HR Management & Compliance

Trump puts final nail in the coffin: Blacklisting rule ‘gone forever’

President Donald Trump has signed a resolution voiding an Obama-era regulation that would have required federal contractors to disclose employment law violations to agencies that award contracts. His signature was the final step in the repeal process. “It was the stake through the heart of the blacklisting regs,” according to H. Juanita Beecher, of counsel with Fortney & Scott and an editor of Federal Employment Law Insider.

The move is a welcome one for federal contractors, which expected the so-called blacklisting rule to be incredibly burdensome, Beecher said. The rule was issued to implement President Barack Obama’s Fair Pay and Safe Workplaces Executive Order, which directed agencies to consider employment law disclosures when awarding contracts.

The Obama administration said the requirements were necessary to ensure that employers that illegally cut corners at employees’ expense didn’t benefit from taxpayer-funded contracts. Republicans, however, called the rule flawed and unnecessary.

The regulation was scheduled to take effect on October 25, 2016, but a federal district court temporarily halted certain provisions the evening before. The judge took issue with the reporting requirements, especially because none of the laws involved (e.g., the Fair Labor Standards Act (FLSA), Title VII of the Civil Rights Act of 1964, and the Americans with Disabilities Act ADA)) provide for debarment or disqualification of contractors for violations of their provisions.

The judge left intact, however, the rule’s paycheck transparency requirement, which took effect in January 2017. That part required federal contractors to provide wage statements detailing employees’ hours worked, overtime hours, pay, and additions to or deductions from pay. It also required federal contractors to inform an individual in writing if 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 blacklisting regulation, 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 used successfully only once­—to void Occupational Safety and Health Administration (OSHA) ergonomics rules issued during the final days of the Clinton administration. Trump has now used the CRA seven times, according to various media reports.

The Senate adopted the resolution, and Trump signed it on March 27 as expected. The only surprise was that Trump didn’t kill the rule sooner via Executive Order, Beecher said. But that would have left the door open for a future president to bring back Obama’s order, she noted. By going about it this way, Trump ensured it will be very difficult to bring back the rule. When Congress uses the CRA to void a regulation, the law prevents the agency from issuing the same or a similar rule until Congress passes a new law permitting the agency to do so.

“It eliminated the whole thing,” Beecher said of the blacklisting rule. “Basically, it’s gone forever.”

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