Employment Law

Congress Strikes Down ‘Blacklisting’ Rule; Trump Expected to Sign Off

Congress voted March 6 to repeal a regulation requiring federal contractors to report employment law violations to agencies that award contracts. President Trump is expected to approve the resolution.

The move was expected but is still a great relief to all federal contractors, according Burton J. Fishman, senior counsel with FortneyScott. Even the most compliant contractors had negative reactions to the rule. “They were all opposed to this and that tells you something,” Fishman said. “This was really exceedingly burdensome with very little upside and had the trappings of political—not practical—purpose involved.”

The so-called blacklisting rule was issued to implement President Obama’s Fair Pay and Safe Workplaces executive order. In addition to requiring employers to report violations, it also required agencies to consider those reports when awarding contracts. The rule, according to then-Secretary of Labor Thomas E. Perez, was aimed at ensuring that employers that illegally cut corners at their employees’ expense do not benefit from taxpayer-funded contracts.

The regulation was scheduled to take effect October 25, 2016, but a federal district court temporarily halted certain provisions the evening before (Associated Builders and Contractors of Southeast Texas, et al. v. Rung, No. 1:16-cv-00425 (E.D. Texas, Oct. 24, 2016)).

The judge took issue with the reporting requirements, which she said were not authorized by federal law or the Executive Order. Moreover, none of the laws involved (like the Fair Labor Standards Act, Title VII, and the Americans with Disabilities Act) provide for debarment or disqualification of contractors for violations of their provisions, Judge Marcia A. Crone said.

She left intact, however, the rule’s paycheck transparency requirement, which took effect in January. That part requires federal contractors to provide wage statements detailing employees’ hours worked, overtime hours, pay and any additions made to or deductions made from pay. It also requires these companies to inform an individual in writing if he or she was being treated as an independent contractor rather than an employee.

Shortly after Trump’s inauguration, the House passed a resolution (H.J. Res. 37) to permanently reverse the regulations, including the paycheck transparency requirements. The Congressional Review Act (CRA) allows Congress to undo rules in the 60 days after they are issued, leaving an outgoing administration’s final actions vulnerable. Before Trump, the law was only used successfully once before, to void Occupational Safety and Health Administration ergonomics rules issued during the final days of the Clinton administration.

The Senate adopted the resolution 49-48 and Fishman says he expects Trump to sign it, citing a February 1 statement from the administration expressing its support. “The rule would bog down federal procurement with unnecessary and burdensome processes that would result in delays, and decreased competition for federal government contract,” the White House said. “Rolling back this rule will also help to reduce costs in federal procurement.

“The Administration is committed to reducing onerous regulatory burdens on America’s businesses and using existing authorities to continue enforcing the nation’s workplace laws. If these bills were presented to the president in their current form, his advisors would recommend that he sign them into law.”

And if Trump signs off on the resolution as expected, contractors might not see anything else like the blacklisting rule anytime soon. When Congress uses the CRA to void a regulation, it prevents the agency from issuing the same or similar rules until Congress passes a new law permitting it to do so.

Kate TornoneKate McGovern Tornone is an editor at BLR. She has almost 10 years’ experience covering a variety of employment law topics and currently writes for HR Daily Advisor and HR.BLR.com. Before coming to BLR, she served as editor of Thompson Information Services’ ADA and FLSA publications, co-authored the Guide to the ADA Amendments Act, and published several special reports. She graduated from The Catholic University of America in Washington, D.C., with a B.A. in media studies.