Fair Pay and Safe Workplaces Legislation - Bill Introduced to Restore Repealed Executive Order

Senator Tina Smith (Minn) introduced legislation last week that would restore the Fair Pay and Safe Workplaces rules from the previous administration that were repealed last year. When we first read the Senator's press release, we thought "wait a minute, what?" But sure enough, there it was.

We covered the previous rules extensively on these pages, from the initial Executive Order to the Labor Department's rules to the FAR (Federal Acquisition Regulations) rules to the court battles that threw out a major portion of them, to the eventual demise.

Here's an extract from the Senator's press release. It reads, almost work for word, like the President Obama's Executive Order.

The Fair Pay and Safe Workplaces Act is based on President Obama's executive order of the same name. While the Obama-era rules were repealed in 2017, Sen. Smith's legislation would restore them. The bill would require the federal government to consider a company's history of labor law violations in awarding federal contracts to ensure that taxpayer funds don't go to companies that repeatedly violate the law. Companies with problematic records of mistreating their workers would be required to take steps to improve the treatment of workers or face the possibility of being barred from federal contracting. The bill would also ensure that workers for federal contractors receive pay stubs and aren't forced to give up their rights to go to court for sexual harassment or sexual assault. Further the bill would ensure that taxpayer funds aren't used for union-busting activity.

We can't imagine that this legislation will have any success of passing the Senate or the House, much less the President's signature.

Fair Pay and Safe Workplaces Rules - Dead

This week, the FAR (Federal Acquisition Regulation) Councils issued a final rule implementing a public law that disapproved a previous final rule. The rule, called Fair Pay and Safe Workplaces, was based on an Executive Order (EO) that was ultimately overturned by Congress. To read what the regulations would have required, see Fair Pay and Safe Workplaces).

In 2014, the President issued EO 13673, Fair Pay and Safe Workplaces. In August 2016, implementing rules were published. In October 2016, several industry organizations filed a lawsuit seeking to overturn the final rule. That same month, the Court issued a preliminary injunction against the Government preventing them from enforcing most of the rules.

In March 2017, under the Congressional Review Act, Congress passed House Joint Resolution 37 which disapproved the entire FAR rule that was published back in August 2016. The President signed the Resolution into law that same month. By statute, the rule was to be treated as if it had never taken effect.

Had the rules remained in effect, the cost to contractors and the Government would have been significant. The Regulatory Impact Analysis (RIA) that included a detailed discussion and explanation about he assumptions and methodology used to estimate the cost of the final rule, calculated the cost to be in excess of $470 million the first year, $458 of which was to be born by contractors and subcontractors. That figure doesn't include the defense of litigation, some of it frivolous, that most people figured would occur as a result of alleged noncompliances with the rules.

No contractor we know of is disappointed that these onerous rules have been abolished.

RIP - Fair Pay and Safe Workplaces Regulations

Yesterday the President signed into law H.J.Res 37 which repeals the Fair Pay and Safe Workplaces regulations, which was based on an Executive Order from the prior President.

According to the Presidential spokesman, manufacturers had identified the "blacklisting" rule as one of the most significant threats to growing American business and hiring more American workers. "The rule simply made it too easy for trial lawyers to go after American companies and American workers who contracted with the federal Government.

Nice, we just got rid of 90 pages of Federal Register regulations.

Congress Issues Joint Resolution to Block Government Contractor Fair Pay and Safe Workspaces Rules

Last Monday, Rep. Virginia Foxx introduced a joint resolution of disapproval of the recently implemented (and more recently temporarily suspended by a Federal judge) of the so-called Fair Pay and Safe Workspaces rules. This joint resolution is provided by the Congressional Review Act (CRA). The CRA allows Congress a limited period of time in which to overrule a regulation through use of a joint resolution, essentially giving Congress a legislative veto. The resolution needs to be passed by both houses and then signed by the President or passed over the President's veto by two-thirds of the House and Senate.

