Obama's 'Fair Pay, Safe Workplaces' Rule for Federal Contractors Appears Endangered

Among the many Obama administration regulations that President-elect Trump plans to eviscerate could be the “Fair Pay and Safe Workplaces” rule the Labor Department finalized in August.

Labor’s goal was to protect workers against abuses such as wage theft and health violations by instituting additional disclosure and reporting requirements for federal contractors concerning their compliance with 14 labor laws. Industry viewed the impact as a burdensome “blacklisting” of contractors whose reputations, in some cases, could suffer from unproven allegations of past worker abuse.

In October, a Texas district judge issued a preliminary injunction blocking parts of the rule in response to a suit brought by a chapter of the Associated Builders and Contractors. The judge decided that the rule’s reporting requirements reach beyond executive authority and are otherwise preempted by federal labor laws. She left only the paycheck transparency provisions intact to take effect Jan. 1.

The election of Trump has given hope to some in the contracting community—which spent years opposing the rule in its draft form—for its cancellation.

“This is probably going to be one of the executive orders he will do away with [via] the signing of a pen,” said Michael Moschel, a partner in the law firm of Bass Berry & Sims. Moschel acknowledged not having heard from Trump’s team directly, but noted that “Trump has promised to wipe out job-killing regulations and executive orders.”

Moschel and colleague Richard Arnholt argued that “the president and agencies went around Congress” in a quest for efficiency and cost savings, but provided no reliable data to prove the need for the rule, while forcing contractors to do detailed reporting on “non-final decisions and determinations” of alleged labor law violations that could end up denying them a contract “without due process.”

Arnholt added that congressional amendments to the National Defense Authorization Act often place limits on the application of other statutes, but “that authority is not afforded to the president.” 

The 400-member Professional Services Council also opposed the rule. PSC president and CEO David Berteau told Government Executive, “The executive order will stand until it is reversed by the next president, subject to court decisions and recognizing that the next president does not take office until January 20. PSC continues to believe that a legislative prohibition is still desired and effective.”

Asked for comment, a Labor Department spokeswoman reiterated a statement from October, saying, “The Fair Pay and Safe Workplaces final rule and guidance promote contracting efficiency by ensuring compliance with basic labor standards during the performance of federal contracts, level the playing field so that contractors who comply with the law don't have to compete against those that don't, and promote responsible stewardship of taxpayer dollars. These actions are supported by extensive outreach and feedback from the contracting community and many others to ensure that they achieve these critical goals while minimizing burden on federal contractors.”

A key backer of the rule, the grass-roots workers advocacy group Good Jobs Nation, remained optimistic about its survival as a way to prevent wage theft and other abuses. “President Trump on the campaign trail gave a speech at the New York Economic Club saying that every policy decision has to meet a litmus test--does it create more jobs with better wages?” said communications director Paco Fabián. “For us, if he doesn’t move on that executive order, that’s a signal on whether he’s trying to fulfill that promise.”