December 29, 2016

Paycheck Transparency Requirements Take Effect January 1: What Federal Contractors Need to Know

President Obama’s Fair Pay and Safe Workplaces executive order is one of a number of regulatory initiatives many expect to be rolled back by the incoming Trump administration, and many of the order’s guidelines have already been stayed due to pending litigation. Nonetheless, the order’s paycheck transparency requirements will still take effect January 1, 2017, and federal contractors and subcontractors should determine if they are impacted and what compliance measures they need to take.

Bids for future contracts (and resulting contracts) that exceed $500,000 are subject to the paycheck transparency clause. This clause requires contractors and certain subcontractors to provide all individuals performing work under the contract with a wage statement document (pay stub) in each pay period detailing the following information:

  • total number of hours worked in that pay period;
  • number of those hours that were overtime hours;
  • rate of pay (e.g., hourly rate, piece rate);
  • gross pay (may include bonuses, awards, and shift differentials); and
  • an itemization of each addition to or deduction from gross pay (e.g., withholding for taxes, employee contributions to health insurance premiums or retirement accounts).

Contractors already complying with substantially similar state-based wage statement requirements may already be in compliance. To date, the DOL has determined that the following states and localities have substantially similar wage statement requirements: Alaska, California, Connecticut, District of Columbia, Hawaii, New York and Oregon.

In addition to the wage statement requirements, contractors must also provide notice of exemption from the overtime compensation requirements of the Fair Labor Standards Act (FLSA) and notice to workers who are treated as independent contractors informing them of their independent contractor status.

The regulations also stipulate that where a significant population of the contractor’s workers is not fluent in English, contractors must provide the required wage statement and other notices in the appropriate alternative language.

If your company is bidding on a federal contract or subcontract in excess of $500,000 on or after January 1, 2017, please contact us so that we can provide additional guidance on the paycheck transparency clause and other details of the new regulations.

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