the federal Labor Laws.
    Categories (a) through (e) in the definition list types of 
administrative merits determinations that are issued by specific 
enforcement agencies. Categories (f) and (g) describe types of 
administrative merits determinations that are common to multiple 
enforcement agencies. Category (f) is necessary because it is possible 
that an enforcement agency will not have issued a notice or finding 
following its investigation that falls within categories (a) through 
(e) prior to filing a complaint in court.
    The administrative merits determinations listed in the definition 
are issued following an investigation by the relevant enforcement 
agency. Administrative merits determinations are not limited to notices 
and findings

[[Page 30580]]

issued following adversarial or adjudicative proceedings such as a 
hearing, nor are they limited to notices and findings that are final 
and unappealable. Thus, administrative merits determinations that must 
be reported under the Order include an administrative merits 
determination that the contractor or subcontractor is challenging, can 
still challenge, or is otherwise subject to further review. However, 
the Department understands that contractors and subcontractors may 
raise good-faith disputes regarding administrative merits 
determinations that have been issued to them. As set forth below, when 
contractors and subcontractors report administrative merits 
determinations, they may also submit any additional information that 
they believe may be helpful in assessing the violations at issue 
(including the fact that the determination has been challenged). 
Additionally, contractors and subcontractors will have opportunities to 
provide information regarding any mitigating factors.
    Certain ``complaints'' issued by enforcement agencies are included 
in the definition of ``administrative merits determination.'' The 
complaints issued by enforcement agencies included in the definition 
are not akin to complaints filed by private parties to initiate 
lawsuits in Federal or state courts. Each complaint included in the 
definition represents a finding by an enforcement agency following a 
full investigation that a Labor Law was violated; in contrast, a 
complaint filed by a private party in a Federal or state court 
represents allegations made by that plaintiff and not any enforcement 
agency. Moreover, employee complaints made to enforcement agencies 
(such as a complaint for failure to pay overtime wages filed with the 
Department's Wage and Hour Division or a charge of discrimination filed 
with the EEOC) are not administrative merits determinations.
2. Defining ``Civil Judgment''
    For purposes of the Order, the term ``civil judgment'' means any 
judgment or order entered by any federal or State court in which the 
court determined that the contractor or subcontractor violated any 
provision of the Labor Laws, or enjoined or restrained the contractor 
or subcontractor from violating any provision of the Labor Laws. Civil 
judgment includes a judgment or order that is not final or is subject 
to appeal.
    A civil judgment could be the result of an action filed in court by 
or on behalf of an enforcement agency or, for those Labor Laws that 
establish a private right of action, by a private party or parties. The 
judgment or order in which the court determined that a violation 
occurred may be the result of a jury trial, a bench trial, or a motion 
for judgment as a matter of law, such as a summary judgment motion. 
Even a decision granting partial summary judgment may be a civil 
judgment if, for example, the decision finds a violation of the Labor 
Laws but leaves resolution of the amount of damages for later in the 
proceedings. Likewise, a preliminary injunction can be a civil judgment 
if the order enjoins or restrains a violation of the Labor Laws. Civil 
judgments include consent judgments and default judgments to the extent 
that there is a determination in the judgment that any of the Labor 
Laws have been violated, or the judgment enjoins or restrains the 
contractor or subcontractor from violating any provision of the Labor 
Laws. A private settlement where the lawsuit is dismissed by the court 
without any judgment being entered is not a civil judgment.
    Civil judgments do not include judgments or orders issued by an 
administrative law judge or other administrative tribunals, such as 
those identified in the definition of administrative merits 
determination. Such judgments and orders may be administrative merits 
determinations. If, however, a federal or State court issues a judgment 
or order affirming an administrative merits determination, then the 
court's decision is a civil judgment.
    Civil judgments include a judgment or order finding that a 
contractor or subcontractor violated any of the Labor Laws even if the 
order or decision is subject to further review in the same proceeding, 
is not final, can be appealed, or has been appealed. As set forth 
below, when contractors and subcontractors report civil judgments, they 
may also submit any additional information that they believe may be 
helpful in assessing the violations at issue (including the fact that 
the civil judgment has been appealed). Additionally, contractors and 
subcontractors will have opportunities to provide information regarding 
any mitigating factors.
3. Defining ``Arbitral Award or Decision''
    For purposes of the Order, the term ``arbitral award or decision'' 
means any award or order by an arbitrator or arbitral panel in which 
the arbitrator or arbitral panel determined that the contractor or 
subcontractor violated any provision of the Labor Laws, or enjoined or 
restrained the contractor or subcontractor from violating any provision 
of the Labor Laws. Arbitral award or decision includes an award or 
order that is not final or is subject to being confirmed, modified, or 
vacated by a court.
    Arbitral award or decision includes an arbitral award or decision 
regardless of whether it is issued by one arbitrator or a panel of 
arbitrators and even if the arbitral proceedings were private or 
confidential.
    Arbitral award or decision also includes an arbitral award or 
decision finding that a contractor or subcontractor violated any of the 
Labor Laws even if the award or decision is subject to further review 
in the same proceeding, is not final, or is subject to being confirmed, 
modified, or vacated by a court. As set forth below, when contractors 
and subcontractors report arbitral awards or decisions, they may also 
submit any additional information that they believe may be helpful in 
assessing the violations at issue (including the fact that they have 
sought to have the award or decision vacated or modified). 
Additionally, contractors and subcontractors will have opportunities to 
provide information regarding any mitigating factors.
4. Successive Administrative Merits Determinations, Civil Judgments, 
and Arbitral Awards or Decisions Arising From the Same Underlying 
Violation
    If a contractor or subcontractor appeals or challenges an 
administrative merits determination, civil judgment, and/or arbitral 
award or decision, there may be successive administrative merits 
determinations, civil judgments, and/or arbitral awards or decisions 
that arise from the same underlying violation. For example, if a 
contractor or subcontractor receives an OSHA citation and appeals that 
citation, it may receive an order from an administrative law judge 
(ALJ) concerning that citation. Similarly, if a contractor or 
subcontractor receives an adverse decision from the Department's 
Administrative Review Board (ARB) and challenges the decision in 
federal court, it may receive a court judgment concerning that 
decision.
    If a contractor or subcontractor receives, during the preceding 
three-year period, successive administrative merits determinations, 
civil judgments, and/or arbitral awards or decisions arising from the 
same underlying violation, it need not report the violation if, at the 
time of reporting, the determination that there was a violation of a 
Labor Law has been reversed or vacated in its entirety. If the 
determination that there was a violation of a Labor Law is later 
reinstated on

[[Page 30581]]

appeal or in further proceedings, then the subsequent administrative 
merits determination, civil judgment, or arbitral award or decision 
reinstating the finding of a violation is an administrative merits 
determination, civil judgment, or arbitral award or decision within the 
meaning of this guidance and the Order and therefore must be reported. 
Thus, in the above examples, if the ALJ reverses the OSHA citation, or 
if the federal court vacates the ARB's adverse decision, the contractor 
or subcontractor need not report the violation. If the OSHA violation 
is later reinstated by the full Occupational Health and Safety Review 
Commission (OSHRC), or if the federal court's decision vacating the 
ARB's adverse decision is reversed by a court of appeals, these 
subsequent decisions must be reported.
    If a subsequent decision concerning the same underlying violation 
upholds or does not completely reverse or vacate the finding of 
violation, the contractor or subcontractor should report only the 
administrative merits determination, civil judgment, or arbitral award 
or decision that is the most recent at the time of reporting. Thus, in 
the first example above, if the ALJ affirms the OSHA citation in whole 
or in part, the contractor or subcontractor must report the more recent 
ALJ order but need not report the original citation. In the second 
example above, if the federal court affirms the ARB's decision, or 
modifies it but does not vacate it in its entirety, the contractor or 
subcontractor should report the more recent court order and need not 
report the original ARB decision.
    If, however, the contractor or subcontractor appeals or challenges 
only part of an administrative merits determination, civil judgment, or 
arbitral award or decision, it must continue to report the original 
administrative merits determination, civil judgment, or arbitral award 
or decision even if a successive administrative merits determination, 
civil judgment, or arbitral award or decision has been issued. For 
example, if, within the preceding three-year period, a district court 
finds a contractor or subcontractor liable for Title VII and FLSA 
violations, and the contractor or subcontractor appeals only the Title 
VII judgment to the court of appeals, it must continue to report the 
district court decision (containing the finding of an FLSA violation) 
even if a subsequent court of appeals decision is rendered concerning 
the Title VII violation.
    If the contractor or subcontractor reported an administrative 
merits determination, civil judgment, or arbitral award or decision 
before being awarded a covered contract, and a successive 
administrative merits determination, civil judgment, or arbitral award 
or decision arising from the same underlying violation is rendered 
during the performance of the contract and affirms that the contractor 
or subcontractor committed the violation, the successive administrative 
merits determination, civil judgment, or arbitral award or decision is 
an administrative merits determination, civil judgment, or arbitral 
award or decision within the meaning of this guidance and the Order. 
Therefore, the contractor or subcontractor must report the most recent 
determination, judgment, award or decision when it updates its 
disclosures at semi-annual intervals during performance of the covered 
contract.

C. What Information Must Be Disclosed

    The following sections provide guidance on what information must be 
reported at different stages of the contracting process. When 
finalized, the FAR Council regulation will set forth the specific 
requirements for what must be reported at each stage, and how such 
information is to be reported.
1. Initial Representation
    When a contractor bids on a solicitation for a covered procurement 
contract, the Order requires it to report to the contracting agency 
issuing the solicitation whether any administrative merits 
determinations, civil judgments, or arbitral awards or decisions have 
been rendered against it within the preceding three-year period. See 
Sec.  2(a). At this stage, the contractor will represent to the best of 
its knowledge and belief whether it has or has not had such violations, 
without providing further information.
2. Pre-Award Reporting
    If a contractor reaches the stage in the process at which a 
responsibility determination is made, and that contractor responded 
affirmatively at the initial representation stage, the contracting 
officer will require additional information about that contractor's 
Labor Laws violation(s). For each administrative merits determination, 
civil judgment, or arbitral award or decision that must be reported, 
the contractor will provide:
     The Labor Law that was violated;
     the case number, inspection number, charge number, docket 
number, or other unique identification number; \17\
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    \17\ Specifically, the contractor should provide the inspection 
number for OSH Act citations, the case number for National Labor 
Relations Board proceedings, the charge number for EEOC proceedings, 
the investigation or case number if known for Wage and Hour Division 
investigations, the case number for investigations by the Office of 
Federal Contract Compliance Programs, the case number for 
determinations by administrative tribunals, and the case number for 
court proceedings.
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     the date that the determination, judgment, award, or 
decision was rendered; and
     the name of the court, arbitrator(s), agency, board, or 
commission that rendered it.\18\
---------------------------------------------------------------------------

    \18\ Pursuant to FAR 9.105-1(a), contracting officers have a 
duty to obtain such additional information as may be necessary to be 
satisfied that a prospective contractor has a satisfactory record of 
integrity and business ethics.
---------------------------------------------------------------------------

    The contractor may also provide such additional information as the 
contractor deems necessary to demonstrate its responsibility, such as 
mitigating circumstances, remedial measures (to include labor 
compliance agreements), and other steps taken to achieve compliance 
with the Labor Laws. Mitigating factors are discussed below.
3. Post-Award Reporting
    The Order requires contractors to update the information reported 
to contracting agencies semi-annually during performance of the covered 
procurement contract. See Sec.  2(b). These periodic updates should 
include any new administrative merits determinations, civil judgments, 
and arbitral awards or decisions rendered since the last report and 
updates to previously reported or provided information. As noted above 
in section II.B.4, contractors must report new administrative merits 
determinations, civil judgments, and arbitral awards or decisions even 
if they arise from a violation of the Labor Laws that was already 
reported. For example, if a contractor initially reported a federal 
district court judgment finding that it violated the FLSA, it must 
still report as part of the periodic updates any federal court of 
appeals decision affirming that judgment. Through the ongoing post-
award reporting, contractors may also submit updated information 
reflecting the fact that a given administrative merits determination, 
civil judgment, or arbitral award or decision has been vacated, 
reversed, or otherwise modified. And contractors may also report 
mitigating factors and any other information that they believe may be 
helpful in assessing the violations at issue.

[[Page 30582]]

4. Reporting by Subcontractors
    The Order provides that contractors will require their 
subcontractors performing covered subcontracts to report administrative 
merits determinations, civil judgments, or arbitral awards or decisions 
rendered against them within the preceding three-year period for 
violations of any of the Labor Laws. See Sec. Sec.  2(a)(iv)-(v). The 
Order further provides that contractors must require their 
subcontractors to make such reports to the contractor prior to being 
awarded a covered subcontract and semi-annually during performance of a 
covered subcontract. Id. The Order requires contractors to make the 
same assessments regarding subcontractors and their violations of the 
Labor Laws as contracting agencies must make of contractors. Id. This 
builds on contractors' existing obligation to determine the 
responsibility of their subcontractors.
    To facilitate these assessments, given that contractors may have 
more difficulty than contracting officers and LCAs in obtaining copies 
of administrative merits determinations, civil judgments, and arbitral 
awards or decisions, the FAR Council's proposed regulations would 
require contractors to include provisions in subcontracts requiring 
that subcontractors who report violations of Labor Laws--and for which 
a responsibility determination has been initiated--provide a copy of 
the relevant administrative merits determination(s), civil judgment(s), 
and arbitral award(s) or decision(s), as well as any notice from the 
Department advising that the subcontractor either has not entered into 
a labor compliance agreement within a reasonable period of time or is 
not meeting the terms of an existing agreement. The preamble to the FAR 
Council's proposed regulations indicates that the subcontractor 
reporting requirement may be phased in through a delayed implementation 
to allow the contracting community to become familiar with the Order's 
requirements and procedures. To this end, contractors are encouraged to 
contact the Department for assistance in obtaining information 
necessary to assess any Labor Laws violations reported by their 
subcontractors. The Department will set up a structure within the 
Department to be available to consult with contractors in carrying out 
these responsibilities, as well as provide guidance as needed to 
contractors and subcontractors in compliance with the requirements of 
the Order. The Department will also be available to assist 
subcontractors directly in carrying out their responsibilities under 
the Order.
    The above paragraphs describe the duties of contractors and 
subcontractors as set forth in the text of the proposed FAR rule. 
However, the Department recognizes that the FAR Council is considering 
allowing contractors to direct their subcontractors to report 
violations to the Department, which would then assess the violations.

III. Weighing Violations of the Labor Laws

    The Order directs the Department to develop guidance ``to assist 
agencies in determining whether administrative merits determinations, 
arbitral awards or decisions, or civil judgments were issued for 
serious, repeated, willful, or pervasive violations'' of the Labor Laws 
for purposes of implementing the final rule issued by the FAR Council. 
See Sec.  4(b)(i). The Order specifies that the Department's guidance 
should ``incorporate existing statutory standards for assessing whether 
a violation is serious, repeated, or willful'' where they are 
available. Id. The Order also provides some guidelines for developing 
standards where none are provided by statute. Id.
    This section of the proposed guidance defines the terms 
``serious,'' ``repeated,'' ``willful,'' and ``pervasive'' and provides 
guidance on their meanings and how violations of the Labor Laws should 
be weighed. While contracting officers and LCAs can seek additional 
information from the Department to provide context, in utilizing this 
guidance to determine whether violations are serious, repeated, 
willful, or pervasive, contracting officers should rely on the 
information contained in the administrative merits determinations, 
arbitral awards or decisions, and civil judgments.
    All violations of federal labor laws are serious, but in this 
context the Department has, pursuant to the Order, identified certain 
violations as ``serious,'' ``willful,'' ``repeated,'' and 
``pervasive.'' This subset of all labor violations represents the 
violations that are most concerning and bear on an assessment of a 
contractor's or subcontractor's integrity and business ethics. The 
Department has purposely excluded from consideration violations that 
could be characterized as inadvertent or minimally impactful. In most 
cases, even for violations subject to disclosure and consideration 
under the Order, a single violation of one of the Labor Laws will not 
give rise to a determination of lack of responsibility. In contrast, as 
explained more fully below, pervasive violations and violations of 
particular gravity, among others, will in most cases result in the need 
for a labor compliance agreement. See section III.E below.
    Each contractor's disclosed violations of Labor Laws will be 
assessed on a case-by-case basis in light of the totality of the 
circumstances, including the severity of the violation or violations, 
the size of the contractor, and any mitigating factors. The extent to 
which a contractor has remediated violations of Labor Laws, including 
agreements entered into by contractors with enforcement agencies, will 
be given particular weight in this regard. In fact, the vast majority 
of administrative merits determinations (in some enforcement agencies, 
as much as 90 percent) result in settlement agreements between 
employers and enforcement agencies.
    The Department will work with LCAs across contracting agencies to 
help ensure efficient, accurate, and consistent decisions across the 
government.

A. Serious Violations

    Of the federal Labor Laws, only the OSH Act provides a statutory 
standard for what constitutes a ``serious'' violation, and this 
standard also applies to OSHA-approved State Plans. The other federal 
Labor Laws do not have statutory standards for what constitutes a 
serious violation. According to the Order, where no statutory standards 
exist, the Department's guidance for ``serious'' violations must take 
into account ``the number of employees affected, the degree of risk 
posed or actual harm done by the violation to the health, safety, or 
well-being of a worker, the amount of damages incurred or fines or 
penalties assessed with regard to the violation, and other 
considerations as the Secretary finds appropriate.'' See Sec.  
4(b)(i)(B)(1).
    Accordingly, a violation is ``serious'' for purposes of the Order 
if it involves at least one of the following:

     An OSH Act or OSHA-approved State Plan citation was 
designated as serious, there was a notice of failure to abate an OSH 
Act violation, or an imminent danger notice was issued under the OSH 
Act or an OSHA-approved State Plan;
     The affected workers comprised 25% or more of the 
workforce at the worksite;
     Fines and penalties of at least $5,000 were assessed or 
back wages of at least $10,000 were due or injunctive relief was 
imposed by an enforcement agency or a court;
     The contractor's or subcontractor's conduct violated 
MSPA or the child labor provisions of the FLSA and caused or 
contributed to the death or serious injury of one or more workers;

[[Page 30583]]

     Employment of a minor who was too young to be legally 
employed or in violation of a Hazardous Occupations Order;
     The contractor or subcontractor engaged in an adverse 
employment action (including discharge, refusal to hire, suspension, 
demotion, or threat) or is responsible for unlawful harassment 
against one or more workers for exercising any right protected by 
any of the Labor Laws;
     The findings of the relevant enforcement agency, court, 
arbitrator, or arbitral panel support a conclusion that the 
contractor or subcontractor engaged in a pattern or practice of 
discrimination or systemic discrimination;
     The findings of the relevant enforcement agency, court, 
arbitrator, or arbitral panel support a conclusion that the 
contractor or subcontractor interfered with the enforcement agency's 
investigation; or
     The contractor or subcontractor breached the material 
terms of any agreement or settlement entered into with an 
enforcement agency, or violated any court order, any administrative 
order by an enforcement agency, or any arbitral award.