The Fair Pay and Safe Workspaces rules have been controversial from the start and is commonly referred to as the "Blacklisting" rule because it requires contractors to report "alleged" labor violations that have not been adjudicated. For example, a "preliminary determination" by some obscure Governmental agency could prevent a contractor from being awarded a contract.

Given that both houses of Congress and the President are controlled by the same party, it seems likely that the resolution will pass. If it does pass, federal agencies will not be able to issue a substantially similar rule without specific authorization from Congress.

Last October, a Federal judge issued a temporary injunction halting the implementation of the Fair Pay and Safe Workspaces regulations. You can read more about that injunction here.

The text of the Joint Resolution reads as follows:

Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That Congress disapproves the rule submitted by the Department of Defense, the General Services Administration, and the National Aeronautics and Space Administration relating to the Federal Acquisition Regulation published at 81 Fed. Reg. 58562 (August 25, 2016), and such rule shall have no force or effect.

Fair Pay and Safe Workplaces Regulations Injunction - Part 2

Yesterday, we wrote about the federal judge in Texas that issued a temporary injunction halting the implementation of the new Fair Pay and Safe Workplaces (FPSW) regulations (see Federal Court Issues Preliminary Injunction Blocking Most of Fair Pay and Safe Workplace Provisions). Indeed this was a great victory for Government contractors but already, contractors (and prospective contractors) are being cautioned that its too early to take a victory lap. There is a strong potential for an appeal or perhaps amended regulations that address the Judge's concerns. A Justice Department spokesperson was quoted as saying that lawyers are studying the decision and "considering their options". Additionally, a spokesperson from the Labor Department defended the rules and said that the administration is confident they will be upheld in the courts.

The cost of regulations is not free and the cost for the FPSW regulations is huge. The Regulatory Impact Analysis (RIA) calculated costs of $458 million imposed on contractors and subcontractors and nearly $16 million imposed on the Government during the first year of implementation. The cost for the second year of implementation was almost as bad - $414 million for contractors and $10 million for the Government. Even the Judge was taken back by these amounts and ruled that there was insufficient data to accurately assess whether the benefits derived from the new regulations were commensurate with the costs to the contractors. In fact, there is anecdotal evidence that some contractors might withdraw from Government contracting which will reduce competition in the Federal marketplace.

One aspect of the decision that we didn't discuss yesterday concerned the FPSW's "paycheck transparency requirement" allowing employees to chat about their paychecks with one another. The court declined to enjoin enforcement of the paycheck provisions. Most employers have no issue with these provisions so the Court's declination is not viewed as very significant. But, appeals work both ways and perhaps this will be appealed somewhere down the road.

Because there is a strong potential for appeal or amended rules, contractors and subcontractors should continue planning for eventual compliance.

Federal Court Issues Preliminary Injunction Blocking Most of Fair Pay and Safe Workplace Provisons

Just before the provisions of the Fair Pay and Safe Workplaces Executive Order were scheduled to become effective, a U.S. District Court (Eastern Texas) issued a preliminary injunction blocking most of the provisions implementing the President's Executive Order (EO) on Fair Pay and Safe Workplaces (FPSW). Most notably, the provision imposing new reporting requirements regarding labor law violations by Government contractors and subcontractors has been suspended.

For background on the EO and regulations, see Fair Pay and Safe Workplaces and other discussions linked in that post.

The injunction was in response to a suit filed by the Associated Builders and Contractors of Southeast Texas. The association argued that;

1. The Executive Order, FAR rule, and DOL guidance exceed the President's, FAR Council's and DOL's authority and are otherwise preempted by other federal labor laws.
2. The Executive Order, FAR rule, and DOL guidance violate the First Amendment (prohibiting compelled speech)
3. The Executive Order, FAR rule, and DOL guidance violate the due process rights of government contractors and offerors (compelling them to report and defend against non-final agency allegations of labor law violations without being entitled to a hearing at which to contest such allegations).
4. The new rule and guidance are arbitrary and capricious and entitled to no deference
5. The Executive Order and the FAR Council rule violate the Federal Arbitration Act.

