HR Management & Compliance

Final ‘blacklisting’ rule for federal contractors issued

The long-awaited regulations implementing the Fair Pay and Safe Workplaces Executive Order—often called the “blacklisting” rule—were made final on August 24, even though change may be on the way as a result of litigation and legislation. The final rule, announced by the U.S. Department of Labor (DOL) and the Federal Acquisition Regulatory Council, will take effect on October 25.

President Barack Obama signed the Executive Order in July 2014. The order’s purpose is to require prospective federal contractors to disclose violations of 14 federal labor and employment laws during the previous three years once the new rule is fully phased in. Those laws address wage and hour issues, safety and health requirements, collective bargaining, family and medical leave, and civil rights protections. Government agencies are to consider the disclosures when awarding federal contracts.

The release of the final rule means contractors need to prepare to comply.

“Although the government is phasing in [the] reporting requirements, contractors should remember that they may need to report alleged violations going back to October 2015,” says Sean D. Lee, an attorney with Fortney & Scott, LLC, in Washington, D.C. “Whatever record-keeping system a contractor is using, it should have a process in place to preserve that information.”

The DOL has announced that during the week of September 12, it will begin a preassessment process for contractors that anticipate competing for future federal contracts. Preassessment allows prospective contractors to request an assessment of their record of labor law compliance.

Lee has questions about the preassessment process. “What measures will the DOL take to protect information that a contractor submits through the ‘preassessment’ process? Will the department use that information for any other purposes?” he asks. “The lack of clarity is troubling, and until there’s a clear answer, it’s difficult to advise clients to engage in the process.”

Lee also says contractors will be closely watching the National Defense Authorization Act for fiscal year 2017, which is currently in conference committee. He says both the House version and the Senate version of the bill contain provisions that would “eviscerate” the Executive Order by preventing it from applying to defense contractors.

Litigation over the Executive Order also may be on the way. The National Association of Manufacturers and the Associated Builders and Contractors (ABC) are among the organizations that have hinted at taking legal action against the Executive Order.

“ABC will continue to explore every available avenue, including the judicial system, to protect taxpayers, contractors and their employees, whose livelihoods rely on a fair procurement system, from this overreaching policy,” Ben Brubeck, ABC’s vice president of regulatory, labor, and state affairs, said in a statement issued after the announcement of the final rule.

Brubeck’s statement says the final rule “will create a murky and needlessly subjective procurement process that will result in fewer qualified and responsible contractors bidding on federal contracts.”

But Secretary of Labor Thomas Perez says the rule will help deliver value for taxpayers. “Contractors that illegally cut corners at the expense of their workers should not benefit from taxpayer-funded federal contracts,” he said in a statement released after the issuance of the final rule. “At the same time, employers [that] meet their legal responsibilities should not have to compete with those [that] do not.”

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