The definition provides an exhaustive list of the categories of Labor 
Laws violations that may be serious under the Order.
1. OSH Act
    Section 17(k) of the OSH Act, 29 U.S.C. 666(k), defines a violation 
as serious, in relevant part, ``if there is a substantial probability 
that [the hazard created by the violation could result in] death or 
serious physical harm . . . unless the employer did not, and could not 
with the exercise of reasonable diligence know'' of the existence of 
the violation. In other words, a ``violation may be determined to be 
serious where, although the accident itself is merely possible * * *, 
there is a substantial probability of serious injury if it does 
occur.'' East Texas Motor Freight, Inc. v. Occupational Safety and 
Health Review Comm'n, 671 F.2d 845, 849 (5th Cir. 1982) (internal 
quotes and citations omitted).
    In light of this clear statutory definition, a violation of the OSH 
Act is serious if the contractor or subcontractor received a citation 
for a violation designated as ``serious'' under the OSH Act or an OSHA-
approved State Plan, or an imminent danger notice under the OSH Act or 
an OSHA-approved State Plan. Imminent danger notices are issued only 
when ``a danger exists which could reasonably be expected to cause 
death or serious physical harm immediately or before the imminence of 
such danger can be eliminated through the enforcement procedures 
otherwise provided by [the OSH Act].'' 29 U.S.C. 662(a). Because such 
notices are issued only for violations that imminently threaten to 
cause death or serious physical harm, imminent danger notices are by 
definition issued only for serious violations of the OSH Act, and thus 
constitute serious violations under the Order.
    The OSH Act separately prohibits retaliation against workers for 
exercising any right under the Act. 29 U.S.C. 660(c). As with 
retaliation under other Labor Laws, an OSH Act whistleblower violation 
will be a serious violation where the contractor or subcontractor 
engaged in an adverse employment action (including discharge, refusal 
to hire, suspension, demotion, or threat). Similarly, a contractor or 
subcontractor that has interfered with an OSHA inspection or 
investigation will be deemed to have committed a serious violation, as 
will a contractor or subcontractor that has breached the material terms 
of any OSHA settlement agreement, violated any court order under the 
OSH Act, or received a notice that it has failed to abate any cited 
OSHA violation.
2. 25% of the Workforce Affected
    Consistent with the Order's directive to consider the number of 
employees affected, a violation is serious when the workers affected by 
the violation comprised 25% or more of the workforce at the worksite. 
The Department believes that: using a percentage of the workforce 
instead of an absolute number of workers is a more useful way of 
considering the effects of a violation, given that employers of various 
sizes will have disclosure obligations under the Order; 25% represents 
a significant percentage of workers at a particular site, and as such, 
that the underlying violation is a serious one; and 25% strikes an 
appropriate balance by effectively excluding individualized or 
localized violations from this category of ``serious'' while capturing 
more widespread violations.
    For purposes of this 25% threshold, ``workforce'' means all 
individuals employed by the contractor or subcontractor. It does not 
include workers of another entity, unless the underlying violation of 
the Labor Laws includes a finding that the contractor or subcontractor 
is a joint employer of the workers that the other entity employs at the 
worksite.
    For purposes of this 25% threshold, ``worksite'' means the physical 
location or group of locations where the workers affected by the 
violations work and where the contractor or subcontractor conducts its 
business. For example, if the contractor or subcontractor conducts its 
business at a single building, or a single office within an office 
building, that building or office will comprise the worksite. However, 
if the contractor or subcontractor conducts business activities in 
several offices in one building, or in several buildings in a campus or 
industrial park, the worksite consists of all of the offices or 
buildings in which the business is conducted. On the other hand, if a 
contractor or subcontractor has two office buildings in different parts 
of the same city, and a violation affects workers in one building, the 
worksite is the one building where the violation took place. For 
violations that affect workers with no fixed worksite, such as 
construction workers, transportation workers, and workers who perform 
services at various customers' locations, the worksite is the site to 
which they are assigned as their home base, from which their work is 
assigned, or to which they report.
    For purposes of this 25% threshold, ``affected workers'' means the 
workers who were individually impacted by the violation. For example, 
affected workers include workers who were not paid wages due, were 
denied leave or benefits, were denied a job, a promotion, or other 
benefits due to discrimination, or were harmed by an unlawful policy.
    The Department specifically seeks comments on this category of 
serious violations.
3. Fines, Penalties, Back Wages, and Injunctive Relief
    Consistent with the Order's directive to take into account ``the 
amount of damages incurred or fines or penalties assessed,'' a 
violation is serious if it resulted in $5,000 or more in fines and 
penalties, or $10,000 or more in back wages. Such amounts, in the 
Department's view, reflect a violation of sufficient gravity to be 
deemed serious.
    Administrative merits determinations finding violations of the laws 
enforced by the Department's Wage and Hour Division, for example, may 
be more likely to implicate these thresholds than those issued by other 
enforcement agencies. According to recent enforcement data from the 
Wage and Hour Division, these thresholds will capture only a minority 
of the violations of the Labor Laws enforced by Wage and Hour, and a 
smaller minority of the cases investigated by it under those laws. 
According to recent data, Wage and Hour assessed penalties in only a 
small minority of the cases in which it made a finding; in the small 
number of cases in which penalties were assessed, they amounted to 
$5,000 or more only approximately one-fourth of the time. Similarly, 
back wages were due in less than half of the cases in which Wage and 
Hour made a finding, and in cases in which back wages were due, they

[[Page 30584]]

would have passed the proposed threshold of $10,000 only about one-
third of the time. The Department specifically seeks comments on 
whether the thresholds for fines and penalties and for back wages are 
set at the appropriate levels.
    Examples of ``fines and penalties'' include civil monetary 
penalties assessed by the Department under MSPA or under the minimum 
wage, overtime, and child labor provisions of the FLSA. Fines and 
penalties do not include back wages, compensatory damages, liquidated 
damages under the FLSA, or statutory damages under MSPA. However, 
liquidated damages under the ADEA and punitive damages are included in 
fines and penalties for purposes of this threshold.\19\ For purposes of 
determining whether the $10,000 back wages threshold is met, 
compensatory damages, liquidated damages under the FLSA, and statutory 
damages under MSPA should be included as back wages.
---------------------------------------------------------------------------

    \19\ Unlike liquidated damages under the FLSA, liquidated 
damages under the ADEA are punitive in nature, as they are expressly 
tied to willful violations. See 29 U.S.C. 626(b).
---------------------------------------------------------------------------

    The threshold amounts for fines and penalties are measured by the 
amount ``assessed.'' If an administrative merits determination, for 
example, assesses $6,000 in civil monetary penalties against a 
contractor or subcontractor but later that amount is reduced to $4,000 
in settlement negotiations or only $4,000 is collected, the underlying 
violation is serious based on the assessed amount. The Department 
believes that the amount assessed is a better indication of seriousness 
because civil monetary penalties may be reduced for reasons unrelated 
to the seriousness of the violation. If the amount assessed was later 
reduced, the contractor or subcontractor should provide that 
information as a possible mitigating factor.
    When considering whether these thresholds are met, the total fines 
and penalties or the total back wages resulting from the Labor Laws 
violation should be considered. In cases where multiple provisions of a 
Labor Law have been violated, the fines and penalties assessed or the 
back wages due should not be parsed and separately attributed to each 
provision violated. For example, if the Department's FLSA investigation 
discloses violations of the FLSA's minimum wage and overtime provisions 
and back wages are due for both violations, the total back wages due 
determines whether the $10,000 threshold is met. Likewise, if an 
investigation discloses three violations of the same MSPA provision or 
violations of three different MSPA provisions and each violation 
results in assessed civil monetary penalties of $2,000, the MSPA 
violation is serious because the assessed penalties total $6,000.
    A violation is also serious if injunctive relief was imposed by an 
enforcement agency, a court, or an arbitrator or arbitral panel. 
Injunctive relief is an order from an enforcement agency or court 
either to take a certain action or to refrain from taking a certain 
action. For example, an order to reinstate a wrongfully terminated 
worker, to modify discriminatory hiring practices, to make a location 
accessible to individuals with disabilities, to reinstate workers who 
are attempting to organize a union, or to refrain from intimidating 
workers during an enforcement agency's investigation would constitute 
injunctive relief.
4. MSPA or Child Labor Violations That Cause or Contribute to Death or 
Serious Injury
    Violations of the health and safety provisions of MSPA and the 
child labor provisions of the FLSA may have serious health and safety 
implications. In the most serious cases, violations of these statutes 
may result in death or serious injury to one or more workers. 
Consistent with the Order's directive to consider ``the degree of risk 
posed or actual harm done by the violation to health, safety, or well-
being of a worker,'' MSPA or child labor violations that cause or 
contribute to the death or serious injury of one or more workers are 
serious under the Order. For these purposes, serious injury has the 
same meaning as in the FLSA's child labor provisions as administered by 
the Department's Wage and Hour Division.
5. Employment of Minors Who Are Too Young To Be Legally Employed or in 
Violation of a Hazardous Occupations Order
    Consistent with the Order's directive to consider ``the degree of 
risk posed or actual harm done by the violation to health, safety, or 
well-being of a worker,'' any violation of the FLSA's child labor 
provisions where the minor is too young to be legally employed or is 
employed in violation of any of the Secretary's Hazardous Occupations 
Orders is a serious violation. Such violations do not include 
situations where minors are permitted to perform the work at issue but 
who perform the work outside the hours permitted by law. Rather, it 
refers to minors who, by virtue of their age, are legally prohibited 
from being employed or are not permitted to be employed to perform the 
work at issue. Thus, for example, the employment of any minor under the 
age of 18 to perform a hazardous non-agricultural job, any minor under 
the age of 16 to perform a hazardous farm job, or any minor under the 
age of 14 to perform non-farm work where he or she does not meet a 
statutory exception otherwise permitting the work would be a serious 
violation. This reflects the particularly serious dangers that can 
result from the prohibited employment of underage minors. Conversely, 
the employment of, for example, a 14 or 15 year-old minor in excess of 
three hours outside school hours on a school day in a non-hazardous, 
non-agricultural job in which the child is otherwise permitted to work 
would not be a serious violation for purposes of the Order, even though 
the work violates the FLSA's child labor provisions.
6. Adverse Employment Actions or Unlawful Harassment for Exercising 
Rights Under Labor Laws
    Consistent with the Order's directive to consider ``the degree of 
risk posed or actual harm done by the violation to health, safety, or 
well-being of a worker,'' a violation involving an adverse employment 
action or unlawful harassment against one or more workers for 
exercising any right protected by the Labor Laws is a serious 
violation. For these purposes, adverse employment actions include 
discharge, refusal to hire, suspension, demotion, or threats. Examples 
include disciplining workers for attempting to organize a union, 
demoting workers for testifying in an investigation, lawsuit, or 
proceeding involving one of the Labor Laws, firing or demoting workers 
who take leave under the FMLA, and threatening workers with adverse 
consequences--such as termination or referral to immigration or 
criminal authorities--for making a complaint about potential violations 
of Labor Laws. These are serious violations because they both reflect a 
disregard by an employer for its obligations under the Labor Laws and 
undermine the Labor Laws by making workers reluctant to exercise their 
rights for fear of retaliation.
7. Pattern or Practice of Discrimination or Systemic Discrimination
    Consistent with the Order's directive to consider ``the degree of 
risk posed or actual harm done by the violation to health, safety, or 
well-being of a worker,'' a Labor Laws violation is serious if the 
findings of the relevant enforcement agency, court, arbitrator, or 
arbitral panel support a conclusion that the contractor or 
subcontractor engaged

[[Page 30585]]

in a pattern or practice of discrimination or systemic discrimination. 
A pattern or practice of discrimination involves intentional 
discrimination against a protected group of employees, rather than 
discrimination that occurs in an isolated fashion. Systemic 
discrimination involves a pattern or practice, policy, or class case 
where the discrimination has a broad impact on an industry, profession, 
company or geographic area. Examples include policies and practices 
that effectuate discriminatory hiring barriers; restrictions on access 
to higher level jobs on the basis of race, gender, gender identity, 
sexual orientation, national origin, or other protected 
characteristics; unlawful pre-employment inquiries regarding 
disabilities; and discriminatory placement or assignments that are made 
to comply with customer preferences. Systemic discrimination also 
includes policies and practices that are seemingly neutral but may 
cause a disparate impact on protected groups. Examples include pre-
employment tests used for selection purposes; height, weight or lifting 
requirements or restrictions; compensation practices and policies; and 
performance evaluation policies and practices.
8. Interference With Investigations
    Violations of the Labor Laws in which the findings of the relevant 
enforcement agency, court, arbitrator, or arbitral panel support a 
conclusion that the contractor or subcontractor engaged in interference 
with the enforcement agency's investigation also are serious under the 
Order. Interference can take a number of forms, such as denial of 
access by a contractor or subcontractor to an enforcement agency to 
conduct an on-site investigation, evaluation, or review; refusal to 
submit required documents to an enforcement agency or comply with its 
request for information; threats to workers who speak to enforcement 
agency investigators; falsification or destruction of records; lying or 
making misrepresentations to investigators; and threatening workers 
with termination or referral to immigration or criminal authorities if 
they do not return back wages received as part of an investigation. 
Like retaliation, interference with investigations is intentional 
conduct that frustrates the enforcement of the Labor Laws and 
therefore, in the Department's view, is a serious violation.
9. Material Breaches and Violations of Settlements, Agreements, or 
Orders
    Violations of the Labor Laws involving a breach of the material 
terms of any agreement or settlement, or a violation of a court or 
administrative order or arbitral award, are serious under the Order. 
Such violations are serious because an employer that is a government 
contractor or subcontractor is expected to comply with orders by a 
court or administrative agency and to adhere to the terms of any 
agreements or settlements into which it enters. A contractor's or 
subcontractor's failure to do so may indicate that it will similarly 
disregard its contractual obligations to, or agreements with, a 
contracting agency (or a contractor in case of a subcontractor), which 
could result in delays, increased costs, and other adverse 
consequences. A contractor or subcontractor will not, however, be found 
to have committed a serious violation if the agreement, settlement, 
award, or administrative order in question has been stayed pending an 
appeal or other further proceeding.
10. Table of Examples
    For a table containing selected examples of serious violations, see 
Appendix A.

B. Willful Violations

    The Order provides that the standard for willful should 
``incorporate existing statutory standards'' to the extent such 
standards exist. See Sec.  4(b)(i)(A). The Order further provides that, 
where no statutory standards exist, the standard for willful should 
take into account ``whether the entity knew of, showed reckless 
disregard for, or acted with plain indifference to the matter of 
whether its conduct was prohibited by the requirements of the [Labor 
Laws].'' See Sec.  4(b)(i)(B)(3). A violation is ``willful'' under the 
Order if:

     For purposes of a citation issued pursuant to the OSH 
Act or an OSHA-approved State Plan, the citation at issue was 
designated as willful or any equivalent State designation (i.e., 
``knowing''), and the designation was not subsequently vacated;
     For purposes of the FLSA (including the Equal Pay Act), 
the administrative merits determination sought or assessed back 
wages for greater than two years or sought or assessed civil 
monetary penalties for a willful violation, or there was a civil 
judgment or arbitral award or decision finding the contractor or 
subcontractor liable for back wages for greater than two years or 
affirming the assessment of civil monetary penalties for a willful 
violation;
     For purposes of the ADEA, the enforcement agency, 
court, arbitrator, or arbitral panel assessed or awarded liquidated 
damages;
     For purposes of Title VII or the ADA, the enforcement 
agency, court, arbitrator, or arbitral panel assessed or awarded 
punitive damages for a violation where the contractor or 
subcontractor engaged in a discriminatory practice with malice or 
reckless indifference to the federally protected rights of an 
aggrieved individual; or
     For purposes of any of the other Labor Laws, the 
findings of the relevant enforcement agency, court, arbitrator, or 
arbitral panel support a conclusion that the contractor or 
subcontractor knew that its conduct was prohibited by any of the 
Labor Laws or showed reckless disregard for, or acted with plain 
indifference to, whether its conduct was prohibited by one or more 
requirements of the Labor Laws.
1. The OSH Act, the FLSA, and the ADEA
    The term ``willful'' has well-established meanings under the OSH 
Act, the FLSA, and the ADEA. These meanings are consistent with the 
standard provided in the Order. Violations of the OSH Act, the FLSA, 
and the ADEA are willful under the Order if they fit these well-
established meanings.
    Under the OSH Act, a violation is willful where an employer has 
demonstrated either an intentional disregard for the requirements of 
the OSH Act or a plain indifference to its requirements. See A.E. 
Staley Mfg. Co. v. Sec'y of Labor, 295 F.3d 1341, 1351-52 (D.C. Cir. 
2002). For example, if an employer knows that specific steps must be 
taken to address a hazard, but substitutes its own judgment for the 
requirements of the legal standard, the violation is willful. Under the 
OSH Act or an OSHA-approved State Plan, if a violation was designated 
as willful and that designation has not been subsequently vacated, the 
violation will be willful for purposes of the Order. Some States may 
use a different term (i.e., ``knowing'') that means the same thing.
    Similarly, under the FLSA, a violation is willful where the 
employer knew that its conduct was prohibited by the FLSA or showed 
reckless disregard for the FLSA's requirements. See 29 CFR 578.3(c)(1); 
McLaughlin v. Richland Shoe Co., 486 U.S. 128, 133 (1988). For example, 
an employer that requires workers to ``clock out'' after 40 hours in a 
workweek and then continue working ``off the clock'' or pays workers 
for 40 hours by check and then pays them in cash at a straight-time 
rate for hours worked over 40 commits a willful violation of the FLSA's 
overtime requirements. These actions show knowledge of the FLSA's 
requirements to pay time-and-a-half for hours worked over 40 and an 
attempt to evade that requirement by concealing records of

[[Page 30586]]

the workers' actual hours worked. Under the FLSA, because willful 
violations are grounds for assessing back wages for greater than two 
years or civil monetary penalties, these measures are understood to 
reflect a finding of willfulness and therefore will be considered 
indicative of willfulness under the Order.\20\
---------------------------------------------------------------------------

    \20\ Civil monetary penalties may be assessed under the FLSA for 
violations that are either willful or repeated. Only civil monetary 
penalties involving willful violations will constitute willful 
violations under the Order.
---------------------------------------------------------------------------

    Likewise, under the ADEA, a violation is willful when the employer 
knew or showed reckless disregard for the matter of whether its conduct 
was prohibited by the ADEA. See Trans World Airlines v. Thurston, 469 
U.S. 111, 126 (1985). Willful violations are required for liquidated 
damages to be assessed or awarded under the ADEA. See 29 U.S.C. 626(b). 
Accordingly, any violation of the ADEA in which the enforcement agency, 
court, arbitrator, or arbitral panel assessed or awarded liquidated 
damages is understood to reflect a finding of willfulness and therefore 
will be considered indicative of a willful violation under the Order.
2. Title VII and the ADA
    Violations of Title VII or the ADA are ``willful'' under the Order 
if the enforcement agency, court, arbitrator, or arbitral panel 
assessed or awarded punitive damages for a violation where the 
contractor or subcontractor engaged in a discriminatory practice with 
malice or reckless indifference to the federally protected rights of an 
aggrieved individual. Punitive damages are appropriate in cases under 
Title VII or the ADA where the contractor or subcontractor engaged in 
intentional discrimination with ``malice or reckless indifference to 
the federally protected rights of an aggrieved individual.'' 42 U.S.C. 
1981a. This means that a managerial agent of the contractor or 
subcontractor, acting within the scope of employment, made a decision 
that was in the face of a perceived risk of violating federal law, and 
the contractor or subcontractor cannot prove that the manager's action 
was contrary to its good faith efforts to comply with federal law. See 
Kolstad v. American Dental Ass'n, 527 U.S. 526, 536, 545 (1999). For 
example, if a manager received a complaint of sexual harassment but 
failed to report it or investigate it, and the employer's anti-
harassment policy was ineffective in protecting the employees' rights, 
or the employer did not engage in good faith efforts to educate its 
managerial staff about sexual harassment, then the violation would 
warrant punitive damages and qualify as ``willful'' under the Order, 
See, e.g., EEOC v. Mgmt. Hospitality of Racine, Inc., 666 F.3d 422, 
438-39 (7th Cir. 2012).
3. Other Labor Laws
    For violations of Labor Laws other than the OSH Act, the FLSA, the 
ADEA, Title VII, and the ADA, a violation is willful for purposes of 
the Order if the findings of the relevant enforcement agency, court, 
arbitrator, or arbitral panel support a conclusion that the contractor 
or subcontractor knew that its conduct was prohibited by the Labor Laws 
or showed reckless disregard for, or acted with plain indifference to, 
whether its conduct was prohibited by Labor Laws.\21\ A contractor or 
subcontractor need not act maliciously or with a bad purpose to commit 
a willful violation; rather, the focus is on whether the enforcement 
agency, court, arbitrator, or arbitral panel's findings support a 
conclusion that, based on all of the facts and circumstances discussed 
in the findings, the contractor or subcontractor acted with knowledge 
or reckless disregard of its legal requirements. The administrative 
merits determination, civil judgment, or arbitral award or decision 
need not include the specific words ``knowledge'' or ``reckless 
disregard''; however, the factual findings or legal conclusions 
contained in the determination, judgment, award or decision must 
support a conclusion that the violation meets one of these conditions, 
as described further below.
---------------------------------------------------------------------------