The Court ruled that the Plaintiffs (the Association) satisfied the prerequisites for a preliminary injunction, that they have demonstrated a substantial likelihood of success on the merits as to their claims, have shown irreparable harm in the absence of immediate relief, and the public interest supports issuance of an injunction to maintain the status quo of many decades pending a final decision on the merits. Specifically, the Government is enjoined for implementing any portion of the FAR Rule or DOL guidance relating to the new reporting and disclosure requirements regarding labor law violations.

The Court also noted that FPSW violated the Administrative Procedures Act (APA) as an arbitrary and capricious action that does not provide an adequate explanation for imposing drastic new requirements, a cumbersome process with the potential of bogging down the already overloaded procurement process, and the significant additional costs and expenses on government contractors without a demonstration that the FPSW will promote economy and efficiency in Government contracting. This cost/benefit disconnect is very obvious to just about everyone.

This injunction should please every current and prospective Government contractor. We have yet to find a contractor favoring the FPSW regulations.

Fair Pay and Safe Workplaces

Last week, the Federal Acquisition Institute released an awareness video to help the acquisition workforce and current and prospective Government contractors to acclimate to the Fair Pay and Safe Workplaces Executive Order from July 2014. It provides a high-level overview of the basic requirements and is worth the 20 minutes it takes to watch.

The video may be viewed at https://www.acquisition.gov/?q=fair-pay-eo. It points out in so many words that the Government believes that contractors that consistently adhere to labor laws are more likely to have workplace practices that enhance productivity and increase the likelihood of timely, predictable, and satisfactory delivery of goods and services to the Federal Government.


The regulations to implement the executive order have been published in draft form, the public comment period and ended and the regulatory agencies are putting the final touches on a final regulation.

We spent several postings discussing the some of the public comments. See Fair Pay and Safe Workplaces - Public Comments and suspect that it will take some time for the Government to read, distill, analyze, and respond to all 918 comments received

Fair Pay and Safe Workplaces - Public Comments - Part 5

This week, we have been recapping several of the 918 public comments submitted in response to draft regulations implementing the President's Executive Order (EO) called Fair Pay and Safe Workplaces. The EO is intended to punish Government contractors (or some would say is intended to incentivize Government contractors to do better) who engage in repeated offenses of fourteen different labor laws currently on the books. Under the proposed regulations, offending contractors (and subcontractors) will be at a disadvantage compared to their competitors, when responding to solicitations for Government work.

If you have not been following this series, you may want to go back and read Parts 1 through 4:

• Part 1 - Comments from the Project on Government Oversight (POGO) - Endorse
• Part 2 - Comments from the Associated General Contractors of America (AGC) - Oppose
• Part 3 - Comments from the American Bar Association - Oppose
• Part 4 - Comments from the Leadership Conference on Civil and Human Rights - Endorse

So far, we've looked at comments submitted by a public service organization (POGO), one that represents a certain segments of contractors (AGC), one that represents attorneys specializing in contract law (ABA) and one that represents workers in general (Leadership Conference on Civil and Human Rights). Today we will recap a response from an existing Government contractor; Lithko Contracting. Many of the 918 public comments came from Government contractors. There was no particular reason for choosing Lithko's submission other than it seemed to have been written by someone that had given some thought to the practicalities of trying to implement the regulations.

Lithko is a nationwide specialty concrete contractor employing 1800 people. It has been in business for 33 years and, according to its narrative, has an excellent safety record and a great relationship with OSHA and other Governmental agencies. Lithko opposes the proposed rules.

Lithko's first objection concerns the requirement to report non-final agency and court actions. Lithko pointed out that companies commonly undergo agency investigations and receive violation notices or court complaints, but a subsequent hearing or legal proceeding reveals the alleged violation is unfounded or is much less serious than the original claim. If non-final agency or court actions are considered by contracting officers as part of the responsibility determination process, quality companies could lose a contract as a result of cases or investigations that are not yet fully adjudicated or are eventually dismissed.

Secondly, adding reporting requirements and certifying compliance of subcontractors will force companies to hire more staff  (and attorneys) at great cost which will eventually be passed on to the federal government and taxpayers.

