President Signs Executive Order Requiring Federal Contractors to Disclose Labor Violations and Eliminate Pre-Dispute Arbitration Agreements with Employees

On July 31, 2014, the President signed an Executive Order that will require will require prospective federal contractors to disclose labor law violations from the past three years before they can get a contract with the federal government. Contractors will also be expected to collect similar information from many of their subcontractors. The new disclosure requirements will apply to new federal procurement contracts valued at more than $500,000; however, according to the Fact Sheet put out by the White House it will be “implemented on new contracts in stages, on a prioritized basis, during 2016.” The Executive Order anticipates the creation of a website by the General Services Administration that will serve as the one location where contractors can report this information to avoid having to provide it with each new contract.

In addition to the new disclosure requirements, the Executive Order also includes a provision directing companies with federal contracts of $1 million or more not to require their employees to enter into predispute arbitration agreements for certain employment-related claims such as statutory claims under Title VII and tort claims related to sexual assault or harassment. This provision is not intended to affect employment agreements currently in place that include such arbitration provisions.