    \21\ Nothing in this guidance is intended to affect the 
terminology or operation of FAR Part 22.4.
---------------------------------------------------------------------------

    Generally, willfulness will be found in one of two circumstances. 
One is where the findings of the enforcement agency, court, arbitrator, 
or arbitral panel support a conclusion that the contractor or 
subcontractor knew that its conduct was prohibited by law, yet engaged 
in the conduct anyway. Knowledge can be inferred from the factual 
findings or legal conclusions contained in the administrative merits 
determination, civil judgment, or arbitral award or decision. For 
example, willfulness will typically be found where the administrative 
merits determination, civil judgment, or arbitral award or decision 
supports a conclusion that a contractor or subcontractor was previously 
advised by responsible government officials that its conduct was not 
lawful, but engaged in the conduct anyway. Repeated violations may also 
be willful to the extent that the original proceeding demonstrates that 
the contractor or subcontractor was put on notice of its legal 
obligations, only to later commit the same or a substantially similar 
violation. If the administrative merits determination, civil judgment, 
or arbitral award or decision supports a conclusion that a contractor 
or subcontractor has a written policy or manual that describes a legal 
requirement, and then knowingly violates that requirement, the 
violation is also likely to be willful.
    For example, if the administrative merits determination, civil 
judgment, or arbitral award or decision supports a conclusion that a 
contractor or subcontractor was warned by an official from the 
Department that the housing it was providing to migrant and seasonal 
agricultural workers did not comply with required safety and health 
standards, and that the contractor or subcontractor then failed to make 
the required repairs or corrections, such findings demonstrate that the 
contractor or subcontractor engaged in a willful violation of MSPA. 
Likewise, if the administrative merits determination, civil judgment, 
or arbitral award or decision indicates that a contractor's or 
subcontractor's employee handbook states that it provides unpaid leave 
to employees with serious health conditions as required by the FMLA, 
but the contractor or subcontractor refuses to grant FMLA leave or 
erects unnecessary hurdles to employees requesting such leave, that 
violation would also likely be willful. Certain acts, by their nature, 
are willful, such as conduct that demonstrates an attempt to evade 
statutory responsibilities, including the falsification of records, 
fraud or intentional misrepresentation in the application for a 
required certificate, payment of wages ``off the books,'' or 
``kickbacks'' of wages from workers back to the contractor or 
subcontractor.
    The second type of willful violation is where the findings of the 
enforcement agency, court, arbitrator, or arbitral panel supports a 
conclusion that a contractor or subcontractor acted with reckless 
disregard or plain indifference toward the Labor Laws' requirements. 
These terms refer to circumstances in which the administrative merits 
determination, civil judgment, or arbitral award or decision supports a 
conclusion that a contractor or subcontractor failed to make sufficient 
efforts to learn or understand whether it was complying with the law. 
Although merely inadvertent or negligent conduct would not meet this 
standard, blissful ignorance of the law is not a defense to a willful 
violation. The adequacy of a contractor's or subcontractor's inquiry is

[[Page 30587]]

judged in light of all of the facts and circumstances, including the 
nature of the violation, the complexity of the legal issue, and the 
sophistication of the contractor or subcontractor. Reckless disregard 
or plain indifference may also be shown where the administrative merits 
determination, civil judgment, or arbitral award or decision supports a 
conclusion that a contractor or subcontractor was aware of plainly 
obvious violations and failed to take an appropriate action. For 
example, an employer who employs a 13-year-old child in an obviously 
dangerous occupation, such as operating a forklift, is acting in 
reckless disregard of the law even if it cannot be shown that the 
employer actually knew that doing so was in violation of one of the 
Secretary's Hazardous Occupation Orders. Reckless disregard or plain 
indifference will also be found if the administrative merits 
determination, civil judgment, or arbitral award or decision supports a 
conclusion that a contractor or subcontractor acted with purposeful 
lack of attention to its legal requirements, such as if management-
level officials are made aware of a health or safety requirement but 
make little or no effort to communicate that requirement to lower-level 
supervisors and employees.
4. Table of Examples
    For a table containing selected examples of willful violations, see 
Appendix B.

C. Repeated Violations

    The Order provides that the standard for repeated should 
``incorporate existing statutory standards'' to the extent such 
standards exist. See Sec.  4(b)(i)(A). The Order further provides that, 
where no statutory standards exist, the standards for repeated should 
take into account ``whether the entity has had one or more additional 
violations of the same or a substantially similar requirement in the 
past 3 years.'' See Sec.  4(b)(i)(B)(2). Accordingly, a violation is 
``repeated'' under the Order if it is the same as or substantially 
similar to one or more other violations of the Labor Laws by the 
contractor or subcontractor.
    For a violation to be repeated, the same or substantially similar 
other violation(s) must be reflected in one or more civil judgments, 
arbitral awards or decisions, or adjudicated or uncontested 
administrative merits determinations issued within the last three 
years. Substantially similar does not mean ``exactly the same.'' United 
States v. Washam, 312 F.3d 926, 930 (8th Cir. 2002). Rather, two things 
may be substantially similar where they share ``essential elements in 
common.'' Alameda Mall, L.P. v. Shoe Show, Inc., 649 F.3d 389, 392 (5th 
Cir. 2011) (citing dictionary definition of the term). Whether a 
violation is ``substantially similar'' to a past violation turns on the 
nature of the violation and underlying obligation itself.
1. Timeframe
    The civil judgment, arbitral award or decision, or adjudicated or 
uncontested administrative merits determination for the prior, or 
predicate, violation(s) must have occurred within the three-year 
reporting period. This is the case even if a violation may be 
designated as ``repeated'' within the meaning of one of the Labor Laws 
if the prior violation took place more than three years earlier. For 
example, under current OSHA policy, repeated violations under the OSH 
Act take into account a five-year period. However, an OSH Act or OSHA-
approved State Plan violation designated as a repeated violation in the 
citation would be repeated for purposes of the Order only if the 
predicate violation was issued or affirmed within the three-year 
reporting period.
2. Separate Investigations or Proceedings
    The prior violation(s) must be the subject of one or more separate 
investigations or proceedings. Thus, for example, if a single 
investigation discloses that a contractor or subcontractor violated the 
FLSA and the OSH Act, or committed multiple violations of any one of 
the Labor Laws, such violations would not be deemed ``repeated.''
3. Type of Violation
    The prior violation(s) must be reflected in one or more civil 
judgments, arbitral awards or decisions, or adjudicated or uncontested 
administrative merits determinations. To the extent that a prior civil 
judgment, arbitral award or decision, or administrative merits 
determination has been reversed or vacated in its entirety and is thus 
exempt from the reporting requirements, it cannot render a subsequent 
violation repeated.
    As the definition indicates, for an administrative merits 
determination to serve as a predicate violation that will render a 
subsequent violation repeated, it must have been adjudicated or be 
uncontested. An adjudicated administrative merits determination for 
purposes of the Order is an administrative merits determination that 
follows a proceeding in which the contractor or subcontractor had an 
opportunity to present evidence or arguments on its behalf, such as at 
a hearing or through written submissions, before the appropriate 
decision-making authority. An uncontested administrative merits 
determination is any non-reversed, non-vacated administrative merits 
determination except one in which a timely appeal of the determination 
has been filed or is pending before a court or other tribunal with 
jurisdiction to hear the appeal.
    Only the predicate administrative merits determination need be 
adjudicated or uncontested when determining whether a violation is 
repeated. Thus, for example, if a contractor or subcontractor receives 
an OSH Act citation but timely contests it before the OSHRC, and during 
the pendency of that proceeding is cited for a substantially similar 
OSH Act violation, the second citation would not, during the pendency 
of the OSHRC proceeding, be a repeated violation because the first 
citation is neither adjudicated nor uncontested. However, if OSHRC 
affirms the first citation, then the second citation could be a 
repeated violation because the first violation is now the product of an 
adjudication, even though the second violation is neither adjudicated 
nor uncontested. This framework is intended to ensure that repeated 
violations will only be assessed when the contractor or subcontractor 
has had the opportunity to present facts or arguments in its defense 
concerning the predicate violation.
4. Company-Wide Consideration
    Repeated violations may be considered on a company-wide basis. 
Thus, a prior violation by any establishment of a multi-establishment 
company can render subsequent violations repeated, provided the other 
relevant criteria are satisfied. As discussed below, the relative size 
of the contractor or subcontractor as compared to the number of 
violations may be a mitigating factor.
5. Substantially Similar Violations
    The prior violation(s) must be the same as or substantially similar 
to the violation designated as repeated. Whether violations fall under 
the same Labor Law is not determinative of whether the requirements 
underlying those violations are substantially similar. Rather, this 
inquiry turns on the nature of the violation and underlying obligation 
itself.
    For example, the FLSA contains provisions requiring that employers 
pay their covered employees the minimum wage and overtime for any hours 
worked over 40 in a workweek. Two or

[[Page 30588]]

more violations of these requirements would be deemed substantially 
similar because they all would involve failure to pay workers their 
proper wages.\22\ However, the FLSA also includes prohibitions against 
forms of child labor. Although two or more violations of child labor 
provisions would be substantially similar to each other,\23\ a child 
labor violation would not be substantially similar to a violation of 
the FLSA's wage provisions. The same would be true of a violation of 
the FLSA's provision requiring break time for nursing mothers--a 
violation of that provision would not be substantially similar to a 
violation of the wage or child labor provisions.
---------------------------------------------------------------------------

    \22\ This is consistent with the treatment of such violations as 
``repeated'' in the FLSA's regulations. See 29 CFR 578.3(b).
    \23\ 29 CFR 579.2 treats any two child labor violations as 
repeated.
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    Similarly, for NLRA violations, any two violations of section 
8(a)(3), which prohibits employers from discriminating against 
employees for engaging in or refusing to engage in union activities, 
would be substantially similar, but would not be substantially similar 
to violations of section 8(a)(2), which prohibits an employer from 
dominating or assisting a labor union through financial support or 
otherwise.
    For violations of the OSH Act, violations are repeated if they 
involve the same or a substantially similar hazard. A repeated 
violation may be found based on a prior violation of the same standard, 
a different standard, or the general duty clause, but the hazards 
themselves must be the same or substantially similar. Thus, for 
example, if an employer is cited in one instance for failing to provide 
fall protection on a residential construction site, and a second time 
for failing to provide fall protection at a commercial construction 
site, those violations would be repeated because they involve the same 
or substantially similar hazards, even though the cited standards are 
different.
    Under the FMLA, any two violations would generally be considered 
substantially similar to each other, with the exception of violations 
of the notice requirements. Thus, denial of leave, retaliation, 
discrimination, failure to reinstate an employee to the same or an 
equivalent position, and failure to maintain group health insurance 
would all be considered substantially similar, given that each 
violation involves either denying FMLA leave or penalizing an employee 
who takes leave. Any two instances of failure to provide notice--such 
as failure to provide general notice via a poster as well as failure to 
notify individual employees regarding their eligibility status, rights, 
and responsibilities--would be substantially similar to each other, but 
not to other violations of the FMLA.
    Under MSPA, multiple violations of the statute's requirements 
pertaining to wages, supplies, and working arrangements (including, for 
example, failure to pay wages when due, prohibitions against requiring 
workers to purchase goods or services solely from particular 
contractors, employers, or associations, and violating the terms of any 
working arrangements) would all be substantially similar for purposes 
of the Order. Likewise, violations of any of MSPA's requirements 
related to health and safety, including both housing and transportation 
health and safety, would all be substantially similar to each other. 
Violations of the statute's disclosure and recordkeeping requirements 
would also be substantially similar to each other. Finally, multiple 
violations related to MSPA's registration requirements would be 
substantially similar.
    For purposes of Title VII, Section 503 of the Rehabilitation Act of 
1973, the ADA, the ADEA, Section 6(d) of the FLSA (known as the Equal 
Pay Act, 29 U.S.C. 206(d)), Executive Order 11246 of September 24, 
1965, the Vietnam Era Veterans' Readjustment Assistance Act of 1972, 
and the Vietnam Era Veterans' Readjustment Assistance Act of 1974, 
violations are substantially similar if they involve the same or an 
overlapping protected status--e.g., race/color, national origin, sex, 
gender identity, sexual orientation, religion, disability, age, 
protected veterans' status--even if they do not involve the same 
employment practice--e.g., hiring, firing, harassment, compensation. 
This is true regardless of whether the violations arise under the same 
statute or different statutes, e.g., an ADA violation and a Section 503 
violation. For example, two violations of requirements not to 
discriminate on the basis of sex would be substantially similar even if 
they involved two different employment practices--e.g., hiring and 
promotions. Additionally, if, for example, the first violation involves 
discrimination on the basis of national origin and the second violation 
involves discrimination on the basis of national origin and race, the 
violations are substantially similar because they involve an 
overlapping protected status, namely, discrimination on the basis of 
national origin.
    Other violations arising under two or more different statutes may 
also be substantially similar. For example, several of the Labor Laws 
have provisions prohibiting retaliation against individuals who 
exercise protected rights. An employer who commits two or more 
violations involving retaliation will be found to have engaged in 
repeated violations. Similarly, failure to pay wages mandated by the 
FLSA, SCA, DBA, MSPA, or Executive Order 13658 would be substantially 
similar violations since all of these violations concern the failure to 
pay wages mandated by law. Likewise, violations of the OSH Act and 
violations of the health and safety provisions of MSPA could be 
substantially similar if they involve substantially similar hazards. 
Two or more failures to post notices required under the Labor Laws 
would also be deemed substantially similar, as would be two or more 
failures to keep records.
    The Department specifically seeks comments by interested parties 
regarding its proposed definition of ``substantially similar'' for 
determining if a violation is repeated under the Order.
6. Table of Examples
    For a table containing selected examples of repeated violations, 
see Appendix C.

D. Pervasive Violations

    The Order provides that, where no statutory standards exist, the 
standard for pervasive should take into account ``the number of 
violations of a requirement or the aggregate number of violations of 
requirements in relation to the size of the entity.'' See Sec.  
4(b)(i)(B)(4). No statutory standards for ``pervasive'' exist under the 
Labor Laws.
    Violations are ``pervasive'' if they reflect a basic disregard by 
the contractor or subcontractor for the Labor Laws as demonstrated by a 
pattern of serious or willful violations, continuing violations, or 
numerous violations. Violations must be multiple to be pervasive, 
although the number of violations necessarily depends on the size of 
the contractor or subcontractor, because larger employers, by virtue of 
their size, are more likely to have multiple violations. To be 
pervasive, the violations need not be of the same or similar 
requirements of the Labor Laws. Pervasive violations may exist where 
the contractor or subcontractor commits multiple violations of the same 
Labor Law, regardless of their similarity, or violations of more than 
one of the Labor Laws. This category is intended to identify those 
contractors and subcontractors whose numerous violations of Labor Laws 
indicate that they may view sanctions for their violations as merely 
part of the ``cost of doing business,'' an attitude that is

[[Page 30589]]

inconsistent with the level of responsibility required by the FAR. LCAs 
and contractors are strongly encouraged to consult with the Department 
when determining whether violations are pervasive.
    Pervasive violations differ from repeated violations in a number of 
ways. First, unlike repeated violations, pervasive violations need not 
be substantially similar, or even similar at all, as long as each 
violation involves one of the Labor Laws. Additionally, pervasive 
violations, unlike repeated violations, may arise in the same 
proceeding or investigation. For example, a small tools manufacturer 
with a single location may be cited multiple times for serious 
violations under the OSH Act--once for improper storage of hazardous 
materials, once for failure to provide employees with protective 
equipment, once for inadequate safeguards on heavy machinery, once for 
lack of fall protection, once for insufficient ventilation, once for 
unsafe noise exposure, and once for inadequate emergency exits. While 
these violations are sufficiently different that they would not 
constitute repeated violations, such a high number of workplace safety 
violations relative to the size of a small company with only a single 
location would likely demonstrate a basic disregard by the company for 
workers' safety and health, particularly if the company lacked a 
process for identifying and eliminating serious health hazards. As 
such, these violations would likely be considered pervasive.
    In addition, violations across multiple Labor Laws--especially when 
they are serious, willful, or repeated--are an indication of pervasive 
violations that warrant careful examination by the contracting officer, 
in consultation with the LCA. For example, a medium-sized company that 
provides janitorial services at federal facilities may be found to have 
violated the SCA for failure to pay workers their required wages, Title 
VII for discrimination in hiring on the basis of national origin, the 
National Labor Relations Act for demoting workers who are seeking to 
organize a union, and the Family and Medical Leave Act for denying 
workers unpaid leave for serious health conditions. While these 
violations are substantively different from each other, a medium-sized 
employer that violates so many Labor Laws is demonstrating a basic 
disregard for its legal obligations to its workers and is likely 
committing pervasive violations.
    Whereas a repeate d violation may be found anytime a contractor or 
subcontractor commits two or more substantially similar violations, 
there is no specific numeric threshold for pervasive violations. 
Rather, the number of violations necessary will depend on the size of 
the contractor or subcontractor, as well as the nature of the 
violations themselves.
    A series of repeated violations may, however, become pervasive, 
particularly if it demonstrates that a contractor or subcontractor, 
despite knowledge of its violations, fails to make efforts to change 
its practices and continues to violate the law. For example, if the 
Department's Wage and Hour Division issued several administrative 
merits determinations over the course of three years finding that a 
contractor or subcontractor illegally employed underage workers, and 
the contractor or subcontractor, despite receiving these notices, 
failed to make efforts to change its child labor practices and 
continued to violate the FLSA's child labor provisions, the series of 
violations would likely be considered pervasive.
    For smaller companies, a smaller number of violations may be 
sufficient for a finding of pervasiveness, while for large companies, 
pervasive violations will typically require either a greater number of 
violations or violations affecting a significant number or percentage 
of a company's workforce. For example, if the Department's Office of 
Federal Contract Compliance Programs finds that a large contractor that 
provides food services at federal agencies nationwide used pre-
employment screening tests for most jobs at the company's facilities 
that resulted in Hispanic workers being hired at a significantly lower 
rate than non-Hispanic workers over a 5-year period, and in addition, 
the Wage and Hour Division finds that the company failed to comply with 
the SCA's requirements to pay its workers prevailing wages at many of 
its locations, such violations would likely be pervasive, 
notwithstanding the large size of the contractor, because the 
contractor's numerous serious violations spanned most of its locations 
and affected many of its workers. Conversely, had the company only 
engaged in these prohibited practices at, for example, only a few of 
its locations, such violations might not necessarily be considered 
pervasive.
    Similarly, if a large company that provides laundry services to 
military bases in several states is cited 50 times for serious OSHA 
violations affecting most of its locations over the span of one year, 
and a number of the citations are for failure to abate dangerous 
conditions that OSHA had cited previously, and as a result the company 
is placed on OSHA's Severe Violator Enforcement Program, such 
violations would likely be pervasive because the sheer number of 
violations over such a short period of time is evidence that the 
company is ignoring persistent threats to workers' safety, fails to 
treat safety as a serious problem, and is acting in disregard of its 
legal obligations. Conversely, if the violations affected only a few of 
the company's facilities, or if the company had acted quickly to abate 
any violations, the violations might not necessarily be considered 
pervasive.
    The Department specifically seeks comments by interested parties 
regarding how best to assess the number of a contractor's or 
subcontractor's violations in light of its size.
    An additional relevant factor in determining whether violations are 
pervasive is the involvement of higher-level management officials. When 
Labor Laws are violated with either the explicit or implicit approval 
of higher-level management, such approval signals that future 
violations will be tolerated or condoned, and may dissuade workers from 
reporting violations or raising complaints. Thus, to the extent that 
higher-level management officials were involved in violations 
themselves (such as discrimination in hiring by an executive, or a 
decision by an executive to cut back on required safety procedures that 
led to violations of the OSH Act) or knew of violations and failed to 
take appropriate actions (such as ignoring reports or complaints by 
workers), the violations are more likely to be deemed pervasive. For 
example, if the vice president of a construction company directs a 
foreman not to hire Native American workers, and as a result the 
company is later found to have committed numerous Title VII violations 
against job applicants, such violations are likely to be pervasive. 
Likewise, if the chief safety officer at a chemical plant fields 
complaints from workers about several unsafe working conditions but 
then fails to take action to remedy the unsafe conditions, such 
violations are also likely to be pervasive because the dangerous 
working conditions were willfully sanctioned by a high-level company 
official and were evident throughout the chemical plant. Such behavior 
indicates that the company views penalties for such violations as ``the 
cost of doing business,'' rather than indicative of significant threats 
to its workers' health and safety that must be addressed. By the same 
token, managers are expected to play an active role in ensuring Labor

[[Page 30590]]

Law compliance in their workforce rather than abdicating their 
responsibility to do so. If managers actively avoid learning about 
labor law violations (such as by failing to exercise appropriate 
oversight or ``passing the buck'' to others), this may also indicate 
that the violations are pervasive.
    For a table containing selected examples of pervasive violations, 
see Appendix D.