Third, there will likely be an increase in the number of bid protests, litigation against frivolous complaints and investigations, and lawsuits disputing the subjective responsibility determination or assertions made by federal contracting officers and prime contractors. These will create delays.

Finally, added cost, red tape, increased risk, delays and needless uncertainty will have a severe impact on small businesses and will prevent many small businesses from competing for federal contracts because they do not have the resources to comply with this substantial regulatory burden.

Lithko is certainly correct about added cost. The Government acknowledges that. It probably has not thought through the relative impact of the added cost on small businesses.

Fair Pay and Safe Workplaces - Public Comments - Part 4

Today we present the fourth segment in our series on examining the public comments submitted in response to the regulations implementing the President's Fair Pay and Safe Workplaces Executive Order (EO). The idea behind the EO is that by requiring employer's workplace violations be taken into consideration when the Government awards federal contracts, it will no longer be acceptable to award contracts to companies that routinely violate workplace health and safety protections, engage in age, disability, race, and sex discrimination or withhold wages, and other labor violations.

If you're just coming in to this series, you may want to start with Parts 1, 2, and 3.

• Part 1 - Comments from the Project on Government Oversight (POGO) - Endorse
• Part 2 - Comments from the Associated General Contractors of America (AGC) - Oppose
• Part 3 - Comments from the American Bar Association - Oppose

Today, we will summarize comments presented by The Leadership Conference on Civil and Human Rights. The Leadership Conference is a coalition  of more than 200 national organizations promoting and protecting civil and human rights of all persons in the United States. The Conference strongly supports the proposed regulations, maintaining that implementation will improve the lives of millions of workers  - helping to ensure they have access to fair pay, benefits, and working conditions.

The Leadership Conference stated that under current regulations, contractors that violate workplace laws have little incentive to come into compliance and companies with the most egregious violations of these laws continue to receive federal contracts. It cites as support for this claim, a 2013 Senate report showing the government awarded $81 billion in federal contracts in a single year to companies with the most egregious violations of wage and workplace safety laws.

The Leadership Conference also made some recommendations to "enhance" the proposed regulations. For example, it proposes to extend the rules to all employees of a company, not just those working on Government contracts (Actually, the regulations apply to contractors, not employees. Violations affecting non-Government contract employees are to be reported as well as those affecting employees working on Government contracts.)

The Leadership Conference wants to add "physical assault" by any employee against any other employee of the company to the list of unlawful harassment. It seems to us that a lot of physical assaults occurring in the workplace are well beyond violations of labor laws. They also want to significantly narrow the definitions of willful violations, repeated violations, and pervasive violations; lowering the bar for reporting violations.

Like many other respondents, both for and against the regulations, the Leadership Conference believes that the information regarding violations be made publicly available. Publicizing violations will increase incentives for contractors to comply with labor laws.

Fair Pay and Safe Workplaces - Public Comments - Part 3

We are in the midst of recapping public comments to the proposed regulations implementing the President's Fair Pay and Safe Workplaces Executive Order (EO). Who could possibly be opposed to fair pay and safe workplaces? No one, really. But the EO and the accompanying regulations have very little to do with fair pay and safe workplaces. Fair pay and safe workplaces are already ensured by 14 different labor laws already on the books. The proposed regulations require contractors to disclose violations of those laws (including non-judicial settlements) that occurred withing the three years preceding the submission of a proposal for a Government contract. If you're just coming in to this series, you may want to start with Parts 1 and 2.

• Part 1 - Comments from the Project on Government Oversight (POGO) - Endorse
• Part 2 - Comments from the Associated General Contractors of America (AGC) - Oppose

Today, we will look at comments from the American Bar Association's Section of Public Contract Law (PCL).  The purpose of the PCL Section is to seek to improve the process of public contracting for needed supplies, services, and public works. While agreeing that contractors and subcontractors must comply with U.S. labor laws, the PCL believes that the proposed rules as drafted would be

• difficult to implement
• significantly disrupt procurements
• impose significant costs and burdens on offerors, contractors, and subcontractors and the Government. 

