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Judge Delays Contractor 'Blacklist' Rule

Friday, October 28, 2016

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A new rule that would put federal contractors under much closer scrutiny was delayed by a preliminary injunction from a federal judge in Texas Tuesday (Oct. 25), the day it was scheduled to go into partial effect.

The U.S. Department of Labor's Fair Pay and Safe Workplaces Rule—referred to by critics as the “blacklisting” rule—requires prospective federal contractors bidding on projects over $500,000 to disclose labor law violations in the last three years. It stems from an executive order signed by President Barack Obama on July 31, 2014.

Obama with Thomas Perez

The controversial rule stems from an executive order signed by President Barack Obama, seen here with Labor Secretary Thomas Perez, in 2014.

Several groups, including the Associated Builders and Contractors, have fervently opposed the rule, bringing a legal challenge Oct. 7 in the U.S. District Court for the Eastern District of Texas.

Order Blocks Rule

Judge Marcia A. Crone issued the preliminary injunction in the case Monday (Oct. 24) evening, noting that the groups had “properly demonstrated immediate and ongoing injury to their members if the rule is allowed to take effect,” Politico reports.

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.”

Ruling Applauded

In a statement applauding the ruling, ABC Vice President of Regulatory, Labor & State Affairs Ben Brubeck said, “Associated Builders and Contractors is pleased the court ruled that the Obama administration cannot order private businesses to publicly disclose mere accusations of labor law violations that have not been fully adjudicated.”

“By issuing this decision, the court has maintained the First Amendment rights of government contractors and protected them and taxpayers from the poorly crafted blacklisting rule.”

'A Broken System'

Roughly 24,000 businesses, employing 28 million workers, have federal contracts.

“Cheaters shouldn't win,” U.S. Secretary of Labor Thomas E. Perez said when the executive order was first announced. “This action ensures they won't.”

According to Perez, companies with a history of labor-law violations continue to receive lucrative federal contracts. A study released in 2013 found that almost 30 percent of the top violators of federal wage and safety laws were also current federal contractors.

Proponents say the order and subsequent rule are attempts to “fix a broken system.”

For additional information on the Fair Pay and Safe Workplaces Rule and its scheduled rollout, click here.


Tagged categories: Associated Builders and Contractors; Contractors; Department of Labor; Government; Government contracts; North America; Program/Project Management; Regulations; Violations; Workers

Comment from Tony Rangus, (10/28/2016, 10:03 AM)

Pity the poor contractors, but why not MD's and any judgments against them - like lost malpractice lawsuits; disciplinary actions by state medical boards etc. Another abuse of executive orders. Would be interesting to see how the AMA would react to a similar order and how much lobbying would be used.

Comment from Tom Schwerdt, (10/31/2016, 9:11 AM)

Calling this "Blacklisting" seems to be a real warping of what the order does. It's just requiring disclosure, not preventing anyone from bidding or being awarded contracts.

Comment from M. Halliwell, (11/1/2016, 11:01 AM)

Misnomer for sure, Tom. Personally, I like the idea behind the legislation...but maybe splitting it up into "finalized" citations (i.e. all the wrangling is done) and some form of "cited - in progress" (where the ticket is issued, but the wrangling is somewhere in the months or years of haggling regarding the severity and fine). Ask to go back 10 years and see what you get. As you say, Tom, doesn't preclude anyone, but gives the owner / feds something to look at and consider regarding safety. The other alternative is they feds could do what a lot of the big industrial sites do: use a 3rd party prequalification company. All your safety info and stats must be submitted to them, if not or you don't pass their "green light" standards, then you don't get prequalified and can't get any work. It can be a hassle, but it means it's less likely that you get a fly-by-night type qualifying for the work.

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