Court Halts 'Blacklisting' Rule for Federal Contractors
Input Sought The Labor Dept. says it conducted “extensive” outreach with stakeholders. Photo courtesy of DOL.gov
An Obama administration rule that would require federal contractors and subcontractors to disclose past labor-law violations puts the contractor groups and organized labor at odds. The contractors hope a preliminary injunction temporarily halting the rule is a signal that their challenge to the regulation will prevail. But organized labor opposes that view and wants to see the rule take effect.
Judge Marcia Crone, of the U.S. District Court for the Eastern District of Texas, on Oct. 24 ruled that, if it were to take effect, the Fair Pay and Safe Workplaces regulation would cause “irreparable harm” to contractors and subcontractors. The rule, which contractors have dubbed the “blacklisting” regulation, had an effective date of Oct. 25.
The Associated Builders and Contractors, along with its Southeast Texas Chapter and the National Association of Security Companies, filed a legal challenge to the rule on Oct. 7 and motions for a temporary restraining order and preliminary injunction on Oct. 13. Other contractor groups, including the Associated General Contractors of America, also oppose the new requirements.
The district court’s ruling puts the regulation on hold until the court issues a decision on the underlying lawsuit.
In her 32-page opinion, Crone said the industry groups’ motion met all the requirements to warrant an injunction. She also said the organizations would probably prevail in their lawsuit.
The final rule, issued by the Federal Acquisition Regulation (FAR) Council on Aug. 25, along with a Dept. of Labor guidance document, would require contractors and subs to disclose violations that occurred in the previous three years of 14 federal labor, employment, and safety and health laws, as well as related state laws, before they could win a federal contract valued first at $50 million or more and then at $500,000 by April 27, 2017.
The FAR Council rule and Labor Dept. guidance aim to implement a July 2014 executive order issued by President Obama that calls for the new disclosure requirements for contractors and subcontractors.
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Construction contractor organizations and other business groups contend the regulation would give federal officials broad discretion to discriminate against companies that have alleged violations. The groups say many such allegations, if reviewed by courts, likely would be dismissed.
Ben Brubeck, ABC vice president of regulatory, labor and state affairs, says his group was pleased with the court’s ruling, which, he says, found that “the Obama administration cannot order private businesses to publicly disclose mere accusations of labor-law violations that have not been fully adjudicated.”
On the other hand, labor unions and the Labor Dept. say the regulation is necessary to make sure that companies that have a pattern of breaking labor and employment laws do not win federal contracts.
The Labor Dept. says it conducted “extensive” outreach with interest groups before issuing its guidance. A department spokesman said the final regulation and guidance will ensure companies follow basic labor standards as they carry out federal contracts. He adds, “We are confident that the rule and guidance are legally sound, and the Dept. of Justice is considering options for next steps.”
The Laborers’ International Union of North America supports the rule. LIUNA General President Terry O’Sullivan says his union hopes the injunction is “lifted quickly” and that the regulation is implemented.
