1. Big reputational risk ahead for banks seeking federal contracts, 2016 WL 6080496
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Big reputational risk ahead for banks seeking federal contracts
(October 18, 2016) - Banks, credit unions and other financial firms seeking new or renewed contracts to provide credit
card or benefit plan services to federal agencies will face high reputational risk from required disclosure of violations of
numerous employment laws as the "blacklisting rule" begins to take effect next week.
However, the former director of the Office of Federal Contract Compliance Programs, Lawrence Lorber, says while
reports of employment law offenses — even relatively minor and still-disputed ones — will be made available to the
public, it is unlikely many financial firms will be found "nonresponsible" and therefore ineligible for federal contracts.
Still, "the high-profile woes of large banks relating to dismissal of whistle blowers and other alleged misdeeds may make
the blacklisting rule's disclosures a very unwelcome spotlight for financial companies," said Lorber, now a senior counsel
at Seyfarth Shaw LLP in Washington.
In late August, the Federal Acquisition Regulatory Council issued final rules and the Department of Labor published
final guidance intended to implement the Fair Pay and Safe Workplaces Executive Order, signed by President Barack
Obama on July 14, 2014.
Effective Oct. 25, 2016, this so-called blacklisting rule requires federal agencies to survey a potential contractor's
compliance record when awarding contracts valued at over $500,000 to ensure only businesses with "safe, healthy, fair,
and effective workplaces" work for federal agencies.
Lorber notes that, in addition to credit card and benefit plan contracts, leasing space from the government may also
constitute a covered contract under these rules if the lease meets the base coverage amount.
Commenting on the rule's purpose, Secretary of Labor Thomas E. Perez said "contractors that illegally cut corners at the
expense of their workers should not benefit from taxpayer-funded federal contracts," and "employers [that] meet their
legal responsibilities should not have to compete with those [that] do not."
Under the rule, prospective federal contractors must disclose violations of 14 federal labor and employment laws during
the previous three years once the rule is fully phased in, including laws regarding minimum wages, overtime pay, safety
and health, collective bargaining, family and medical leave, and discrimination.
However, the rule's disclosure requirements come into force for contract solicitations issued on or after Oct. 25 only for
contracts valued at $50 million or more. On contracts for lesser amounts, bidders won't have to begin submitting data
on employment law violations to DOL until April 24, 2017.
Bidding contractors have to report any workplace law violations back to Oct. 25, 2015, and updated disclosures will be
due every six months. By Oct. 25, 2018, the look back would reach the previous three years.
Subcontractors also must report their violations directly to the DOL, who will then inform the related contractors, and
contractors will need to consider the DOL's analysis and advice as they make their own responsibility determinations on
their prospective subcontractors. Subcontractors must begin to report to DOL on Oct. 25, 2017.
Relevant "violations" include any adverse administrative merits determination, federally initiated lawsuit, civil judgment,
or arbitral award or decision even if the matter is still under appeal or otherwise subject to further review and challenge.

2. Big reputational risk ahead for banks seeking federal contracts, 2016 WL 6080496
© 2016 Thomson Reuters. No claim to original U.S. Government Works. 2
The Executive Order also requires the Department of Labor to publish a list of equivalent state laws which would trigger
disclosure. The department has not yet published the list. Contractors may also report mitigating factors, remedial
measures, and other steps taken to correct the violations.
Contractors that succeed in obtaining new contracts will have to observe new paycheck transparency standards and
restrictions on pre-dispute arbitration, effective Jan. 1, 2017. The pay transparency standards require such contractors
to provide statements to their workers that outline their pay details (hours, gross pay and deductions, and whether an
employee is exempt or non-exempt regarding the Fair Labor Standards Act) and to inform any worker being treated as
an independent contractor rather than an employee of his or her status in writing.
Litigation is pending that seeks to either stay or affirmatively challenge the Executive Order and the regulations.
By Kieran Sharpe, CQ Roll Call
© 2016 Congressional Quarterly Inc. All Rights Reserved
End of Document © 2016 Thomson Reuters. No claim to original U.S. Government Works.