E. Assessing Violations and Considering Mitigating Factors

    When assessing violations of the Labor Laws by a contractor or 
subcontractor, all the facts and circumstances of the violations, as 
well as any mitigating factors, should be considered.
    The following types of violations raise particular concerns 
regarding the contractor's or subcontractor's compliance with the Labor 
Laws:
     Pervasive violations. Pervasive violations, by definition, 
demonstrate a basic disregard for the Labor Laws. Such disregard of 
legal obligations creates a heightened danger that the contractor or 
subcontractor may, in turn, disregard its contractual obligations as 
well. Additionally, such contractors and subcontractors are more likely 
to violate the Labor Laws in the future, and those violations--and any 
enforcement proceedings or litigation that may ensue--may imperil their 
ability to meet their obligations under a contract. Finally, that a 
contractor or subcontractor shows such disregard for the Labor Laws is 
highly probative of whether the contractor or subcontractor lacks 
integrity and business ethics.
     Violations that meet two or more of the categories 
discussed above (serious, repeated, and willful). A violation that 
falls into two or more of the categories is also, as a general matter, 
more likely to be probative of the contractor's or subcontractor's lack 
of integrity and business ethics than a violation that falls into only 
one of those categories.
     Violations that are reflected in final orders. To the 
extent that the judgment, determination, or order finding a Labor Law 
violation is final (because appeals and opportunities for further 
review have been exhausted or were not pursued), the violation should 
be given greater weight. Likewise, where a violation has not resulted 
in a final judgment, determination, or order, it should be given lesser 
weight.
     Violations of particular gravity. In the Department's 
view, certain Labor Laws violations that are serious under the Order 
should be given greater weight, including violations related to the 
death of an employee; violations involving a termination of employment 
for exercising a right protected under the Labor Laws; violations that 
detrimentally impact the working conditions of all or nearly all of the 
workforce at a worksite; and violations where the amount of back wages, 
penalties, and other damages awarded is greater than $100,000.
    Various factors may mitigate the existence of a Labor Law 
violation. The Department respects the fact that most employers 
endeavor to comply with the Labor Laws. The Department values highly 
contractors' good-faith efforts to comply, and it encourages them to 
report these efforts, including workplace policies that foster 
compliance.
    In most cases, the most important mitigating factors will be the 
extent to which the contractor or subcontractor has remediated the 
violation and taken steps to prevent its recurrence. Other mitigating 
factors include where the contractor or subcontractor has only had a 
single violation; where the number of violations is low relative to the 
size of the contractor or subcontractor; where the contractor or 
subcontractor has implemented a safety and health management program, a 
collectively-bargained grievance procedure, or other compliance 
program; where there was a recent legal or regulatory change; where the 
findings of the enforcement agency, court, arbitrator, or arbitral 
panel support a conclusion that contractor or subcontractor acted in 
good faith and had reasonable grounds for believing that it was not 
violating the law; and where the contractor or subcontractor has 
maintained a long period of compliance following any violations. 
Contractors and subcontractors should provide any information that may 
mitigate a Labor Law violation.
1. Remediation of Violation, Including Labor Compliance Agreements
    As noted above, the extent to which a contractor or subcontractor 
has remediated a Labor Law violation will typically be the most 
important factor that can mitigate the existence of a violation. 
Remediation is an indication that a contractor or subcontractor has 
assumed responsibility for a violation and has taken steps to bring 
itself into compliance with the law going forward. Conversely, failure 
to remediate a violation may demonstrate disregard for legal 
obligations and workers, which in turn would have bearing on whether 
the contractor or subcontractor lacks integrity or business ethics. In 
most cases, for remediation to be considered mitigating, it should 
involve two components. First, the remediation should correct the 
violation itself, including by making any affected workers whole. For 
example, this could involve abating a dangerous hazard, paying workers 
their back wages owed, or reinstating a wrongfully discharged employee. 
Second, the remediation should demonstrate efforts by the contractor or 
subcontractor to prevent similar violations in the future. For example, 
if a contractor or subcontractor improperly misclassified workers as 
exempt from the FLSA and pays any back wages due to the workers without 
reviewing its classifications of the workers going forward, it will 
likely commit similar violations in the future. Particular 
consideration will be given where the contractor or subcontractor has 
implemented remediation on an enterprise-wide level or has entered into 
an enhanced settlement agreement with the relevant enforcement agency 
or agencies that goes beyond what is minimally required under the law 
to address appropriate remedial or compliance measures.
    Similarly, when a contractor or subcontractor enters into a labor 
compliance agreement (defined above) with the enforcement agency, that 
agreement is an important mitigating factor. Entering into a labor 
compliance agreement indicates that the contractor or subcontractor 
recognizes the importance that the Federal Government places on 
compliance with the Labor Laws.
2. Only One Violation
    The Order provides that, in most cases, a single violation of a 
Labor Law may not necessarily give rise to a determination of lack of 
responsibility, depending on the nature of the violation. See Sec.  
4(a)(i). However, a contracting agency is not precluded from making a 
determination of non-responsibility based on a single violation in the 
rare circumstances where merited.
3. Low Number of Violations Relative to Size
    Larger employers, by virtue of their size, are more likely to have 
multiple violations than smaller ones. When assessing contractors or 
subcontractors with multiple violations, the size of the contractor or 
subcontractor will be considered.
4. Safety and Health Programs or Grievance Procedures
    Implementation of a safety and health management program such as 
OSHA's 1989 Safety and Health Program Management guidelines or any 
updates

[[Page 30591]]

to those guidelines,\24\ grievance procedures (including collectively-
bargained ones), monitoring arrangements negotiated as part of an 
enhanced settlement agreement, or other compliance programs foster a 
corporate culture in which workers are encouraged to raise legitimate 
concerns about Labor Laws violations without the fear of repercussions. 
Such programs and procedures may prompt workers to report violations 
that would, under other circumstances, go unreported. Therefore, the 
implementation of such programs or procedures will be considered a 
mitigating factor, particularly as to violations that might otherwise 
be deemed repeated or pervasive.
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    \24\ In addition, there are two industry consensus standards 
that, if implemented, should be considered as mitigating factors for 
violations involving workplace safety and health. The American 
National Standards Institute (ANSI) and American Industrial Hygiene 
Association (AIHA) have published a voluntary consensus standard, 
ANSI/AIHA Z10--2005 Occupational Safety and Health Management 
Systems (ANSI/AIHA, 2005), and the Occupational Health and Safety 
Assessment Series (OHSAS) Project Group has produced a similar 
document, OHSAS 18001--2007 Occupational Health and Safety 
Management Systems (OHSAS Project Group, 2007). These consensus-
based standards have been widely accepted in the world of commerce 
and adopted by many businesses on a voluntary basis. They all have a 
similar set of elements (management leadership, worker 
participation, hazard identification and assessment, hazard 
prevention and control, education and training, and program 
evaluation and improvement) that focus on finding all hazards and 
developing a workplace plan for prevention and control of those 
hazards.
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5. Recent Legal or Regulatory Change
    To the extent that the Labor Laws violations can be traced to a 
recent legal or regulatory change, that may be a mitigating factor. The 
change must be recent, and the violations must not have been violations 
but for the change.
6. Good Faith and Reasonable Grounds
    It may be a mitigating factor if the contractor or subcontractor 
shows that it made efforts to ascertain its legal obligations and to 
follow the law, and that its actions under the circumstances were 
objectively reasonable. For example, if a contractor or subcontractor 
acts in reasonable reliance on advice from a responsible official from 
the relevant enforcement agency, or an administrative or authoritative 
judicial ruling, such reliance will typically demonstrate good faith 
and reasonable grounds. This factor may also apply where the 
contractor's or subcontractor's legal obligations are unclear, such as 
when a new statute, rule, or standard is first implemented.
7. Significant Period of Compliance Following Violations
    If, following one or more violations within the three-year 
reporting period, the contractor or subcontractor maintains a steady 
period of compliance with the Labor Laws, such compliance may mitigate 
the existence of prior violations (e.g., violations were reported from 
2\1/2\ years ago and there have been none since).

IV. Paycheck Transparency Provisions

    Transparency in the relationships between employers and their 
workers is critical to workers' understanding of their legal rights and 
to the resolution of workplace disputes. When workers lack information 
about how their pay is calculated and their status as employees or 
independent contractors, workers are less aware of their rights and 
employers are less likely to comply with labor laws. Providing workers 
with information about how their pay is calculated each pay period will 
enable workers to raise any concerns about pay more quickly, and will 
encourage proactive efforts by employers to resolve such concerns. 
Similarly, providing workers who are classified as independent 
contractors with notice of their status will enable them to better 
understand their legal rights, evaluate their status as independent 
contractors, and raise any concerns during the course of the working 
relationship as opposed to after it ends (which will increase the 
likelihood that the employer and the worker will be able to resolve any 
concerns more quickly and effectively). Thus, the Order's paycheck 
transparency provisions will increase transparency in compensation 
information and improve working relationships.

A. Wage Statement

    The Order requires contracting agencies to ensure that, for covered 
procurement contracts, provisions in solicitations and clauses in 
contracts require contractors to provide all workers under the contract 
for whom they must maintain wage records under the FLSA, the DBA, the 
SCA, or equivalent State laws \25\ with a ``document'' each pay period 
with ``information concerning that individual's hours worked, overtime 
hours, pay, and any additions made to or deductions made from pay.'' 
See Sec.  5(a). Contracting agencies shall also ensure that contractors 
``incorporate this same requirement'' into covered subcontracts. Id.
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    \25\ In a second proposed guidance to be published later in the 
Federal Register, the Department will identify those State laws that 
are equivalent to the FLSA, the DBA, and the SCA.
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    The Order requires that the wage statement be provided to ``all 
individuals performing work'' for whom the contractor or subcontractor 
is required to maintain wage records under the FLSA, the DBA, the SCA, 
or equivalent State laws. This means that a wage statement must be 
provided to every worker subject to the FLSA, the DBA, the SCA, or 
equivalent State laws regardless of the contractor's or subcontractor's 
classification of the worker as an employee or independent contractor.
    The Order states that the wage statement provided to workers each 
pay period must be a ``document.'' If the contractor or subcontractor 
regularly provides documents to its workers by electronic means, the 
wage statement may be provided electronically if the worker can access 
it through a computer, device, system, or network provided or made 
available by the contractor or subcontractor.
    The Order further provides that the wage statement must be issued 
every pay period and contain the total number of hours worked in the 
pay period and the number of those hours that were overtime hours. The 
FAR Council's proposed regulations would require, if the wage statement 
is not provided weekly and is instead provided bi-weekly or semi-
monthly (because the pay period is bi-weekly or semi-monthly), that the 
hours worked and overtime hours contained in the wage statement be 
broken down to correspond to the period (which will almost always be 
weekly) for which overtime is calculated and paid. If the hours worked 
and overtime hours are aggregated in the wage statement for the entire 
pay period as opposed to being broken down by week, the worker may not 
be able to understand and evaluate how the overtime hours were 
calculated. For example, if the pay period is bi-weekly and the worker 
is entitled to overtime pay for hours worked over 40 in a week, then 
the wage statement must provide the hours worked and any overtime hours 
for the first week and the hours worked and any overtime hours for the 
second week.
    The Order states that the wage statement must also contain the 
worker's pay--a reference to the gross pay due the worker for the pay 
period--as well as all additions to and deductions from the gross pay. 
Additions to pay may include bonuses, awards, and shift differentials. 
Deductions from pay include deductions required by law (such as 
withholding for taxes), voluntary

[[Page 30592]]

deductions by the worker (such as contributions to health insurance 
premiums or retirement accounts), and all other deductions or 
reductions made from gross pay regardless of the reason. Providing a 
worker with gross pay and all additions to and deductions from gross 
pay will necessarily allow the worker to understand the net pay 
received and how it was calculated.
    According to the Order, the wage statement provided to workers who 
have no entitlement to overtime compensation under the FLSA ``need not 
include a record of hours worked if the contractor informs the 
individuals of their exempt status.'' See Sec.  5(a). Because such 
workers are exempt from the FLSA's overtime compensation requirements, 
there will be no overtime hours to include on the wage statement.\26\ 
To sufficiently inform a worker of exempt status so that the wage 
statement need not include hours worked, the contractor or 
subcontractor must provide written notice to the worker stating that 
the worker is exempt from the FLSA's overtime compensation requirements 
(oral notice is not sufficient).\27\ If the contractor or subcontractor 
regularly provides documents to its workers by electronic means, the 
document may be provided electronically if the worker can access it 
through a computer, device, system, or network provided or made 
available by the contractor or subcontractor.
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    \26\ Workers may be entitled to overtime under the FLSA, but 
under terms other than time-and-a-half for hours worked over 40 in a 
week. See, e.g., 29 U.S.C. 207(j), (k). Such workers are not exempt 
from the FLSA's overtime requirements, and wage statements provided 
to them under the Order must contain a record of their hours worked.
    \27\ As specified in the FAR Council's proposed regulations, if 
a significant portion of the contractor's or subcontractor's 
workforce is not fluent in English, the document provided notifying 
the worker of exempt status must also be in the language(s) other 
than English in which the significant portion of the workforce is 
fluent.
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    The wage statement requirements ``shall be deemed to be fulfilled'' 
where a contractor or subcontractor ``is complying with State or local 
requirements that the Secretary of Labor has determined are 
substantially similar to those required'' by the Order. See Sec.  5(a). 
This proposed guidance, when final, will therefore include a list of 
the State and local jurisdictions that the Secretary determines to have 
wage statement requirements that are ``substantially similar'' to the 
Order's wage statement requirement (``Substantially Similar Wage 
Payment States''). Providing a worker in one of these States with a 
wage statement that complies with the requirements of that State would 
satisfy the Order's wage statement requirement.
    As described above, substantially similar does not mean ``exactly 
the same.'' Washam, 312 F.3d at 930. Rather, two things may be 
substantially similar where they share ``essential elements in 
common.'' Alameda Mall, 649 F.3d at 392. The Secretary is considering 
two options for determining whether State or local requirements are 
substantially similar.
    One option is to find a State or local requirement to be 
substantially similar where it requires wage statements to include the 
essential elements of overtime hours or overtime earnings, total hours, 
gross pay, and any additions or deductions. When overtime hours or 
earnings are disclosed in a wage statement, workers can identify from 
the face of the document whether they have been paid for overtime 
hours. The benefit of this option is that workers would be more likely 
to become aware of a problem with their paycheck at an earlier date, 
increasing the likelihood that the problem will be resolved 
efficiently. Applying this method, the current list of Substantially 
Similar Wage Payment States would be Alaska, California, Connecticut, 
the District of Columbia, Hawaii, New York, and Oregon.\28\
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    \28\ Oregon does not expressly require disclosure of overtime 
hours. However, Or. Admin. Rule 839-020-0012 requires that ``[i]f 
multiple rates of pay are paid, the total number of hours worked at 
each rate of pay'' must be included on the wage statement, and 
overtime pay is described as a ``rate of pay'' by Or. Admin. R. 839-
020-0030.
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    A second option would allow wage statements to omit overtime hours 
or earnings, so long as they instead include an element not listed in 
the Order--the ``rate of pay''--in addition to the essential elements 
of total hours, gross pay, and any additions or deductions. The benefit 
of this option is that it would allow more flexibility while still 
requiring wage statements to provide enough information for a worker to 
calculate whether he or she has been paid in full. By working backwards 
from the information provided--dividing the gross earnings by the 
number of hours worked and comparing the result to the rate of pay--the 
worker should be able to determine whether the paycheck includes 
payment for overtime hours. The drawback of this option is that a 
failure to pay overtime would not be immediately identifiable from the 
face of the document as it would be in the first option. Instead, 
workers would need to complete a calculation in order to catch an 
error. Thus, if the Department were to choose this second option, 
workers in some of the Substantially Similar Wage Payment States would 
be at greater risk of missing a problem with a paycheck than if the 
Department were to choose the first option. Applying this second 
method, the current list of Substantially Similar Wage Payment States 
would be Alaska, California, Connecticut, the District of Columbia, 
Hawaii, Massachusetts, Minnesota, New York, Oregon, Pennsylvania, 
Texas, Vermont, Washington, and Wisconsin.\29\ The Department 
specifically seeks comments regarding the two options above. It is also 
open to considering other combinations of essential elements or other 
ways to determine whether State or local requirements are substantially 
similar.
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    \29\ Neither of these two options would satisfy the Order's 
requirement that an employer inform workers of their status as 
exempt from overtime in order to provide a wage statement to exempt 
employees that does not include a record of hours worked.
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    After this proposed guidance is finalized, the Department will 
maintain on its Web site a list of the Substantially Similar Wage 
Payment States. The Secretary recognizes that States may change their 
wage statement laws, such that some States whose wage statement laws 
are initially designated as substantially similar may later weaken 
them, and other States whose laws are not initially designated as 
substantially similar may later strengthen them. When the Secretary 
determines that a State must be added to or removed from the list of 
Substantially Similar Wage Payment States, notice of such changes will 
be published on the Web site.\30\ The Department may also issue All 
Agency Memoranda or similar direction to contracting agencies and the 
public to communicate updates to the list of the Substantially Similar 
Wage Payment States.
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    \30\ The same is true for local wage statement ordinances. The 
Department will list on the Web site any newly enacted local 
ordinances that are substantially similar.
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B. Independent Contractor Notice

    The Order requires contractors and subcontractors, for workers 
under covered contracts for whom they are required to maintain wage 
records under the FLSA, the DBA, the SCA, or equivalent State laws, to 
provide those workers whom they treat as independent contractors with 
``a document informing the individual of this [independent contractor] 
status.'' See Sec.  5(a). For covered contracts, provisions in 
solicitations and clauses in contracts should be included requiring 
such notice to workers treated as independent contractors.