The PCL calls for the FAR Councils and the Department of Labor to withdraw the proposed guidance and regulations.

The Proposed Rule and Proposed Guidance effect a major modification to the current acquisition process. This major modification creates a complex compliance regime that is new both to the Government and to contractors. Implementation of systems both within the Government and at the contractor and subcontractor levels throughout the supply chain will take time and require a significant expenditure of money and resources. Moreover, the labor-law compliance review includes a new agency participant, the Agency Labor Compliance Adviser ("ACLA"); new reporting requirements; and new responsibility reviews that will have to operate within the already-existing procurement environment governed by a complicated and layered system of statutes and regulations.

Like the AGC, the PCL believes that the cost om implementing the EO have omitted some forseeable costs and impacts from their cost-benefit analysis. This is a polite way of saying that the Government's estimates are grossly understated. The Government estimates that 26 thousand contractors and subcontractors will be impacted and each of those will spend eight hours during the first year and zero hours each year thereafter. The PCL points out that basing an estimate on the use of a single contractor employee to understand all the complex requirements is neither reasonable no realistic. The PCL believes that compliance with the reporting obligations will be a multi-disciplinary effort that involves such functions as human resources, legal, ethics and compliance, information technology, program management, business development, contract management, and subcontract or supply-chain management.

Also, like the AGC, the PCL recommended that the FAR Council should consider the impact of the proposed rule on small businesses. Not only is the new requirements onerous but small business subcontractors might be negatively impacted because a prime contractor may have difficulty evaluating labor violations for small contractors.

Fair Pay and Safe Workplaces - Public Comments - Part 2

Yesterday we began a series on summarizing some of the public comments submitted in response to the proposed regulations that will require contractors to report three years worth of violations of 14 different labor laws when submitting proposals to the Government. This is a highly controversial and emotionally charged proposal. There were 918 comments submitted during the public comment period - a number rarely seen related to procurement regulations. Yesterday, we summarized positive comments submitted by POGO (Project on Government Oversight). Today we will look at a contrary position submitted by the AGC.

The Associated General Contractors of America (AGC) is an association in the contruction industry, representing both union and non-union prime and specialty construction companies. It represents more than 26 thousand firms engaged in the construction of the nation's commercial buildings, shopping centers, factories, warehouses, highways, bridges, tunnels, airports, waterworks facilities, waste treatment facilities, dams, water conservation projects, defense facilities, and more.

The AGC is firmly opposed to the proposed regulations, believing the President's EO (Executive Order) and accompanying regulations are "unfounded, unnecessary, unworkable and unlawful. If implemented, these executive actions would improve neither economy nor efficiency in government procurement." The AGC goes on to state:

If implemented, the EO and proposed rule would be destined to malfunction. They are unreasonable and inconsistent, and would be ineffective, excluding from service to the government not only bad-actor contractors but also a far greater number of well-intentioned, ethical contractors. The EO and proposed rule would needlessly create a new, complicated and unmanageable bureaucracy to address problems that a host of federal laws, regulations and bureaucracies already address. Furthermore, they would lead to crippling delays in federal contracting, encourage unnecessary litigation, and increase procurement costs to the government and taxpayers.

Other points made by AGC include:

• The FAR Council's Economic Analysis of the Proposed Rule is Fundamentally Flawed. The estimated cost of compliance is significantly understated. Actually similar points were also made by other commentators.
• The Executive Order and Proposed Rule are Unworkable. Prime contractors do not have sufficient time and information to perform responsibility determinations of all proposed subcontractors. Prime contractors fear liability from denying subcontractors potential subcontracts based on their labor law violations. What recourse does a subcontractor have against a prime? Who will cover the cost of termination after an irresponsibility determination? Disclosing sensitive information to potential competitors would increase the number of bid protests. The proposed rule would increase contractor litigation of suits that would have otherwise settled. The EO and proposed rule will prove difficult for small businesses and create a further barrier to entry into government contracting.

