Fair Pay and Safe Workplaces Rules On Hold, Paycheck Transparency Remains

When President Obama signed the Fair Pay and Safe Workplaces Executive Order (13673) in July 2014, federal contractors, trade associations, and legal experts immediately claimed he exceeded his executive authority. On October 24, 2016, the U.S. District Court for the Eastern District of Texas enjoined implementation of key components of the Rule.

The two sections that are on hold are: (1) the requirement to self-report labor law violations of some 14 federal labor laws; and (2) the prohibition on pre-dispute arbitration agreements with employees or independent contractors for Title VII claims and torts relating to sexual harassment or assault. The litigation surrounding these sections could last for years, although the preliminary injunction is only temporary. MSEC will continue to monitor developments and report on them as information becomes available.

What remains from the Final Rule is a section relating to paycheck transparency. Those obligations go into effect on January 1, 2017, for prime contracts over $500,000 and subcontracts over $500,000 (but not subcontracts for commercially available off-the-shelf items). For compliance with the paycheck transparency provisions of Executive Order 13673, a summary is provided below.

Paycheck Transparency

Employers must provide a wage statement to all individuals working under a covered contract. The wage statement (pay stub) must include:

  • The total number of hours worked in the pay period;
  • The number of those hours that were overtime hours;
  • The rate of pay (hourly rate, piece rate);
  • The gross pay;
  • Any additions to or deductions from gross pay, itemized separately.

For wage statements that are provided bi-weekly or semi-monthly, the hours worked and overtime hours must be broken down to correspond to the period (workweek) for which overtime is calculated and paid.

The wage statement does not have to provide hours worked for exempt employees. Notice that an employee is exempt from overtime must be given either before the employee begins work or within the first wage statement under the contract. Notice can be a stand-alone document, offer letter, employment contract, or position description.

Independent contractors must receive written notification of their status. The company shall provide the document to the individual either at the time an independent-contractor relationship is established with the individual or prior to the time the individual begins to perform work on the contract. The document must be provided for this contract, even if the worker was notified of independent contractor status on other contracts. The document must be separate from any independent contractor agreement between the contractor and the individual.

Notices and wage statements may be provided electronically. The notices and wage statements must also be provided in English and the language in which the workforce is fluent.