[[Page 30593]]

    The notice informing the worker of status as an independent 
contractor must be provided to each individual worker treated as an 
independent contractor before the worker performs any work under the 
contract. The notice must be a ``document'' (oral notice of independent 
contractor status is not sufficient).\31\ The document must be separate 
from any contract entered into between the contractor or subcontractor 
and the independent contractor. If the contractor or subcontractor 
regularly provides documents to its workers by electronic means, the 
document may be provided electronically if the worker can access it 
through a computer, device, system, or network provided or made 
available by the contractor or subcontractor.
---------------------------------------------------------------------------

    \31\ As specified in the FAR Council's proposed regulations, if 
a significant portion of the contractor's or subcontractor's 
workforce is not fluent in English, the document notifying the 
worker of independent contractor status must also be in the 
language(s) other than English in which the significant portion of 
the workforce is fluent.
---------------------------------------------------------------------------

    As of the effective date of the Order's independent contractor 
notice requirement, contractors and subcontractors must provide the 
required notice to each independent contractor then engaged to perform 
work under a covered contract. Thereafter, contractors and 
subcontractors must provide the notice to an independent contractor 
each time that he or she is engaged to perform work under a covered 
contract (and certainly before he or she performs any work under the 
contract). The notice provided is specific to a particular covered 
contract regardless of whether the worker performs the same type of 
work on another covered contract. If a worker who has performed work 
under a contract and who received notice that his or her status was as 
an independent contractor is engaged to perform work as an independent 
contractor under a different covered contract, then the contractor or 
subcontractor shall provide the worker with a new notice informing the 
worker of his or her status as an independent contractor for work 
performed under the different contract.
    The provision of the notice to a worker informing the worker that 
he or she is an independent contractor does not mean that the worker is 
correctly classified as an independent contractor under applicable 
laws. The Department will not consider the notice when determining 
whether a worker is an independent contractor or employee. The 
determination of whether a worker is an independent contractor under a 
particular law remains governed by that law's definition of 
``employee'' and its standards for determining for its purposes which 
workers are independent contractors and not employees.

V. Invitation To Comment

    As discussed above, the Department, in its discretion, solicits 
comments on this proposed initial guidance document in the manner and 
before the date specified herein. After the comment period has ended, 
the Department will publish final guidance in the Federal Register.
    This solicitation of public feedback is intended to improve the 
internal management of the Executive Branch and is not intended to, and 
does not, create any right or benefit, substantive or procedural, 
enforceable at law or in equity, against the United States, its 
agencies or other entities, its officers or employees, or any other 
person.

VI. Next Steps

    This proposed guidance is the first step in the phased 
implementation of the Order.
    The Order requires the FAR Council to propose to amend the Federal 
Acquisition Regulation to incorporate the Order's requirements into the 
process by which contracting officers make pre-award responsibility 
determinations, among other necessary and appropriate proposed changes. 
See Sec.  4(a). This proposed guidance, when finalized, will assist the 
FAR Council in promulgating regulations that will be binding for 
covered contracts. The Order further requires the GSA Administrator, in 
consultation with other relevant agencies, to develop a single Web site 
for Federal contractors to use for all Federal contract reporting 
requirements related to the Order to the extent practicable. See Sec.  
4(d). The final FAR rule will include the reporting Web site address 
for Federal contractors.
    As indicated in this proposed guidance, the Department will publish 
in the Federal Register at a later date a second proposed guidance 
under this Order.

    Signed this 19th day of May 2015.
Mary Beth Maxwell,
Principal Deputy Assistant Secretary, Office of the Assistant Secretary 
for Policy, U.S. Department of Labor.

------------------------------------------------------------------------
 
-------------------------------------------------------------------------
               Appendix A: Examples of Serious Violations
------------------------------------------------------------------------
All violations of federal labor laws are serious, but in the context of
 Executive Order 13673, Fair Pay and Safe Workplaces, the Department of
 Labor has identified certain violations as ``serious,'' ``willful,''
 ``repeated,'' and ``pervasive.'' This subset of all labor violations
 represents the violations that are most concerning and bear on the
 assessment of a contractor or subcontractor's integrity and business
 ethics. The Department has purposely excluded from consideration
 violations that could be characterized as inadvertent or minimally
 impactful. Ultimately, each contractor's disclosed violations of Labor
 Laws will be assessed on a case-by-case basis in light of the totality
 of the circumstances, including the severity of the violation or
 violations, the size of the contractor, and any mitigating factors. In
 most cases, even for violations subject to disclosure and consideration
 under the Order, a single violation of one of the Labor Laws will not
 give rise to a determination of lack of responsibility.
The chart below includes a non-exhaustive list of examples of Labor Laws
 violations that may be found to be ``serious'' under the Department's
 proposed guidance for Executive Order 13673. These are examples only:
 They are not minimum requirements, nor are they exclusive of other
 violations under each Labor Law that may be serious. The chart does not
 include violations of ``equivalent state laws,'' which are also covered
 by the Order, but (with the exception of OSHA State Plans, which are
 addressed in the current proposed guidance) will be addressed in future
 guidance. Where the chart indicates that a violation is serious for
 more than one reason, this means that either of the reasons listed is
 an independent ground for finding that the violation is serious, as
 defined in the guidance.
------------------------------------------------------------------------
             Summary of Definition of ``Serious Violation''
------------------------------------------------------------------------
The full definition of a ``serious violation'' is set forth in section
 III.A of the Department of Labor's proposed guidance. When evaluating
 violations, Labor Compliance Advisors and contracting officers, and
 contractors when evaluating subcontractors, should refer to the full
 definition in the guidance.
In summary, the guidance provides that a violation of one of the Labor
 Laws is serious if it involves at least one of the following:
     An OSH Act or OSHA-approved State Plan citation was
     designated as serious, there was a notice of failure to abate an
     OSH Act violation, or an imminent danger notice was issued under
     the OSH Act or an OSHA-approved State Plan;
     The affected workers comprised 25% or more of the workforce
     at the worksite;

[[Page 30594]]

 
     Fines and penalties of at least $5,000 were assessed or
     back wages of at least $10,000 were due or injunctive relief was
     imposed by an enforcement agency or a court;
     The contractor's or subcontractor's conduct violated MSPA
     or the child labor provisions of the FLSA and caused or contributed
     to the death or serious injury of one or more workers;
     Employment of a minor who was too young to be legally
     employed or in violation of a Hazardous Occupations Order;
     The contractor or subcontractor engaged in an adverse
     employment action (including discharge, refusal to hire,
     suspension, demotion, or threat) or is responsible for unlawful
     harassment against one or more workers for exercising any right
     protected by any of the Labor Laws;
     The findings of the relevant enforcement agency, court,
     arbitrator or arbitral panel support a conclusion that the
     contractor or subcontractor engaged in a pattern or practice of
     discrimination or systemic discrimination;
     The findings of the relevant enforcement agency, court,
     arbitrator or arbitral panel support a conclusion that the
     contractor or subcontractor interfered with the enforcement
     agency's investigation; or
     The contractor or subcontractor breached the material terms
     of any agreement or settlement entered into with an enforcement
     agency, or violated any court order, any administrative order by an
     enforcement agency, or any arbitral award.
When evaluating Labor Laws violations, Labor Compliance Advisors and
 contracting officers, and contractors when evaluating subcontractors,
 will review all of the above criteria to determine whether a violation
 is serious. The examples below are intended to illustrate how these
 criteria may arise in different contexts, but a violation will be
 serious if it meets any of the above criteria.
------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                            Labor law                                       Example of serious violation
----------------------------------------------------------------------------------------------------------------
Fair Labor Standards Act (FLSA)..................................  The Wage and Hour Division of DOL (WHD) found
                                                                    that a contractor violated the minimum wage
                                                                    and overtime provisions of the FLSA. It
                                                                    issued the contractor a Form WH-56 ``Summary
                                                                    of Unpaid Wages,'' and also assessed civil
                                                                    monetary penalties. The back wages due
                                                                    totaled $75,000, and the civil monetary
                                                                    penalties assessed totaled $6,000.
                                                                   This is a serious violation for two reasons.
                                                                    First, a violation of any of the Labor Laws
                                                                    is serious if fines and penalties of at
                                                                    least $5,000 were assessed. Second, a
                                                                    violation of any of the Labor Laws is
                                                                    serious if back wages of at least $10,000
                                                                    were due. Conversely, if the back wages due
                                                                    totaled less than $10,000 and the civil
                                                                    monetary penalties assessed had totaled less
                                                                    than $5,000, the violation would not be a
                                                                    serious violation, assuming that none of the
                                                                    other criteria for seriousness listed above
                                                                    are met.
                                                                   WHD finds that a meat processor employed 10
                                                                    workers under the age of 18 to operate power-
                                                                    driven meat processing machines, such as
                                                                    slicers, saws, and choppers. One of these
                                                                    workers died in an accident involving one of
                                                                    the machines.
                                                                   This is a serious violation for two reasons.
                                                                    First, a violation of FLSA's child labor
                                                                    provisions is serious if it involves the
                                                                    employment of a minor too young to be
                                                                    legally employed or in violation of a
                                                                    Hazardous Occupations Order. The employment
                                                                    of minors in the above-described occupation
                                                                    is prohibited under Hazardous Occupation
                                                                    Order No. 10. Second, a violation of FLSA's
                                                                    child labor provisions is serious if it
                                                                    causes or contributes to the death or
                                                                    serious injury of one or more workers.
                                                                    Conversely, the employment of, for example,
                                                                    a 14- or 15-year-old minor in excess of
                                                                    three hours outside school hours on a school
                                                                    day in a non-hazardous, non-agricultural job
                                                                    in which the child is otherwise permitted to
                                                                    work would not be a serious violation,
                                                                    assuming that none of the other criteria for
                                                                    seriousness listed above are met.
Occupational Safety and Health (OSH) Act.........................  OSHA issued a citation for failing to protect
                                                                    against fall hazards on a construction
                                                                    worksite. The citation was designated as
                                                                    ``serious.''
                                                                   This is a serious violation because all
                                                                    citations designated as serious by OSHA (or
                                                                    an OSHA State Plan) are serious under the
                                                                    Order. Conversely, if OSHA (or the
                                                                    equivalent state agency under an OSHA State
                                                                    Plan) had designated the violation as
                                                                    ``other-than-serious,'' the violation would
                                                                    not be a serious violation under the Order.
Migrant and Seasonal Agricultural Worker Protection Act (MSPA)...  WHD issued a letter indicating that an
                                                                    investigation had disclosed a violation of
                                                                    MSPA that contributed to the serious injury
                                                                    of a worker.
                                                                   This is a serious violation because a
                                                                    violation of MSPA is serious if it caused or
                                                                    contributed to the death or serious injury
                                                                    of one or more workers. Conversely, if WHD
                                                                    issued a letter indicated that the
                                                                    investigation had disclosed that 3 of the 50
                                                                    MSPA workers at a job site did not receive
                                                                    their wages when due, and those wages
                                                                    totaled $1,000 and the civil monetary
                                                                    penalties totaled $500, the violation would
                                                                    not be serious, assuming that none of the
                                                                    other criteria for seriousness listed above
                                                                    are met.
National Labor Relations Act (NLRA)..............................  The General Counsel of the National Labor
                                                                    Relations Board (NLRB) issued a complaint
                                                                    alleging that the contractor fired the
                                                                    employee who was the lead union adherent
                                                                    during the union's organizational campaign.
                                                                   This is a serious violation because a
                                                                    violation of any of the Labor Laws is
                                                                    serious where the contractor or
                                                                    subcontractor engaged in an adverse
                                                                    employment action (including discharge,
                                                                    refusal to hire, suspension, demotion, or
                                                                    threat) or is responsible for unlawful
                                                                    harassment against one or more workers for
                                                                    exercising any right protected by any of the
                                                                    Labor Laws. Conversely, if the NLRB's
                                                                    complaint had instead alleged that the
                                                                    contractor had, for example, denied a single
                                                                    employee a collectively-bargained benefit
                                                                    (for example, a vacation to which the
                                                                    employee was entitled based on her
                                                                    seniority), the violation would not be
                                                                    serious, assuming that none of the other
                                                                    criteria for seriousness listed above are
                                                                    met.
Davis-Bacon Act (DBA)............................................  WHD issued a letter indicating that a
                                                                    contractor violated the DBA, and that back
                                                                    wages were due in the amount of $12,000. The
                                                                    contractor had previously been investigated
                                                                    by WHD and, to resolve that investigation,
                                                                    had entered into a written agreement to pay
                                                                    the affected workers prevailing wages as
                                                                    required by the DBA.

[[Page 30595]]

 
                                                                   This is a serious violation for two reasons.
                                                                    First, a violation of any of the Labor Laws
                                                                    is serious if back wages of at least $10,000
                                                                    were due. Second, a violation of any of the
                                                                    Labor Laws is serious if the contractor or
                                                                    subcontractor breached the material terms of
                                                                    any agreement or settlement entered into
                                                                    with an enforcement agency. Conversely, if
                                                                    WHD issued a letter indicating that a
                                                                    contractor owed several workers a total of
                                                                    $8,000, and the contractor's conduct did not
                                                                    constitute a breach of a prior agreement or
                                                                    meet any of the other criteria for
                                                                    seriousness listed above, the violation
                                                                    would not be serious.
Service Contract Act (SCA).......................................  An ALJ issued an order finding a food service
                                                                    company violated the SCA by failing to
                                                                    provide the required amount of health and
                                                                    welfare benefits to 35 of its 100 workers at
                                                                    a particular location. The order included a
                                                                    finding that the contractor interfered with
                                                                    WHD's investigation by threatening to fire
                                                                    workers who spoke to WHD investigators.
                                                                   This is a serious violation for two reasons.
                                                                    First, a violation of any any of the Labor
                                                                    Laws is serious if the affected workers
                                                                    comprise 25% or more of the workforce at the
                                                                    worksite. Second, a violation of any of the
                                                                    Labor Laws is serious where the findings of
                                                                    the relevant enforcement agency, court,
                                                                    arbitrator or arbitral panel support a
                                                                    conclusion that the contractor or
                                                                    subcontractor interfered with the
                                                                    enforcement agency's investigation.
                                                                    Conversely, if the ALJ's order had indicated
                                                                    that the contractor owed back wages to only
                                                                    10 of the 100 SCA-covered workers at the
                                                                    location, and did not contain a finding of
                                                                    interference, the violation would not be
                                                                    serious, assuming that none of the other
                                                                    criteria for seriousness listed above are
                                                                    met.
Executive Order 11246 (Equal Employment Opportunity).............  OFCCP issued a show cause notice indicating
                                                                    that an investigation had disclosed that a
                                                                    contractor had discriminated against African-
                                                                    American and Hispanic job seekers in
                                                                    violation of EO 11246. OFCCP had determined
                                                                    that back wages were due to job applicants
                                                                    in an amount upwards of $50,000. The
                                                                    contractor subsequently settled the case
                                                                    with OFCCP for a total of $30,000 in back
                                                                    wages.
                                                                   This is a serious violation for two reasons.
                                                                    First, a violation of any of the Labor Laws
                                                                    is serious if findings of the relevant
                                                                    enforcement agency, court, arbitrator or
                                                                    arbitral panel support a conclusion that the
                                                                    contractor or subcontractor engaged in a
                                                                    pattern or practice of discrimination or
                                                                    systemic discrimination. Second, a violation
                                                                    of any of the Labor Laws is serious if back
                                                                    wages of at least $10,000 were due.
                                                                    Conversely, if OFCCP issued a show cause
                                                                    notice indicating that the investigation
                                                                    disclosed that the contractor had
                                                                    discriminated against only a few such job
                                                                    seekers, and the amount of back wages due
                                                                    was only $9,000, the violation would not be
                                                                    serious, assuming that none of the other
                                                                    criteria for seriousness listed above are
                                                                    met.
Section 503 of the Rehabilitation Act............................  The ARB affirmed an ALJ order directing the
                                                                    contractor to change a practice of medical
                                                                    screenings that discriminated against job
                                                                    applicants with disabilities--and that were
                                                                    not job-related or consistent with business
                                                                    necessity--in violation of Section 503.
                                                                   This is a serious violation for two reasons.
                                                                    First, a violation of any of the Labor Laws
                                                                    is serious if injunctive relief is imposed
                                                                    by an enforcement agency or court. Second, a
                                                                    violation of any of the Labor Laws is
                                                                    serious if the findings of the relevant
                                                                    enforcement agency, court, arbitrator or
                                                                    arbitral panel support a conclusion that the
                                                                    contractor or subcontractor engaged in a
                                                                    pattern or practice of discrimination or
                                                                    systemic discrimination. Conversely, if the
                                                                    ARB had found that the contractor's practice
                                                                    of medical screenings was generally not
                                                                    discriminatory, but that the contractor had
                                                                    discriminated against two specific disabled
                                                                    job applicants in another fashion, and the
                                                                    ARB did not order the contractor to take any
                                                                    specific actions, the violation would not be
                                                                    serious, assuming that none of the other
                                                                    criteria for seriousness listed above are
                                                                    met.
Vietnam Era Veterans' Readjustment Assistance Act (VEVRAA).......  OFCCP issued a show cause notice indicating
                                                                    that an investigation had disclosed that a
                                                                    contractor had discriminated against a
                                                                    veteran job applicant, and that back wages
                                                                    were due to the job applicant in an amount
                                                                    upwards of $10,000.
                                                                   This is a serious violation because a
                                                                    violation of any of the Labor Laws is
                                                                    serious if back wages of at least $10,000
                                                                    were due. Conversely, if OFCCP had
                                                                    determined that the job applicant was due
                                                                    only $5,000 in back wages, the violation
                                                                    would not be serious, assuming that none of
                                                                    the other criteria for seriousness listed
                                                                    above are met.
Family and Medical Leave Act (FMLA)..............................  The Secretary of Labor filed a complaint in
                                                                    federal court after an investigation found
                                                                    that a contractor fired a worker in
                                                                    retaliation for taking FMLA leave.
                                                                   This is a serious violation because a
                                                                    violation of any of the Labor Laws is
                                                                    serious where the contractor or
                                                                    subcontractor engaged in an adverse
                                                                    employment action (including discharge,
                                                                    refusal to hire, suspension, demotion, or
                                                                    threat) or is responsible for unlawful
                                                                    harassment against one or more workers for
                                                                    exercising any right protected by any of the
                                                                    Labor Laws. Conversely, had the Secretary
                                                                    filed a complaint in federal court alleging
                                                                    that a contractor improperly denied an
                                                                    employee two weeks of FMLA leave but did not
                                                                    take any adverse employment action against
                                                                    the employee, the violation would not be
                                                                    serious, assuming that none of the other
                                                                    criteria for seriousness listed above are
                                                                    met.
Title VII of the Civil Rights Act of 1964........................  The EEOC filed a complaint in federal court
                                                                    after an investigation found that the
                                                                    contractor engaged in a pattern or practice
                                                                    of discrimination under Title VII.
                                                                   This is a serious violation because a
                                                                    violation of any of the Labor Laws is
                                                                    serious if the findings of the relevant
                                                                    enforcement agency, court, arbitrator or
                                                                    arbitral panel support a conclusion that the
                                                                    contractor or subcontractor engaged in a
                                                                    pattern or practice of discrimination or
                                                                    systemic discrimination. Conversely, had the
                                                                    EEOC's complaint alleged that the contractor
                                                                    discriminated against only a single
                                                                    individual, the violation would not be
                                                                    serious, assuming that none of the other
                                                                    criteria for seriousness listed above are
                                                                    met.
Americans with Disabilities Act of 1990 (ADA)....................  In a private action under the ADA brought in
                                                                    federal district court, the court issued
                                                                    injunctive relief to the plaintiff, ordering
                                                                    the contractor to cease violating the ADA,
                                                                    to rehire the plaintiff, and to provide the
                                                                    plaintiff a reasonable accommodation for her
                                                                    disability.

