On Monday of this week, we wrote in this blog about new rules that would have required contractors to disclose labor law violations as well as allegations that they violated labor laws, and then would have required contracting officers to consider that information in awarding contracts. New Federal Acquisition Regulation (“FAR”) clauses and U.S. Department of Labor “Guidance” implementing these requirements of Executive Order 13673 were supposed to take effect on October 25, 2016.
Not so fast, a federal judge decided at the eleventh hour on October 24th. In her order, Judge Crone of the U.S. District Court for the Eastern District of Texas put an indefinite hold on the rules because she found that the Executive Order, FAR provisions, and DOL Guidance “arrogate to contracting agencies the authority to require contractors to report for public disclosure mere allegations of labor law violations, and then to disqualify or require contractors to enter into premature labor compliance agreements based on their alleged violations of such laws in order to obtain or retain federal contracts. By these actions, the Executive Branch appears to have departed from Congress’s explicit instructions dictating how violations of the labor law statutes are to be addressed.”
As examples of the harsh effect of the new rules, the judge notes that DOL’s Guidance requires covered contractors to disclose, among other things, any complaint against them issued by the General Counsel of the National Labor Relations Board (the “NLRB”), even if the complaint has not yet been adjudicated before an Administrative Law Judge (“ALJ”) or the Board itself, and even if no court has yet enforced any order of the Board as to the complaint. The judge then noted that the General Counsel of the NLRB issues more than 1,200 such unfair labor practice complaints each year, a number of which are ultimately dismissed as lacking in merit, in whole or in part, by an ALJ or by the NLRB.
Similarly, under the new rules, for alleged violations of the Fair Labor Standards Act, Davis-Bacon Act, Service Contract Act, Family and Medical Leave Act, and Executive Order 13658 (Contractor Minimum Wage), covered contractors must report, among other things, non-final determinations by the DOL’s Wage and Hour Division, including WH-56 “Summary of Unpaid Wages” or any Wage and Hour Division letter, notice, or other document assessing civil monetary penalties, even if such forms or documents have not yet been adjudicated before an ALJ or Administrative Review Board, and even if no court has yet enforced any Wage and Hour order. The court then noted that DOL initiates more than 10,000 of these Wage and Hour “cases” against employers each year.
The judge also noted that the laws covered by the executive order and new rules already have penalties, and Congress did not authorize the President to impose new penalties.
DOL has issued a memorandum to contracting agencies telling them not to implement the new rules in any contracts. The Government can appeal Judge Crone’s preliminary injunction or it can revise the regulations to make them more palatable. For now, however, the new reporting requirements will not be taking effect.
The case is Associated Builders and Contractors of Southeast Texas v. Rung, No. 1:16-cv-425-MAC.