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On Monday, President Trump signed a resolution officially declaring that the Fair Pay and Safe Workplaces Rule “shall have no force or effect”. The rule had been widely criticized and often referred to as the “blacklisting rule” for its requirement that Federal contractors disclose unproven allegations of violations of numerous labor laws. The rule was challenged shortly after its publication and the majority of its provisions had been stayed since October 2016 when a Judge in the U.S. District Court for the Eastern District of Texas granted a preliminary injunction in a suit attacking the rule.
The Fair Pay and Safe Workplaces rule implemented Executive Order 13673 and was published in the Federal Acquisition Regulation on August 24, 2016. It imposed broad new record-keeping and reporting requirements on contracts or sub-contracts expected to exceed $500,000. Included in the reporting obligations was the affirmative obligation for contractors to disclose any “administrative merits determinations, arbitral award or decision, or civil judgment” against the contractor under 14 listed statutes and Executive Orders. The list included the Fair Labor Standards Act, Occupational Safety and Health Act, National Labor Relations Act, Service Contract Act, Davis-Bacon Act, Executive Order 11246 (Equal Employment Opportunity), Family Medical Leave Act, Americans with Disabilities Act, Age Discrimination in Employment Act, and Title VII of the Civil Rights Act.
Disclosure was required to cover the three years prior to submitting a proposal for award of a contract. The government agency would then use that disclosure in making a responsibility determination prior to award of the contract. If the contractor was awarded the contract, it was required to update the information every 6 months during the term of the contract.
Much of the criticism focused on the requirement to disclose allegations before they had been fully adjudicated and the contractor afforded due process and the potential for the disclosure to disqualify a contractor from receiving award of a contract. A U.S. District Court Judge agreed with this criticism and concluded that a group challenging the rule was likely to succeed with its argument that the rule exceeded the authority of the President and Executive Branch. The Judge noted that the rule appears to conflict with the named labor laws by permitting disqualification from contract award based upon nothing more than allegations. The Judge also said the rule was a potential violation of the contractors’ First Amendment freedom from compelled speech and Fifth Amendment due process protections. As a result, the Judge stayed most provisions of the rule.
One provision of the rule that was not stayed was the “paycheck transparency” provision. This provision, which went into effect January 1, 2017, required contractors to provide a wage statement each pay period with specific information. The specific information included: total number of hours worked in the pay period, number of those hours that were overtime, rate of pay, gross pay, and any deductions from pay.
Shortly after the new Congress and the new administration took office, Congress passed a resolution to repeal the rule. The resolution went further than the court-ordered stay by nullifying the entire rule, including the paycheck transparency provision. The resolution was passed by Congress in February and signed by President Trump on March 27, 2017. The signature was one of several Congressional Review Act resolutions signed by the President on March 27, rolling back executive branch rules from the prior administration.
If you would like additional information about this and other government contracting or labor and employment law issues, please contact a member of Maynard Nexsen’s Government Solutions Group or Labor and Employment Practice Group.