[[Page 30596]]

 
                                                                   This is a serious violation because a
                                                                    violation of any of the Labor Laws is
                                                                    serious if injunctive relief is imposed by
                                                                    an enforcement agency or court. Conversely,
                                                                    had the court's relief been limited to an
                                                                    award of damages, the violation would not be
                                                                    serious, assuming that none of the other
                                                                    criteria for seriousness listed above are
                                                                    met.
Age Discrimination in Employment Act of 1967 (ADEA)..............  In a private action brought in federal
                                                                    district court, the factfinder found that
                                                                    the contractor unlawfully discriminated
                                                                    against the plaintiff on the basis of age
                                                                    when it discharged the plaintiff. The court
                                                                    awarded back wages of $50,000 to the
                                                                    plaintiff.
                                                                   This is a serious violation because a
                                                                    violation of any of the Labor Laws is
                                                                    serious if back wages of at least $10,000
                                                                    were due. Conversely, had the court awarded
                                                                    only $8,000 in back wages, the violation
                                                                    would not be serious, assuming that none of
                                                                    the other criteria for seriousness listed
                                                                    above are met.
Executive Order 13658 (Minimum Wage for Contractors).............  WHD issued an investigative findings letter
                                                                    indicating that an investigation disclosed a
                                                                    violation of Executive Order 13658 and
                                                                    finding that a total of $15,000 in back
                                                                    wages are due.
                                                                   This is a serious violation because a
                                                                    violation of any of the Labor Laws is
                                                                    serious if back wages of at least $10,000
                                                                    were due. Conversely, had WHD's
                                                                    investigative findings letter indicated that
                                                                    only $1,500 in back wages were due, the
                                                                    violation would not be serious, assuming
                                                                    that none of the other criteria for
                                                                    seriousness listed above are met.
----------------------------------------------------------------------------------------------------------------


------------------------------------------------------------------------
 
-------------------------------------------------------------------------
               Appendix B: Examples of Willful Violations
------------------------------------------------------------------------
All violations of federal labor laws are serious, but in the context of
 Executive Order 13673, Fair Pay and Safe Workplaces, the Department of
 Labor has identified certain violations as ``serious,'' ``willful,''
 ``repeated,'' and ``pervasive.'' This subset of all labor violations
 represents the violations that are most concerning and bear on the
 assessment of a contractor or subcontractor's integrity and business
 ethics. The Department has purposely excluded from consideration
 violations that could be characterized as inadvertent or minimally
 impactful. Ultimately, each contractor's disclosed violations of Labor
 Laws will be assessed on a case-by-case basis in light of the totality
 of the circumstances, including the severity of the violation or
 violations, the size of the contractor, and any mitigating factors. In
 most cases, even for violations subject to disclosure and consideration
 under the Order, a single violation of one of the Labor Laws will not
 give rise to a determination of lack of responsibility.
The chart below includes a non-exhaustive list of examples of Labor Laws
 violations that may be found to be ``willful'' under the Department's
 proposed guidance for Executive Order 13673. These are examples only:
 They are not minimum requirements, nor are they exclusive of other
 violations under each Labor Law that may be willful. The chart does not
 include violations of ``equivalent state laws,'' which are also covered
 by the Order, but (with the exception of OSHA State Plans, which are
 addressed in the current proposed guidance) will be addressed in future
 guidance.
------------------------------------------------------------------------
             Summary of Definition of ``Willful Violation''
------------------------------------------------------------------------
The full definition of a ``willful violation'' is set forth in section
 III.B of the Department of Labor's proposed guidance. When evaluating
 violations, Labor Compliance Advisors and contracting officers, and
 contractors when evaluating subcontractors, should refer to the full
 definition in the guidance.
In summary, the guidance provides that a violation of one of the Labor
 Laws is willful if:
     For purposes of a citation issued pursuant to the
     Occupational Safety and Health (OSH) Act or an OSHA-approved State
     Plan, the citation at issue was designated as willful or any
     equivalent State designation (i.e., ``knowing''), and the
     designation was not subsequently vacated;
     For purposes of the Fair Labor Standards (including the
     Equal Pay Act), the administrative merits determination sought or
     assessed back wages for greater than two years or sought or
     assessed civil monetary penalties for a willful violation, or there
     was a civil judgment or arbitral award or decision finding the
     contractor or subcontractor liable for back wages for greater than
     two years or affirming the assessment of civil monetary penalties
     for a willful violation;
     For purposes of the Age Discrimination in Employment Act
     (ADEA), the enforcement agency, court, arbitrator, or arbitral
     panel assessed or awarded liquidated damages;
     For purposes of Title VII or the Americans with
     Disabilities Act, the enforcement agency, court, arbitrator, or
     arbitral panel assessed or awarded punitive damages for a violation
     where the contractor or subcontractor engaged in a discriminatory
     practice with malice or reckless indifference to the federally
     protected rights of an aggrieved individual; or
     For purposes of any of the other Labor Laws, the findings
     of the relevant enforcement agency, court, arbitrator or arbitral
     panel support a conclusion that the contractor or subcontractor
     knew that its conduct was prohibited by any of the Labor Laws or
     showed reckless disregard for, or acted with plain indifference to,
     whether its conduct was prohibited by one or more requirements of
     the Labor Laws.
When evaluating Labor Laws violations, Labor Compliance Advisors and
 contracting officers, and contractors when evaluating subcontractors,
 will review all of the above criteria to determine whether a violation
 is willful. The examples below are intended to illustrate how these
 criteria may arise in different contexts, but a violation will be
 willful if it meets any of the above criteria.
------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                            Labor law                                       Example of willful violation
----------------------------------------------------------------------------------------------------------------
Fair Labor Standards Act (FLSA)..................................  In a private lawsuit under the FLSA, a
                                                                    federal district court issued an order
                                                                    requiring payment of three years of back
                                                                    wages after finding that a contractor
                                                                    willfully violated the FLSA overtime
                                                                    regulations by paying workers for 40 hours
                                                                    by check and then paying them in cash at a
                                                                    straight-time rate for hours worked over 40.
                                                                   This is a willful violation because FLSA
                                                                    violations are willful under the Order if
                                                                    back wages for greater than two years are
                                                                    assessed. Conversely, if the court had
                                                                    ordered the payment of back wages for only
                                                                    two years, the violation would not be
                                                                    willful under the Order.
                                                                   WHD finds that a contractor employed a 13-
                                                                    year-old child to operate a forklift. In
                                                                    recognition of the contractor's reckless
                                                                    disregard of its obligations under child
                                                                    labor laws, WHD assesses the contractor
                                                                    civil monetary penalties for the violation.

[[Page 30597]]

 
                                                                   This is a willful violation because civil
                                                                    monetary penalties were assessed on the
                                                                    grounds that the violation was willful under
                                                                    the FLSA. Conversely, if, for example, WHD
                                                                    had found that a contractor had
                                                                    inadvertently allowed a 15-year-old, who was
                                                                    about to turn 16 years old, to work as a
                                                                    file clerk during school hours, and WHD did
                                                                    not assess any civil monetary penalties, the
                                                                    violation would not be willful under the
                                                                    Order.
Occupational Safety and Health (OSH) Act.........................  The Indiana Commissioner of Labor issued a
                                                                    Safety Order finding that a refinery
                                                                    committed a ``knowing'' violation of the
                                                                    Indiana Occupational Safety and Health Act
                                                                    (an OSHA State Plan) by failing to properly
                                                                    train truck drivers in a propane loading
                                                                    system, which resulted in an explosion.
                                                                   This is a willful violation because all
                                                                    citations designated as willful by OSHA--or
                                                                    equivalent state documents designated
                                                                    similarly (e.g., as ``knowing'') by an OSHA
                                                                    State Plan--are willful under the Order.
                                                                    Conversely, had the Safety Order not
                                                                    designated the violation as willful or some
                                                                    other equivalent state designation, the
                                                                    violation would not be willful under the
                                                                    Order.
Migrant and Seasonal Agricultural Worker Protection Act (MSPA)...  An ALJ issued an order finding that the
                                                                    contractor was warned by an official from
                                                                    WHD that the housing the contractor was
                                                                    providing to migrant and seasonal
                                                                    agricultural workers did not comply with
                                                                    required safety and health standards and
                                                                    that the contractor then failed to make the
                                                                    required repairs or corrections.
                                                                   This is a willful violation because the
                                                                    findings of the ALJ support a conclusion
                                                                    that the contractor knew, based on the
                                                                    warning of the WHD official, that its
                                                                    conduct was prohibited by law, yet continued
                                                                    to engage in the prohibited conduct.
                                                                    Conversely, if, for example, the ALJ's
                                                                    findings indicated that the contractor did
                                                                    not receive any warning from WHD and, after
                                                                    making a reasonable inquiry into its legal
                                                                    obligations, believed in good faith that its
                                                                    housing was fully in compliance with the
                                                                    relevant standards, the violation would not
                                                                    be willful under the Order.
National Labor Relations Act (NLRA)..............................  The NLRB issued a decision finding that a
                                                                    unionized roofing contractor set up a non-
                                                                    union alter ego corporation to avoid paying
                                                                    its employees the wages and benefits
                                                                    provided in its contract with the union.
                                                                   This is a willful violation because the
                                                                    NLRB's finding that the contractor formed
                                                                    the alter ego corporation supports a
                                                                    conclusion that the employer was aware of
                                                                    its requirements under the NLRA, yet engaged
                                                                    in the prohibited conduct anyway.
                                                                    Conversely, had the contractor, for example,
                                                                    inadvertently failed to pay its workers the
                                                                    benefits specified in its contract because a
                                                                    human resources specialist had incorrectly
                                                                    calculated the workers' seniority, the
                                                                    violation would not be willful.
Davis-Bacon Act (DBA)............................................  An ALJ order affirming a violation of the DBA
                                                                    included a finding that the contractor
                                                                    manipulated payroll documents to make it
                                                                    appear as if it had paid workers the
                                                                    required prevailing wages.
                                                                   This is a willful violation because the
                                                                    findings of the ALJ support a conclusion
                                                                    that the contractor knew that its conduct
                                                                    was prohibited by the DBA. The ALJ's finding
                                                                    that documents were falsified indicates that
                                                                    the contractor knew that it was required to
                                                                    pay the workers prevailing wages, yet paid
                                                                    them less anyway. Conversely, had the
                                                                    contractor, for example, failed to pay
                                                                    certain workers prevailing wages because of
                                                                    a good-faith misunderstanding about the
                                                                    workers' proper classification for the
                                                                    purpose of DBA wage determinations, the
                                                                    violation would not be willful.
Service Contract Act (SCA).......................................  The DOL's Administrative Review Board (ARB)
                                                                    affirmed WHD's determination that a
                                                                    contractor violated the SCA. The order
                                                                    included a finding that the contractor
                                                                    documented the wages as paid, but required
                                                                    the workers to kick back a portion of their
                                                                    wages to the contractor.
                                                                   This is a willful violation because the
                                                                    findings of the ARB support a conclusion
                                                                    that the contractor knew that its conduct
                                                                    was prohibited by the SCA. The finding that
                                                                    the contractor required the workers to kick
                                                                    back wages paid indicates that the
                                                                    contractor knew that it was required to pay
                                                                    the workers prevailing wages, yet paid them
                                                                    less anyway. Conversely, had the ARB found,
                                                                    for example, that employees were not paid
                                                                    their required SCA wages because the
                                                                    contractor's payroll system, due to a
                                                                    systems error, failed to include the most up-
                                                                    to-date SCA wage determinations, the
                                                                    violation would not be willful.
Executive Order 11246 (Equal Employment Opportunity).............  An ALJ decision found that a contractor's
                                                                    vice president knew that federal law
                                                                    prohibits discrimination on the basis of
                                                                    gender, but had a policy of not promoting
                                                                    women to managerial positions.
                                                                   This is a willful violation because the
                                                                    findings of the ALJ support a conclusion
                                                                    that the contractor knew that its
                                                                    discrimination was prohibited by law, but
                                                                    engaged in the conduct anyway. Conversely,
                                                                    had the contractor used a neutral procedure
                                                                    for selecting employees for promotion and
                                                                    validated this procedure in accordance with
                                                                    OFCCP regulations, but the procedure was
                                                                    ultimately determined by the ALJ to be
                                                                    discriminatory on the basis of gender
                                                                    because the contractor did not fully comply
                                                                    with validation requirements, the violation
                                                                    would not be willful.
Section 503 of the Rehabilitation Act............................  An ARB decision found that a contractor
                                                                    refused to hire any individuals with
                                                                    physical disabilities, and that in doing so,
                                                                    the contractor made no attempt whatsoever to
                                                                    determine whether any of these individuals'
                                                                    disabilities would affect their abilities to
                                                                    do the jobs for which they applied.
                                                                   This is a willful violation because the
                                                                    findings of the ARB support a conclusion
                                                                    that the contractor acted in reckless
                                                                    disregard of its obligations under Section
                                                                    503 of the Rehabilitation Act. Conversely,
                                                                    had the ARB found that the contractor made
                                                                    good-faith efforts to determine whether the
                                                                    applicants' disabilities affected their
                                                                    abilities to do the jobs for which they
                                                                    applied, but submitted insufficient evidence
                                                                    to support its claim that accommodations
                                                                    would impose an undue burden, the violation
                                                                    would not be willful.
Vietnam Era Veterans' Readjustment Assistance Act (VEVRAA).......  An ALJ decision finding hiring discrimination
                                                                    in violation of VEVRAA made a factual
                                                                    finding that each time a veteran covered by
                                                                    VEVRAA's protections applied for a job with
                                                                    a contractor, the reasons cited by the
                                                                    contractor as a basis not to hire that
                                                                    individual were pretextual.

[[Page 30598]]

 
                                                                   This is a willful violation because the
                                                                    findings of the ALJ support a conclusion
                                                                    that the contractor knew that its conduct
                                                                    was prohibited by VEVRAA, yet sought to hide
                                                                    its discriminatory practices by creating
                                                                    pretextual reasons for its refusal to hire
                                                                    covered veterans. Conversely, had the
                                                                    contractor used a neutral procedure for
                                                                    selecting employees that the contractor
                                                                    claimed was job-related and consistent with
                                                                    business necessity, but the procedure was
                                                                    ultimately determined by the ALJ to be
                                                                    discriminatory against veterans, the
                                                                    violation would not be willful.
Family and Medical Leave Act (FMLA)..............................  After suit in federal district court by a
                                                                    private litigant, the court issued a
                                                                    decision that included findings that the
                                                                    contractor's employee handbook provided for
                                                                    unpaid leave to employees with serious
                                                                    health conditions as required by the FMLA,
                                                                    but that the contractor in practice erected
                                                                    unnecessary hurdles to employees requesting
                                                                    such leave.
                                                                   This is a willful violation because the
                                                                    court's findings support a conclusion that
                                                                    the contractor knew of its requirements
                                                                    under the FMLA, yet violated these
                                                                    requirements. Conversely, had the court's
                                                                    decision instead found that the contractor's
                                                                    actions were based on a good-faith
                                                                    misunderstanding of the FMLA's provisions
                                                                    concerning medical certification, the
                                                                    violation would not be willful.
Title VII of the Civil Rights Act of 1964........................  After a federal district court trial finding
                                                                    the contractor liable for sexual harassment,
                                                                    the factfinder assessed punitive damages
                                                                    after finding that the contractor engaged in
                                                                    a discriminatory practice with malice or
                                                                    reckless indifference to the federally
                                                                    protected rights of an aggrieved individual
                                                                    because the employer's anti-harassment
                                                                    policy was ineffective and a manager, after
                                                                    receiving a complaint of sexual harassment,
                                                                    failed to report it or investigate it.
                                                                   This is a willful violation because Title VII
                                                                    violations are willful under the Order if
                                                                    the enforcement agency, court, arbitrator,
                                                                    or arbitral panel assessed or awarded
                                                                    punitive damages for a violation where the
                                                                    contractor or subcontractor engaged in a
                                                                    discriminatory practice with malice or
                                                                    reckless indifference to the federally
                                                                    protected rights of an aggrieved individual.
                                                                    Conversely, had the district court not
                                                                    awarded any punitive damages, the violation
                                                                    would not be willful.
Americans with Disabilities Act of 1990 (ADA)....................  After a trial in federal court, the
                                                                    factfinder assessed punitive damages after
                                                                    finding that the contractor engaged in an
                                                                    ADA-prohibited discriminatory practice with
                                                                    malice or reckless indifference to the
                                                                    federally protected rights of an aggrieved
                                                                    individual, and the contractor could not
                                                                    demonstrate good faith.
                                                                   This is a willful violation because ADA
                                                                    violations are willful under the Order if
                                                                    the enforcement agency, court, arbitrator,
                                                                    or arbitral panel assessed or awarded
                                                                    punitive damages for a violation where the
                                                                    contractor or subcontractor engaged in a
                                                                    discriminatory practice with malice or
                                                                    reckless indifference to the federally
                                                                    protected rights of an aggrieved individual.
                                                                    Conversely, had the factfinder not assessed
                                                                    punitive damages, the violation would not be
                                                                    willful.
Age Discrimination in Employment Act of 1967 (ADEA)..............  An arbitral award included liquidated damages
                                                                    for a willful violation of the ADEA.
                                                                   This is a willful violation because ADEA
                                                                    violations are willful under the Order if
                                                                    the enforcement agency, court, arbitrator,
                                                                    or arbitral panel assessed or awarded
                                                                    liquidated damages. Conversely, had the
                                                                    arbitrator not awarded any liquidated
                                                                    damages, the violation would not be willful.
Executive Order 13658 (Minimum Wage for Contractors).............  An ALJ order affirming a violation of
                                                                    Executive Order 13658 included a finding
                                                                    that the employer, an experienced and
                                                                    sophisticated government contractor, made no
                                                                    effort whatsoever to determine what its
                                                                    minimum wage obligations were or whether its
                                                                    workers were employees or independent
                                                                    contractors, but instead chose to pay them a
                                                                    flat fee that fell well short of the
                                                                    requirements of Executive Order 13658.
                                                                   This is a willful violation because the ALJ
                                                                    order shows that the contractor made no
                                                                    effort whatsoever to learn or understand
                                                                    whether it was complying with the law, which
                                                                    supports a conclusion that the contractor
                                                                    was acting in reckless disregard or plain
                                                                    indifference of its requirements under
                                                                    Executive Order 13658. Conversely, if the
                                                                    employer in question was a small business
                                                                    and a new federal government contractor and
                                                                    the employer, after reading the regulations
                                                                    implementing Executive Order 13658,
                                                                    mistakenly concluded in good faith that it
                                                                    was not covered by these minimum wage
                                                                    requirements, the violation would not be
                                                                    willful.
----------------------------------------------------------------------------------------------------------------


------------------------------------------------------------------------
 
-------------------------------------------------------------------------
               Appendix C: Examples of Repeated Violations
------------------------------------------------------------------------
All violations of federal labor laws are serious, but in the context of
 Executive Order 13673, Fair Pay and Safe Workplaces, the Department of
 Labor has identified certain violations as ``serious,'' ``willful,''
 ``repeated,'' and ``pervasive.'' This subset of all labor violations
 represents the violations that are most concerning and bear on the
 assessment of a contractor or subcontractor's integrity and business
 ethics. The Department has purposely excluded from consideration
 violations that could be characterized as inadvertent or minimally
 impactful. Ultimately, each contractor's disclosed violations of Labor
 Laws will be assessed on a case-by-case basis in light of the totality
 of the circumstances, including the severity of the violation or
 violations, the size of the contractor, and any mitigating factors. In
 most cases, even for violations subject to disclosure and consideration
 under the Order, a single violation of one of the Labor Laws will not
 give rise to a determination of lack of responsibility.
The chart below includes a non-exhaustive list of examples of Labor Laws
 violations that may be found to be ``repeated'' under the Department's
 proposed guidance for Executive Order 13673. These are examples only:
 They are not minimum requirements, nor are they exclusive of other
 violations under each Labor Law that may be repeated. The chart does
 not include violations of ``equivalent state laws,'' which are also
 covered by the Order, but (with the exception of OSHA State Plans,
 which are addressed in the current proposed guidance) will be addressed
 in future guidance.
------------------------------------------------------------------------
             Summary of Definition of ``Repeated Violation''
------------------------------------------------------------------------
The full definition of a ``repeated violation'' is set forth in section
 III.C of the Department of Labor's proposed guidance. When evaluating
 violations, Labor Compliance Advisors and contracting officers, and
 contractors when evaluating subcontractors, should refer to the full
 definition in the proposed guidance.

