LEGALLY SPEAKING Sick And Safe O ver the last two years, the Obama admin- istration has issued executive orders that will substantially impact contractors and subcontractors on federal construction projects. These executive orders are in the final rule-making process and are scheduled to take effect on January 1, 2017. Executive Order 13673 (July 31, 2014): Fair Pay and Safe Workplaces This executive order requires contractors and subcontractors with contracts and subcontracts over $500,000 on federal projects to disclose during the procurement process all adverse civil judgments, arbitral award and “merits determinations” in the preceding three years relating to 14 labor laws, including the Fair Labor Standards Act, Occupational Safety and Health Act (OSHA), Davis-Bacon Act (prevailing wage law) and Americans with Disabilities Act (ADA). “Merits determinations” are defined to include seven categories of citations and findings, including safety citations issued by OSHA, Department of Labor citations related to prevailing wages, letters of determination by the Equal Employment Opportunity Commission and complaints issued by the National Labor Relations Board. Unfortunately, six of the seven categories consist of unilateral notices, citations, findings and determinations. That is, contractors and subcontractors have to disclose allegations by the government for which the contractors have not yet been afforded due process (filings, hearings, trials, appeals, etc.) to challenge. The government will evaluate the disclosures to determine if a contractor has a “satisfactory record of integrity and business ethics,” thus making it eligible for award of the contract. The government will also use this process to determine if the contractor should be debarred or suspended from performing federal contracts. The rule establishes three steps in the disclosure process. First, the contractor must disclose in its bid or proposal whether the contractor has any of the reportable violations. Second, if the con- tractor is being considered for award, the contractor must pro- vide details of the law violated, including the date, case/citation number, and agency or court issuing the citation or judgment. Finally, the contractor must update its disclosure every six months during the project. One particularly burdensome aspect of the rule is that prime contractors must evaluate the disclosures of subcontractors to determine if they too have a “satisfactory record of integrity and business ethics.” As with the contractor, subcontractors must update their disclosures to the contractor every six months. In effect, the rule requires the prime contractor to serve as a government regulator. The implications of this requirement can be severe to the contractor. For example, if a contractor uses a subcontractor’s price in its proposal and later determines from the sub- contractor’s disclosures that it is not responsible, and would likely be rejected by the government, the contractor has no recourse to recover the premium or other costs to replace the planned subcontractor. Also, because the dis- closures must be up- dated, violations on other projects can result in a determination that a contractor or subcon- tractor is no longer responsible and may serve as a basis for ter- mination of the contract or subcontract. Executive Order 13706 (September 7, 2015): Establishing Paid Sick Leave This executive order requires employers on federal construction projects to give all employees seven days or more of paid sick leave annually, accrued at the rate of 1hour of leave for every 30 hours worked. The leave may be used by employees for: Brian Wood Attorney Of Counsel Smith, Currie and Hancock 1. Recovering from physical or mental illness, injury or medical condition 2. Obtaining diagnosis, care or pre- ventative care 3. Caring for child, parent, spouse, domes- tic partner or individual related by blood or affinity “whose close associa- tion is equivalent of a family relationship” 4. Recovering from domestic violence, sexual assault or stalking (diagnosis and care), obtaining counseling, seeking relocation or assistance from victim ser- vices organizations, taking legal action, preparing and participating in proceed- ings or assisting a person described in category 3 (above) with these activities New rules heighten the compliance requirements for contractors and subcontractors working on federal projects. Unused leave carries over year to year, but the employer is not required to make financial payment for unused leave. Accrued leave must be reinstated for employees rehired within 12 months of separation. Unlike mini- mum wage, overtime and prevailing wage laws, the sick leave rule applies to all employees. Adminis- trative staff, professionals and senior management are not exempt. This requirement creates pay- roll difficulties for com- panies that do a mix of federal and nonfederal projects, as they will have to allocate the time for employees that are not typically charged to projects in order to calculate the sick leave accrual. The takeaway: Contractors and sub- contractors planning to do work on federal construction projects must fully understand new disclosure and payment requirements before submitting proposals. DEEP FOUNDATIONS • JULY/AUG 2016 • 105
