Presidential Executive Order Seeks to Ban Federal Contractors with a History of Employment Law Violations

This week, the President signed an Executive Order designed to debar federal contractors (with contracts valued over $500,000) with a history of employment law violations from doing business with the federal government. Contractors will now be required to disclose, prior to contracting with the government, all violations during the previous three years of state and federal laws governing discrimination, minimum wage and overtime, safety, collective bargaining, family and medical leave, etc. In addition, the Executive Order prohibits federal contractors with contracts valued at over $1 million from requiring their employees to sign mandatory pre-dispute arbitration agreements of discrimination, sexual assault and harassment claims. The Executive Order is expected to take effect in 2016, after final regulations are published. As a practical matter, the Executive Order would require contractors to develop systems tracking the outcomes of all future employment law claims, as well as re-capturing the outcomes of employment law claims concluded within the previous three years, to enable the contractor to make the required disclosures.

Business groups representing federal contractors are already lining up to challenge the President's authority to issue a 7/21/14 Executive Order banning discrimination by federal contractors on the basis of gender identity and sexual orientation. A similar challenge to this Executive Order may be likely.