[[Page 30599]]

 
In summary, the guidance provides that a violation of one of the Labor
 Laws is repeated if it is the same as or substantially similar to one
 or more other violations of the Labor Laws by the contractor or
 subcontractor. ``Substantially similar'' does not mean exactly the
 same; rather, two things may be substantially similar where they share
 essential elements in common. Whether violations fall under the same
 Labor Law is not determinative of whether the requirements underlying
 those violations are substantially similar; rather, this inquiry turns
 on the nature of the violation and underlying obligation itself.
The same or substantially similar other violation(s) must be reflected
 in one or more civil judgments, arbitral awards or decisions, or
 adjudicated or uncontested administrative merits determinations issued
 within the last three years, and must be the subject of one or more
 separate investigations or proceedings. Repeated violations may be
 considered on an enterprise-wide basis; thus, a prior violation by any
 establishment of a multi-establishment enterprise can render subsequent
 violations repeated, provided the other relevant criteria are
 satisfied.
The guidance provides further detail on the meaning of an ``adjudicated
 or uncontested'' administrative merits determination, what constitutes
 a ``substantially similar'' violation, and other aspects of the
 definition.
When evaluating Labor Laws violations, Labor Compliance Advisors and
 contracting officers, and contractors when evaluating subcontractors,
 will review the full definition to determine whether a violation is
 repeated. The examples below are intended to illustrate how the
 definition may be applied in different contexts, but a violation can be
 deemed repeated as long as it meets the criteria set forth in the
 guidance.
------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                            Labor law                                      Example of repeated violation
----------------------------------------------------------------------------------------------------------------
Fair Labor Standards Act (FLSA)..................................  The Wage and Hour Division (WHD) found that a
                                                                    software company violated overtime
                                                                    provisions of the FLSA after misclassifying
                                                                    employees at one facility as independent
                                                                    contractors. The company did not dispute the
                                                                    violation and agreed to pay back wages by
                                                                    signing a Form WH-56. A year later, the
                                                                    Secretary filed a complaint in federal court
                                                                    stating that an investigation of a different
                                                                    facility of the same company disclosed
                                                                    violations of the FLSA minimum wage
                                                                    provision.
                                                                   The second violation is a repeated violation
                                                                    because it is substantially similar to a
                                                                    prior violation reflected in an uncontested
                                                                    administrative merits determination. The
                                                                    first violation is ``uncontested'' because
                                                                    the company did not dispute the violation.
                                                                    The violations are substantially similar
                                                                    because even though the first violation
                                                                    involved overtime and the second involved
                                                                    minimum wage, both violations involved
                                                                    failure by the same company to pay workers
                                                                    their proper wages. Conversely, had one of
                                                                    the two violations instead involved, for
                                                                    example, the company's failure to follow the
                                                                    FLSA's requirements to provide break time
                                                                    for nursing mothers, the violations would
                                                                    not be substantially similar and the second
                                                                    violation therefore would not be repeated.
Occupational Safety and Health (OSH) Act.........................  OSHA issued a citation to a contractor for
                                                                    failing to provide fall protection on a
                                                                    residential construction site. The citation
                                                                    was later affirmed by an administrative law
                                                                    judge (ALJ) at the Occupational Safety and
                                                                    Health Review Commission (OSHRC). OSHA later
                                                                    issued a second citation against the same
                                                                    contractor for failing to provide fall
                                                                    protection at a commercial construction
                                                                    site.
                                                                   The second violation is a repeated violation
                                                                    because it is substantially similar to a
                                                                    prior violation reflected in an adjudicated
                                                                    administrative merits determination. The
                                                                    first citation is an ``adjudicated''
                                                                    administrative merits determination once it
                                                                    is affirmed by the ALJ, because the
                                                                    contractor had an opportunity to contest the
                                                                    citation and present its case before the
                                                                    ALJ. Had the ALJ reversed the first
                                                                    citation, the second violation would not be
                                                                    a repeated violation. (Had the employer not
                                                                    contested the first violation at all, it
                                                                    would be an ``uncontested'' administrative
                                                                    merits determination and the second
                                                                    violation would be ``repeated'' for that
                                                                    reason.) The second violation is
                                                                    substantially similar to the first because
                                                                    even though residential and commercial
                                                                    construction sites have different regulatory
                                                                    standards for fall protection, the hazards
                                                                    involved are substantially similar.
                                                                    Conversely, had one of the two violations
                                                                    instead involved, for example, the
                                                                    contractor's failure to properly store
                                                                    hazardous materials, the violations would
                                                                    not be substantially similar and the second
                                                                    violation therefore would not be repeated.
Migrant and Seasonal Agricultural Worker Protection Act (MSPA)...  A district court issued an order enjoining a
                                                                    farm labor contractor's practice of
                                                                    requiring workers to purchase goods or
                                                                    services solely from a particular company,
                                                                    in violation of MSPA. Later, the Wage and
                                                                    Hour Division assessed civil monetary
                                                                    penalties after finding that the farm labor
                                                                    contractor failed to pay MSPA-covered
                                                                    workers their wages when due.
                                                                   The second violation is a repeated violation
                                                                    because it is substantially similar to a
                                                                    prior violation reflected in a civil
                                                                    judgment. Even though the violations are not
                                                                    identical, under MSPA, multiple violations
                                                                    of the statute's requirements pertaining to
                                                                    wages, supplies, and working arrangements
                                                                    are substantially similar. (Likewise, under
                                                                    MSPA, any two violations of any of MSPA's
                                                                    requirements related to health and safety
                                                                    are substantially similar to each other. The
                                                                    same is true for any two violations of the
                                                                    statute's disclosure and recordkeeping
                                                                    requirements, or any two violations related
                                                                    to its registration requirements.)
                                                                    Conversely, had the contractor, for example,
                                                                    committed one MSPA violation for requiring
                                                                    workers to purchase goods or services solely
                                                                    from a particular company, and a second MSPA
                                                                    violation for failure to comply with MSPA's
                                                                    transportation safety standards, the
                                                                    violations would not be substantially
                                                                    similar and the second violation therefore
                                                                    would not be repeated.
National Labor Relations Act (NLRA)..............................  An National Labor Relations Board (NLRB)
                                                                    Administrative Law Judge (ALJ) issued a
                                                                    decision finding that a contractor violated
                                                                    section 8(a)(3), which prohibits employers
                                                                    from discriminating against employees for
                                                                    engaging in or refusing to engage in union
                                                                    activities, by discharging employees who led
                                                                    a union organizational campaign. Two years
                                                                    later, a Regional Director issued a
                                                                    complaint under section 8(a)(3) against the
                                                                    same contractor at a different location for
                                                                    discharging two union representatives at a
                                                                    plant after they organized a one-day strike
                                                                    to protest low wages.

[[Page 30600]]

 
                                                                   The second violation is a repeated violation
                                                                    because it is substantially similar to a
                                                                    prior violation reflected in an adjudicated
                                                                    administrative merits determination. The
                                                                    first violation is an ``adjudicated''
                                                                    administrative merits determination because
                                                                    the contractor had an opportunity to contest
                                                                    the violation and present its case before
                                                                    the ALJ. The violations are substantially
                                                                    similar because both involved discharges
                                                                    under section 8(a)(3) of the NLRA.
                                                                    Conversely, had one of the two violations
                                                                    been a violation of section 8(a)(2), which
                                                                    prohibits an employer from dominating or
                                                                    interfering with the formation nor
                                                                    administration of a labor union through
                                                                    financial support or otherwise--for example,
                                                                    had the contractor offered assistance to one
                                                                    union but not to another during an
                                                                    organizational campaign--the two violations
                                                                    would not be substantially similar and the
                                                                    second violation would therefore not be
                                                                    repeated.
Davis-Bacon Act (DBA)............................................  A federal district court granted a
                                                                    preliminary injunction enjoining a
                                                                    contractor from further violations of the
                                                                    overtime provisions of the FLSA.
                                                                    Subsequently, WHD sent the contractor a
                                                                    letter finding that the contractor violated
                                                                    the DBA by failing to pay workers at a
                                                                    different worksite their prevailing wages.
                                                                   The second violation is a repeated violation
                                                                    because it is substantially similar to a
                                                                    prior violation reflected in a civil
                                                                    judgment. Even though the contractor
                                                                    violated two different statutes, the
                                                                    violations are substantially similar because
                                                                    both involve the practice of failing to pay
                                                                    wages required by law. Conversely, had the
                                                                    first violation instead involved, for
                                                                    example, the contractor's failure to provide
                                                                    a reasonable accommodation to an employee
                                                                    with a disability under the ADA, the two
                                                                    violations would not be substantially
                                                                    similar and the second violation would
                                                                    therefore not be repeated.
Service Contract Act (SCA).......................................  The Department's Administrative Review Board
                                                                    (ARB) issued an order finding that a
                                                                    contractor failed to pay workers covered by
                                                                    Executive Order 13658 the minimum wage of
                                                                    $10.10 per hour. Subsequently, WHD issued a
                                                                    letter indicating that an investigation
                                                                    disclosed a violation of the SCA because the
                                                                    contractor failed to pay service workers
                                                                    their required amount of fringe benefits.
                                                                   The second violation is a repeated violation
                                                                    because it is substantially similar to a
                                                                    prior violation reflected in an adjudicated
                                                                    administrative merits determination. The
                                                                    first violation is an ``adjudicated''
                                                                    administrative merits determination because
                                                                    the contractor had an opportunity to contest
                                                                    the violation and present its case before
                                                                    the ARB. Even though the contractor violated
                                                                    two different Labor Laws, the violations are
                                                                    substantially similar because both involve
                                                                    the practice of failing to pay wages
                                                                    required by law. Conversely, if the first
                                                                    violation was the subject of a determination
                                                                    by the Department's Wage and Hour Division
                                                                    that the contractor challenged before an
                                                                    ALJ, and the ALJ proceeding was still
                                                                    pending at the time of the second violation,
                                                                    the second violation would not be a repeated
                                                                    violation because the first violation would
                                                                    not be an adjudicated or uncontested
                                                                    administrative merits determination.
Executive Order 11246 (Equal Employment Opportunity).............  An arbitrator found that a contractor created
                                                                    a hostile work environment for African-
                                                                    American workers in violation of Title VII.
                                                                    Subsequently, OFCCP issued a show cause
                                                                    notice finding that the same contractor
                                                                    failed to comply with the nondiscrimination
                                                                    requirements of Executive Order 11246 by
                                                                    failing to hire qualified Asian workers.
                                                                   The second violation is a repeated violation
                                                                    because it is substantially similar to a
                                                                    prior violation reflected in an arbitral
                                                                    award. These violations are substantially
                                                                    similar because violations of Title VII,
                                                                    Section 503, the ADA, the ADEA, the Equal
                                                                    Pay Act, Executive Order 11246, and VEVRAA
                                                                    are substantially similar when they involve
                                                                    the same or an overlapping protected status.
                                                                    In this case, both violations involved
                                                                    discrimination on the basis of race.
                                                                    Conversely, if the first violation had
                                                                    instead involved discrimination by the
                                                                    contractor on the basis of gender, the two
                                                                    violations would not be substantially
                                                                    similar and the second violation would
                                                                    therefore not be repeated.
Section 503 of the Rehabilitation Act............................  A federal district court granted a private
                                                                    plaintiff summary judgment in a claim
                                                                    against a contractor under the ADA alleging
                                                                    constructive discharge and the failure to
                                                                    provide a reasonable accommodation for the
                                                                    plaintiff's disability. Subsequently, the
                                                                    ARB affirmed an ALJ order directing the same
                                                                    contractor to change a practice of medical
                                                                    screenings that discriminated against job
                                                                    applicants with disabilities in violation of
                                                                    Section 503 of the Rehabilitation Act.
                                                                   The second violation is a repeated violation
                                                                    because it is substantially similar to a
                                                                    prior violation reflected in a civil
                                                                    judgment. These violations are substantially
                                                                    similar because violations of Title VII,
                                                                    Section 503, the ADA, the ADEA, the Equal
                                                                    Pay Act, Executive Order 11246, and VEVRAA
                                                                    are substantially similar when they involve
                                                                    the same or an overlapping protected status.
                                                                    In this case, both violations involved
                                                                    discrimination on the basis of a disability.
                                                                    Conversely, if the first violation had
                                                                    instead involved the contractor's failure to
                                                                    provide a reasonable accommodation of an
                                                                    employee's religious beliefs under Title
                                                                    VII, the two violations would not be
                                                                    substantially similar and the second
                                                                    violation would therefore not be repeated.
Vietnam Era Veterans' Readjustment Assistance Act (VEVRAA).......  An ALJ issued an order finding that the
                                                                    contractor violated VEVRAA by discriminating
                                                                    against protected veterans during the hiring
                                                                    process. Subsequently, in a separate
                                                                    compliance evaluation, OFCCP issued a show
                                                                    cause notice indicating that the same
                                                                    contractor failed to promote employees who
                                                                    were protected veterans to higher-level
                                                                    positions.
                                                                   The second violation is a repeated violation
                                                                    because it is substantially similar to a
                                                                    prior violation reflected in an adjudicated
                                                                    administrative merits determination. The
                                                                    first violation is an ``adjudicated''
                                                                    administrative merits determination because
                                                                    the contractor had an opportunity to contest
                                                                    the violation and present its case before
                                                                    the ALJ. These violations are substantially
                                                                    similar because violations of Title VII,
                                                                    Section 503, the ADA, the ADEA, the Equal
                                                                    Pay Act, Executive Order 11246, and VEVRAA
                                                                    are substantially similar when they involve
                                                                    the same or an overlapping protected status.
                                                                    In this case, both violations involved
                                                                    discrimination on the basis of protected
                                                                    veterans' status. Conversely, if the first
                                                                    violation had instead involved
                                                                    discrimination on the basis of race under
                                                                    Executive Order 11246, the two violations
                                                                    would not be substantially similar and the
                                                                    second violation would therefore not be
                                                                    repeated.

[[Page 30601]]

 
Family and Medical Leave Act (FMLA)..............................  A court found that a contractor had failed to
                                                                    reinstate an employee to the same or an
                                                                    equivalent position after the employee took
                                                                    FMLA leave. Subsequently, the Wage and Hour
                                                                    Division, after an investigation, filed suit
                                                                    against the employer challenging the
                                                                    employer's denial of another employee's
                                                                    request for FMLA leave.
                                                                   The second violation is repeated because it
                                                                    is substantially similar to a prior
                                                                    violation that was reflected in a civil
                                                                    judgment. Although the violations are not
                                                                    identical, under the FMLA, any two
                                                                    violations would generally be considered
                                                                    substantially similar to each other, with
                                                                    the exception of violations of the notice
                                                                    requirements. Conversely, had the first
                                                                    violation involved the contractor's failure
                                                                    to provide notice to employees of their FMLA
                                                                    rights and the second involved either denial
                                                                    of leave or failure to reinstate an
                                                                    employee, the two violations would not be
                                                                    substantially similar and the second
                                                                    violation would therefore not be repeated.
Title VII of the Civil Rights Act of 1964........................  OFCCP issued a show cause notice finding that
                                                                    the contractor violated Executive Order
                                                                    11246 by systemically paying women at one of
                                                                    its locations less than similarly situated
                                                                    men. The contractor did not contest the show
                                                                    cause notice and eventually settles the
                                                                    matter. Subsequently, the EEOC issued a
                                                                    letter of determination that reasonable
                                                                    cause existed to believe that the same
                                                                    contractor had engaged in unlawful
                                                                    harassment against women at another one of
                                                                    its locations.
                                                                   The second violation is a repeated violation
                                                                    because it is substantially similar to a
                                                                    prior violation reflected in an uncontested
                                                                    administrative merits determination. The
                                                                    first violation is ``uncontested'' because
                                                                    the company did not dispute the violation.
                                                                    These violations are substantially similar
                                                                    because violations of Title VII, Section
                                                                    503, the ADA, the ADEA, the Equal Pay Act,
                                                                    Executive Order 11246, and VEVRAA are
                                                                    substantially similar when they involve the
                                                                    same protected status. In this case, both
                                                                    violations involved discrimination on the
                                                                    basis of gender. Conversely, if the
                                                                    contractor had challenged the first notice
                                                                    before an ALJ and if the proceeding was
                                                                    still pending at the time of the second
                                                                    violation, the second violation would not be
                                                                    a repeated violation because the first
                                                                    violation would not be an adjudicated or
                                                                    uncontested administrative merits
                                                                    determination.
Americans with Disabilities Act of 1990 (ADA)....................  The ARB affirmed an ALJ order under Section
                                                                    503 of the Rehabilitation Act directing the
                                                                    contractor to grant reasonable
                                                                    accommodations to employees with visual
                                                                    impairments. Subsequently, a federal
                                                                    district court granted a private plaintiff
                                                                    summary judgment in her ADA claim of
                                                                    constructive discharge.
                                                                   The second violation is a repeated violation
                                                                    because it is substantially similar to a
                                                                    prior violation reflected in an adjudicated
                                                                    administrative merits determination. The
                                                                    first violation is an ``adjudicated''
                                                                    administrative merits determination because
                                                                    the contractor had an opportunity to contest
                                                                    the violation and present its case before
                                                                    the ALJ. These violations are substantially
                                                                    similar because violations of Title VII,
                                                                    Section 503, the ADA, the ADEA, the Equal
                                                                    Pay Act, Executive Order 11246, and VEVRAA
                                                                    are substantially similar when they involve
                                                                    the same protected status. In this case,
                                                                    both violations involved discrimination on
                                                                    the basis of a disability. Conversely, had
                                                                    one of the two violations involved, for
                                                                    example, failure to grant FMLA leave to an
                                                                    employee for birth of a child, the two
                                                                    violations would not be substantially
                                                                    similar and the second violation would
                                                                    therefore not be repeated.
Age Discrimination in Employment Act of 1967 (ADEA)..............  An arbitrator found that a contractor
                                                                    violated the ADEA by constructively
                                                                    discharging several employees over the age
                                                                    of 60. Subsequently, in an ADEA private
                                                                    action brought in federal district court,
                                                                    the court found that the contractor
                                                                    unlawfully discriminated against the
                                                                    plaintiff on the basis of age when it failed
                                                                    to hire him.
                                                                   The second violation is a repeated violation
                                                                    because it is substantially similar to a
                                                                    prior violation reflected in an arbitral
                                                                    award. These violations are substantially
                                                                    similar because violations of Title VII,
                                                                    Section 503, the ADA, the ADEA, the Equal
                                                                    Pay Act, Executive Order 11246, and VEVRAA
                                                                    are substantially similar when they involve
                                                                    the same protected status. In this case,
                                                                    both violations involved discrimination on
                                                                    the basis of age. Conversely, had one of the
                                                                    two violations involved, for example,
                                                                    discrimination on the basis of the
                                                                    employee's status as a protected veteran,
                                                                    the two violations would not be
                                                                    substantially similar and the second
                                                                    violation would therefore not be repeated.
Executive Order 13658 (Minimum Wage for Contractors).............  In a private action, a federal court of
                                                                    appeals affirmed a finding that the
                                                                    contractor was liable for failing to pay
                                                                    wages due under the FLSA. Subsequently, WHD
                                                                    issued an Investigative Findings Letter
                                                                    stating that an investigation disclosed a
                                                                    violation of Executive Order 13658.
                                                                   The second violation is a repeated violation
                                                                    because it is substantially similar to a
                                                                    prior violation reflected in a civil
                                                                    judgment. Even though the contractor
                                                                    violated two different Labor Laws, the
                                                                    violations are substantially similar because
                                                                    both involve the practice of failing to pay
                                                                    wages required by law. Conversely, had one
                                                                    of the two violations involved, for example,
                                                                    the contractor's violation of the OSH Act
                                                                    for failure to properly abate workplace
                                                                    hazards, the two violations would not be
                                                                    substantially similar and the second
                                                                    violation would therefore not be repeated.
----------------------------------------------------------------------------------------------------------------


------------------------------------------------------------------------
 
-------------------------------------------------------------------------
              Appendix D: Examples of Pervasive Violations
------------------------------------------------------------------------
All violations of federal labor laws are serious, but in the context of
 Executive Order 13673, Fair Pay and Safe Workplaces, the Department of
 Labor has identified certain violations as ``serious,'' ``willful,''
 ``repeated,'' and ``pervasive.'' This subset of all labor violations
 represents the violations that are most concerning and bear on the
 assessment of a contractor or subcontractor's integrity and business
 ethics. The Department has purposely excluded from consideration
 violations that could be characterized as inadvertent or minimally
 impactful. Ultimately, each contractor's disclosed violations of Labor
 Laws will be assessed on a case-by-case basis in light of the totality
 of the circumstances, including the severity of the violation or
 violations, the size of the contractor, and any mitigating factors. In
 most cases, even for violations subject to disclosure and consideration
 under the Order, a single violation of one of the Labor Laws will not
 give rise to a determination of lack of responsibility.