Fair Pay and Safe Workplaces - Public Comments to Proposed Rule

Last May, the FAR Councils issued a proposed rule to implement the President's Fair Pay and Safe Workplaces Executive Order (EO) from July 31, 2014. The new rules will require prospective contractors to report every time they submit proposals, whether they have had any violations of any of 14 federal labor statutes in the preceding three years. When we last reported on the proposed regulation (see Fair Pay and Safe Workplaces dated June 3, 2015), we made a prediction that there would be plenty of public comments to the proposed regulation. Sure enough, the second extension to the public comment period ended on August 26, 2015 and there were a total of 918 public comments submitted. We pity the folks that will now have to sort through, categorize, and respond to these comments - its going to be a herculean task. (If you care to peruse them yourself, you can find them on-line here)

Over the next few postings, we intend to find a few of the substantive comments submitted by contractor organizations, employee organizations, and watchdog groups to assess the level of support for the regulations. We will start with comments submitted by the Project on Government Oversight (POGO). POGO counts itself as a nonpartisan independent watchdog that champions good government reforms. The Organization investigates allegations of corruption, misconduct, and conflicts of interest in hopes of achieving a more effective, accountable, open, and ethical federal government. POGO is well-known and carries a lot of influence in DC.

POGO supports the proposed rule. "To determine whether companies have a satisfactory record of integrity and business ethics as the FAR requires ... it is necessary for contracting officers to have information about the condition of companies' workplaces and how their workers are treated." But POGO also made a number of recommendations to "strengthen" the rule. One of those recommendations would have contractors disclose "settled" cases. POGO states:

According to the proposed Department of Labor guidance, a private settlement in which the lawsuit is dismissed without any judgment being entered is not considered a "civil judgment" that triggers disclosure. This will substantially weaken the final rule, as legal actions against companies often settle without a formal judgment by a court or tribunal. Nearly half of the thousands of civil, criminal, and administrative instances in POGO's Federal Contract Misconduct Database were settled without a final judgment or finding of liability. Contractors, especially those with substantial financial and legal resources at their disposal, will evade disclosure by settling labor cases before a judgment is entered.

Other notable recommendations from POGO include:

• Make the information available to the public.
• Increase the disclosure period from three years to five years prior to proposal submission.

Fair Pay and Safe Workplaces

Following is an update to prior postings on the President's Fair Pay and Safe Workplaces Executive Order (EO) from July 31, 2014. Prior coverage of this topic includes:

• New Executive Order - Fair Pay and Safe Workplaces
• Fair Pay and Safe Workplaces - First Steps to Implementation

DoD, GSA, and NASA (the FAR Councils) issued a proposed rule last week to implement the EO. In short, the new rules will require prospective contractors to report on every proposal, whether they have had any violations of any of 14 federal labor statutes in the preceding three years. Contracting officers, along with their LCA's (Labor Compliance Advisors), will then use that information to determine if the prospective contractor has demonstrated a pattern of pervasive and willful abuse of the 14 statutes. If the ACO and LCA determine that there has been a pattern of pervasive and willful abuse, the prospective contractor will be determined non-responsible and consequently not eligible for the contract.

The proposed rule is out for comment for the next 60 days. Judging from the internet chatter, there should be plenty of comment. Concerns have been expressed from many interested parties. For example see here and here. Some have expressed concerns that under the proposed rules, patterns of pervasive and willful abuse includes arbitral settlements, administrative settlements, or simply allegations of wrongdoing.

With respect to making disclosures, the DOL guidance defines ther terms "administrative merits determination", "civil judgment," and "arbitral award or decision," for each of the fourteen enumerated labor laws and discusses what information related to these determinations must be reported byu contractors and subcontractors. The FAR rule creates solicitation provisions andcontract clauses that will include these disclosure triggers and explain when the required information described in the DOL guidance is to be submitted, how it is to be submitted, and to whom it is to be submitted.

The proposed rule applies to subcontractors as well. In fact, subcontractors have to make their own disclosures, then the prime contractors will have to decide whether the subcontractor has exhibited a pattern of pervasive and willful abuse, then report its findings to the Government and hope that the Government doesn't second guess its determination.

Implementing these new set of rules is going to be extremely costly for contractors.