WASHINGTON, D.C.—A new rule that would put federal contractors under much closer scrutiny was delayed by a preliminary injunction from a federal judge in October, the day it was scheduled to go into partial effect. The Fair Pay and Safe Workplaces Rule was published by the Department of Labor and the Federal Acquisition Regulation Council.
Originally issued in July 2014 and amended in 2016, the act was supposed to go into effect October 25. It requires businesses seeking federal contracts of over $500,000 to disclose not only civil and administrative proceedings against them, but also violations of any of 14 listed workplace protections in the past three years. The rule is referred to by critics as the “blacklisting” rule.
The Department of Labor holds that the new rules ensure contractors who don’t follow the rules aren’t rewarded with federal contracts, and those who do are given a fair chance. Some industry voices, though, say the act goes too far in blacklisting companies that violate rules some consider to be unfair.
Industry arguments against the new rule largely center around the idea that enforcement can be subjective, and that violations must be reported even if they haven’t gone through the entire appeals process. Several groups, including the Associated Builders and Contractors, have fervently opposed the rule, bringing a legal challenge in the US District Court for the Eastern District of Texas.
Judge Marcia A. Crone issued the preliminary injunction in the case, noting that the groups had “properly demonstrated immediate and ongoing injury to their members if the rule is allowed to take effect.” She also wrote that the regulations “appear in conflict directly with every one of the labor laws they purport to invoke by permitting disqualification solely upon ‘administrative merits determinations’ that are nothing more than allegations of fault asserted by agency employees and do not constitute final agency findings of any violations at all.”
Further, Crone wrote that the group’s argument that the executive order and subsequent rule from the Federal Acquisition Regulatory Council violate the First Amendment has merit because they require contractors to publicly disclose violations of any of the 14 federal labor laws “without regard to whether such violations have been finally adjudicated after a hearing or settled without a hearing, or even occurred at all.”
The labor law violations that must be disclosed according to the new rule include those related to wage and hour laws, health and safety rules, collective bargaining, family and medical leave, and civil rights protections. The three-year window only applies to violations after October 2015. That essentially gives a clean slate for companies with violations before that date.
While the executive order would considerably add to the burden for federal contractors, it’s not the first time firms seeking government contracts have dealt with this sort of procedure. Similar rules, also heralded by some as a blacklist, were put into effect in the waning days of the Clinton administration in 2000, but were rolled back in 2001 after George W. Bush took office.