[[Page 30602]]

 
The chart below includes a non-exhaustive list of examples of Labor Laws
 violations that may be found to be ``pervasive'' under the Department's
 proposed guidance for Executive Order 13673. These are examples only:
 they are not minimum requirements, nor are they exclusive of other
 violations under each Labor Law that may be pervasive. The chart does
 not include violations of ``equivalent state laws,'' which are also
 covered by the Order, but (with the exception of OSHA State Plans,
 which are addressed in the current proposed guidance) will be addressed
 in future guidance.
------------------------------------------------------------------------
            Summary of Definition of ``Pervasive Violation''
------------------------------------------------------------------------
The full definition of a ``pervasive violation'' is set forth in section
 III.D of the Department of Labor's proposed guidance. When evaluating
 violations, Labor Compliance Advisors and contracting officers, and
 contractors when evaluating subcontractors, should refer to the full
 definition in the proposed guidance.
In summary, the guidance provides that violations of the Labor Laws are
 ``pervasive'' if they reflect a basic disregard by the contractor or
 subcontractor for the Labor Laws as demonstrated by a pattern of
 serious or willful violations, continuing violations, or numerous
 violations. Violations must be multiple to be pervasive, although the
 number of violations necessarily depends on the size of the contractor
 or subcontractor, because larger employers, by virtue of their size,
 are more likely to have multiple violations. To be pervasive, the
 violations need not be of the same or similar requirements of the Labor
 Laws. Pervasive violations may exist where the contractor or
 subcontractor commits multiple violations of the same Labor Law,
 regardless of their similarity, or violations of more than one of the
 Labor Laws. This category is intended to identify those contractors and
 subcontractors whose numerous violations of Labor Laws indicate that
 they may view sanctions for their violations as merely part of the
 ``cost of doing business,'' an attitude that is inconsistent with the
 level of responsibility required by the FAR.
When evaluating Labor Laws violations, Labor Compliance Advisors and
 contracting officers, and contractors when evaluating subcontractors,
 will review the full definition to determine whether a violation is
 pervasive. Additionally, Labor Compliance Advisors, and contractors
 evaluating subcontractors, are strongly encouraged to consult with the
 Department of Labor when determining whether violations are pervasive.
 The examples below are intended to illustrate how the definition may be
 applied in different contexts, but a violation can be deemed pervasive
 as long as it meets the criteria set forth in the guidance.
------------------------------------------------------------------------
    Examples of Pervasive Violations (not specific to any particular
                                statute)
------------------------------------------------------------------------
A medium-sized company that provides janitorial services at federal
 facilities was found to have violated the SCA for failure to pay
 workers their required wages, Title VII for discrimination in hiring on
 the basis of national origin, the NLRA for demoting workers who are
 seeking to organize a union, and the FMLA for denying workers unpaid
 leave for serious health conditions.
These violations are pervasive because while the violations are
 substantively different from each other, a medium-sized employer that
 violates so many Labor Laws is demonstrating a basic disregard for its
 legal obligations to its workers and is committing pervasive
 violations.
A 100-employee IT consulting company was found to have violated EO 11246
 for systematically failing to promote women to managerial positions,
 the FLSA for failing to pay workers overtime after misclassifying them
 as independent contractors, and the ADEA for constructively discharging
 employees who were age 60 or over.
These violations are pervasive because while substantively different
 from each other, a small employer that violates Labor Laws to this
 degree is demonstrating a basic disregard for its legal obligations to
 its workers and is committing pervasive violations.
The Wage and Hour Division issued several Form WH-103 ``Employment of
 Minors Contrary to The Fair Labor Standards Act'' notices finding that
 a clothing manufacturer that provides custom-made uniforms for federal
 employees employed numerous underage workers in violation of the child
 labor provisions of the FLSA. Despite receiving these notices, the
 contractor failed to make efforts to change its practices and continued
 to violate the FLSA's child labor provisions repeatedly.
These violations are pervasive because they are a series of repeated
 violations in which the contractor, despite knowledge of its violations
 and several repeated notices from WHD, failed to make efforts to change
 its practices and continued to violate the law repeatedly.
OSHA cited a small tools manufacturer with a single location multiple
 times for a variety of serious violations in the same investigation--
 once for improper storage of hazardous materials, once for failure to
 provide employees with protective equipment, once for inadequate
 safeguards on heavy machinery, once for lack of fall protection, once
 for insufficient ventilation, once for unsafe noise exposure, and once
 for inadequate emergency exits. The manufacturer does not have a
 process for identifying and eliminating serious health hazards.
These violations are pervasive because such a high number of serious
 workplace safety and health violations relative to the size of a small
 company with only a single location and the lack of an effective
 process to identify and eliminate serious violations (hazards) in its
 workplace constitute basic disregard by the contractor for worker
 safety and health. Even though these violations would not be
 ``repeated'' because they arose during the same investigation and
 because they do not involve substantially similar hazards, they would
 be considered pervasive.
An ALJ at OSHRC found that although the chief safety officer at a
 chemical plant fielded complaints from workers about several unsafe
 working conditions, he failed to take action to remedy the unsafe
 conditions, resulting in numerous willful OSH Act violations.
These violations are pervasive because the dangerous working conditions
 were willfully sanctioned by a high-level company official and were
 evident throughout the chemical plant. When Labor Laws are violated
 with either the explicit or implicit approval of higher-level
 management, such approval signals that future violations will be
 tolerated or condoned, and may dissuade workers from reporting
 violations or raising complaints. Such violations also indicate that
 the company does not voluntarily eliminate hazards, but instead views
 penalties for such violations as ``the cost of doing business,'' rather
 than as indicative of significant threats to its workers' health and
 safety that must be addressed. Thus, to the extent that higher-level
 management officials were involved in violations themselves, or knew of
 violations and failed to have an effective process to identify and
 correct serious violations in their workplace, the violations are more
 likely to be deemed pervasive.
A large company that provides laundry services to military bases in
 several states is cited 50 times for serious OSHA violations over the
 span of one year. The violations affect most of its locations, and a
 number of the citations are for high gravity serious failures to abate
 dangerous conditions that OSHA had cited previously. As a result, the
 company is placed on OSHA's Severe Violator Enforcement Program.
These violations are pervasive, notwithstanding the large size of the
 contractor, because the sheer number of high gravity serious violations
 over such a short period of time is evidence that the company is
 ignoring persistent threats to workers' safety, fails to treat safety
 as a serious problem, and is acting in disregard of its legal
 obligations. Conversely, if the violations affected only a few of the
 company's facilities, or if the company had acted quickly to abate any
 violations, the violations might not necessarily be considered
 pervasive.
A federal district court decision in a class-action lawsuit included a
 finding that the vice president of a construction company directed a
 foreman not to hire Native American workers, and as a result, the
 company is found to have committed numerous Title VII violations
 against job applicants.
These violations are pervasive because a high-level company official
 actively participated in the discriminatory conduct, resulting in
 numerous violations. Even though these violations would not be
 ``repeated'' because they arose during the same proceeding, they would
 be considered pervasive. While violations must be multiple to be
 pervasive, a single liability determination in a class proceeding may
 be considered ``multiple'' violations for a determination of
 pervasiveness.

[[Page 30603]]

 
While a union was conducting an organizational campaign at a large
 manufacturer, the contractor held several captive-audience speeches for
 all of its workers at each of its factories for an extended period of
 time, threatening the workers with disciplinary measures if they voted
 to join the union in violation of the National Labor Relations Act
 (NLRA). In addition, the Wage and Hour Division finds that the company
 failed to pay overtime to its workers at the vast majority of its
 locations in violation of the Fair Labor Standards Act.
These violations are pervasive, notwithstanding the large size of the
 contractor, because the contractor committed multiple serious
 violations affecting significant numbers of its workers. Conversely, if
 the contractor made its threatening remarks to only a few of its
 workers, or if the overtime violations only existed at a few of the
 contractor's locations, the violations might not necessarily be
 considered pervasive.
The Department of Labor's Office of Federal Contract Compliance Programs
 finds, through enterprise-wide enforcement, that a large contractor
 that provides food services at federal agencies nationwide used pre-
 employment screening tests for most jobs at the company's facilities
 that resulted in Hispanic workers being hired at a significantly lower
 rate than non-Hispanic workers over a 5-year period. In addition, the
 Wage and Hour Division finds that the company failed to comply with the
 Service Contract Act's requirements to pay its workers prevailing wages
 at many of its locations.
These violations are likely pervasive, notwithstanding the large size of
 the contractor, because the contractor's numerous serious violations
 spanned most of its locations and affected many of its workers.
 Conversely, had the company engaged in these prohibited practices at
 only a few of its locations, such violations might not necessarily be
 considered pervasive.
------------------------------------------------------------------------


------------------------------------------------------------------------
 
-------------------------------------------------------------------------
           Appendix E: Assessing Violations of the Labor Laws
------------------------------------------------------------------------
Appendices A through D provide summary definitions and examples of Labor
 Laws violations that are ``serious,'' ``willful,'' ``repeated,'' and
 ``pervasive'' under Executive Order 13673, Fair Pay and Safe
 Workplaces. A Labor Compliance Advisor and contracting officer, or
 contractor when evaluating subcontractors, will determine whether
 violations reported under the Order fit into these categories, which
 represent the violations that are most concerning and bear on an
 assessment of a contractor or subcontractor's integrity and business
 ethics. The contracting officer with the assistance of the Labor
 Compliance Advisor, or the contractor when evaluating subcontractors,
 will then assess a contractor or subcontractor's serious, willful,
 repeated, and pervasive violations in determining whether the
 contractor or subcontractor is a responsible source with a satisfactory
 record of integrity and business ethics.
Each contractor or subcontractor's disclosed violations will be assessed
 on a case-by-case basis in light of the totality of the circumstances,
 including the severity of the violation or violations, the size of the
 contractor, and any mitigating factors. The extent to which a
 contractor or subcontractor has remediated violations of Labor Laws,
 including agreements entered into by contractors or subcontractors with
 enforcement agencies, will be given particular weight in this regard.
In most cases, even for violations subject to disclosure and
 consideration under the Order, a single violation of one of the Labor
 Laws will not give rise to a determination of lack of responsibility.
 In contrast, pervasive violations and violations of particular gravity,
 for example, will in most cases result in the need for a Labor
 Compliance Agreement.
------------------------------------------------------------------------
                    Violations of Particular Concern
------------------------------------------------------------------------
The following types of violations raise particular concerns regarding
 the contractor's or subcontractor's compliance with the Labor Laws:
     Pervasive violations. Pervasive violations, by definition,
     demonstrate a basic disregard for the Labor Laws. Such disregard of
     legal obligations creates a heightened danger that the contractor
     or subcontractor may, in turn, disregard its contractual
     obligations as well. Additionally, such contractors and
     subcontractors are more likely to violate the Labor Laws in the
     future, and those violations--and any enforcement proceedings or
     litigation that may ensue--may imperil their ability to meet their
     obligations under a contract. The fact that a contractor or
     subcontractor shows such disregard for the Labor Laws is highly
     probative of whether the contractor or subcontractor lacks
     integrity and business ethics.
     Violations that are serious AND repeated, serious AND
     willful, or willful AND repeated. A violation that falls into two
     or more these categories, as a general matter, is more likely to be
     probative of the contractor's or subcontractor's lack of integrity
     and business ethics than a violation that falls into only one of
     those categories.
     Violations that are reflected in final orders. To the
     extent that the judgment, determination, or order finding a Labor
     Law violation is final (because appeals and opportunities for
     further review have been exhausted or were not pursued), the
     violation should be given greater weight. Likewise, where a
     violation has not resulted in a final judgment, determination, or
     order, it should be given lesser weight.
     Violations of particular gravity. Certain Labor Laws
     violations that are serious under the Order should be given greater
     weight, including:
        [cir] Violations related to the death of an employee;
        [cir] Violations involving a termination of employment for
         exercising a right protected under the Labor Laws;
        [cir] Violations that detrimentally impact the working
         conditions of all or nearly all of the workforce at a worksite;
         and
        [cir] Violations where the amount of back wages, penalties, and
         other damages awarded is greater than $100,000.
------------------------------------------------------------------------
                           Mitigating Factors
------------------------------------------------------------------------
Various factors may mitigate the existence of a contractor or
 subcontractor's Labor Laws violations. The Department respects the fact
 that most employers endeavor to comply with the Labor Laws. The
 Department values highly contractors' and subcontractors' good-faith
 efforts to comply, and it encourages them to report these efforts,
 including workplace policies that foster compliance. The following are
 the most common factors that will mitigate the existence of one or more
 violations in the context of a responsibility determination. This list
 is not exclusive, and contractors and subcontractors are encouraged to
 report any factors they believe may mitigate the existence of a
 violation:
     Remediation of the violation(s), including Labor Compliance
     Agreements: Typically the most important factor that can mitigate
     the existence of a violation, remediation is an indication that a
     contractor or subcontractor has assumed responsibility for a
     violation and has taken steps to bring itself into compliance with
     the law going forward. In most cases, for remediation to be
     considered mitigating, it should involve two components:
        [cir] Correction of the violation: The remediation should
         correct the violation itself, including by making any affected
         workers whole. For example, this could involve abating a
         dangerous hazard, paying workers their back wages owed, or
         reinstating a wrongfully discharged employee.
        [cir] Efforts to prevent similar violations in the future: For
         example, if a contractor or subcontractor improperly
         misclassified workers as exempt from the FLSA and pays any back
         wages due to the workers without reviewing its classifications
         of the workers going forward, it will likely commit similar
         violations in the future. Particular consideration will be
         given where the contractor or subcontractor has implemented
         remediation on an enterprise-wide level or has entered into an
         enhanced settlement agreement with the relevant enforcement
         agency or agencies that goes beyond what is minimally required
         under the law to address appropriate remedial or compliance
         measures.

[[Page 30604]]

 
    One specific type of remediation is a Labor Compliance Agreement,
     which is an agreement entered into between an enforcement agency
     and a contractor or subcontractor to address appropriate remedial
     measures, compliance assistance, steps to resolve issues to
     increase compliance with labor laws, or other related matters. A
     Labor Compliance Agreement is an important mitigating factor
     because it indicates that the contractor or subcontractor
     recognizes the importance that the Federal Government places on
     compliance with the Labor Laws.
     Only one violation: In most cases, a single violation of a
     Labor Law may not necessarily give rise to a determination of lack
     of responsibility, depending on the nature of the violation.
     However, a contracting agency (or contractor evaluating
     subcontractors) is not precluded from making a determination of non-
     responsibility based on a single violation in the rare
     circumstances where it may be merited based on the totality of the
     circumstances.
     Low number of violations relative to size: Larger
     employers, by virtue of their size, are more likely to have
     multiple violations than smaller ones. When assessing contractors
     or subcontractors with multiple violations, a contracting officer
     and Labor Compliance Advisor (or contractor evaluating
     subcontractors) should consider the size of the contractor or
     subcontractor.
     Safety and health programs or grievance procedures:
     Implementation of a safety and health management program, such as
     OSHA's 1989 Safety and Health Program Management guidelines or any
     updates to those guidelines, grievance procedures (including
     collectively-bargained ones), monitoring arrangements negotiated as
     part of an enhanced settlement agreement, or other compliance
     programs foster a corporate culture in which workers are encouraged
     to raise legitimate concerns about Labor Laws violations without
     the fear of repercussions. Such programs and procedures may prompt
     workers to report violations that would, under other circumstances,
     go unreported. Therefore, the implementation of such programs or
     procedures will be considered a mitigating factor, particularly as
     to violations that might otherwise be deemed repeated or pervasive.
     Recent legal or regulatory change: To the extent that the
     Labor Laws violations can be traced to a recent legal or regulatory
     change, that may be a mitigating factor. The change must be recent,
     and the violations must not have been violations but for the
     change.
     Good faith and reasonable grounds: It may be a mitigating
     factor if the contractor or subcontractor shows that it made
     efforts to ascertain its legal obligations and to follow the law,
     and that its actions under the circumstances were objectively
     reasonable. For example, if a contractor or subcontractor acts in
     reasonable reliance on advice from a responsible official from the
     relevant enforcement agency, or an administrative or authoritative
     judicial ruling, such reliance will typically demonstrate good
     faith and reasonable grounds. This factor may also apply where the
     contractor's or subcontractor's legal obligations are unclear, such
     as when a new statute, rule, or standard is first implemented.
     Significant period of compliance following violations: If,
     following one or more violations within the three-year reporting
     period, the contractor or subcontractor maintains a steady period
     of compliance with the Labor Laws, such compliance may mitigate the
     existence of prior violations (e.g., violations were reported from
     2\1/2\ years ago and there have been none since).
------------------------------------------------------------------------

[FR Doc. 2015-12562 Filed 5-27-15; 8:45 am]
BILLING CODE P