Senate votes to kill Obama contractor rule

Regulation issued last year requires companies to disclose wage, safety violations; President Trump can seal its fate

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Federal contract workers and their advocates rally at Freedom Plaza in Washington, D.C., in December.

Talia Buford/ Center for Public Integrity

The Senate voted Monday to kill an Obama administration rule aimed at curbing labor violations among government contractors. Two years in the making, the Fair Pay and Safe Workplaces rule was targeted by Republican lawmakers 10 days after Donald Trump’s inauguration. The House voted to excise it on Feb. 2, and Trump can seal its fate with his signature.

Before the Senate vote – 49-48, along party lines – the White House issued a statement saying the rule “would bog down Federal procurement with unnecessary and burdensome processes that would result in delays, and decreased competition for Federal government contracts.”

Issued in August by the U.S. Department of Labor, the rule requires would-be contractors to disclose wage or safety violations during the previous three years.  The vehicle for its undoing by Congress was the rarely used Congressional Review Act, through which recently finalized regulations can be dismantled by simple majorities in the House and Senate. The act prohibits federal agencies from crafting similar rules unless authorized to do so by lawmakers.

Lafe Solomon, a retired Labor Department senior advisor who helped develop the regulation, said Congress’s discarding of it constitutes a loss for American workers. “Workplaces will be less safe and workers certainly run the risk of not getting paid fairly,” he said.

The rule stemmed from a 2014 executive order issued months after a report by Senate Democrats revealed that almost 30 percent of the worst violators of wage and worker-safety laws from 2007 to 2012 had received  government contracts. Eighteen contractors were assessed fines that fell within the top 100 issued by the Labor Department’s Occupational Safety and Health Administration during that period. Thirty-two were hit with back-wage assessments that were among the top 100 levied by the department’s Wage and Hour Division.

“Unfortunately, this report demonstrates that the officials responsible for determining if a prospective contractor is a responsible entity prior to awarding a contract lack access to information on labor violations and lack the tools to evaluate the severity or repeated nature of these types of violations,” wrote Democratic staff members of the Senate Health, Education, Labor and Pensions Committee.

The findings echoed those of the Government Accountability Office in 1995 and 2010.  In 2016, the progressive think tank Demos estimated that employees of federal contractors lose $1.6 billion to $2.5 billion each year from minimum-wage violations alone.

Contractors employ about a quarter of the American workforce. According to the U.S. Treasury, the government spent about $471 billion on contracts last year.

Though contracting agencies already consider companies’ past performance – which may include compliance with labor laws – in weighing bids, that information isn’t easily accessible across the government.

The rule dictates that any company seeking a contract worth more than $500,000 disclose violations – including cases pending with the Labor Department or other federal agencies, going back three years – of 14 different labor laws. Those without any blemishes on their record would check a box saying so.

Another provision is paycheck transparency – employers would have to let workers know precisely what they’re owed, theoretically enabling them monitor their own paystubs for accuracy. Employees alleging workplace discrimination or sexual assault would have the right to seek redress in court rather than be forced into arbitration.

Popular with labor advocates, the regulation has drawn the ire of dozens of trade groups.

“A better, cheaper, and faster approach is for the government to fix problems with their existing processes and data to enforce contractors’ and subcontractors’ labor law compliance,” the Professional Services Council, which represents more than 400 contractors, said in a statement.

Associated Builders and Contractors, whose members receive more than half of all federal construction contracts worth more than $25 million, is also vehemently opposed. Along with the National Association of Security Companies, ABC sued to block the rule last fall. Days before its first phase would have kicked in – companies bidding on contracts worth more than $50 million would have had to start disclosing their violations over the previous year – a federal judge in Texas issued a temporary, nationwide injunction staying everything but the paycheck-transparency requirement.

The judge questioned the legality of making contractors report charges of misconduct that haven’t been adjudicated. The Labor Department is appealing.

The resolution to annul the rule in the House was introduced by Rep. Virginia Foxx (R-N.C.), who chairs the Committee on Education and the Workforce.

“Workers deserve strong protections, and employers who do business with the federal government must be held to a high standard. But this blacklisting rule doesn’t make sense,” Foxx said in a statement.   “Adding an unnecessary layer of red tape would only hurt workers and small businesses, increase costs for taxpayers, and threaten the resources our men and women in uniform rely on.”

Supporters of the rule say the extra layer of scrutiny would help level the playing field for companies that follow wage and safety laws. We don’t want to see somebody who’s a fly-by-night contractor who isn’t complying with a multitude of laws be able to win contracts because their prices come in so low,” said Karla Walter, a labor expert at the Center for American Progress Action Fund.

“I think President Trump has signaled that he intends to be a champion of workers, and he has the opportunity to veto this measure,” Walter said. “If he’s concerned about the little guy, if he wants to push back against corporate lobbyists, then now is the time.”

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