Yesterday, by a vote of 49-48, the Senate passed a house joint resolution disapproving the final rule implementing Executive Order 13673, Fair Pay and Safe Workplaces. The House previously passed the resolution in February. The resolution now goes before President Trump, where all signs indicate he will sign it into law.
The Executive Order and its implementing rules and guidance required agencies to take into account a contractor's history of labor law violations in making responsibility determinations. The rules required contractors to disclose and update violations of 14 federal labor laws and equivalent state laws. Contractors expressed concern that the rule would increase compliance costs without any significant benefits to the government or the public, while delaying the acquisition process. In addition, the process from when an enforcement agency cites a contractor for a labor law violation to the contracting officer's responsibility determination involved too many subjective factors and judgments, which some worried would lead to inconsistent results or eventual "black listing" of a contractor. On the other hand, proponents of the Executive Order argued that the rule provided strong incentives for contractors to comply with workplace safety regulations and implement remedial measures. The rule also limited certain arbitration agreements and required employers to include certain information in their workers' paycheck to increase transparency.
A day before the rules were to go into effect on October 25, 2016, Texas Judge Marcia Crone of the Eastern District of Texas enjoined the government from "implementing any portion of the FAR Rule or DOL Guidance relating to the new reporting and disclosure requirements regarding labor law violations." The Court also enjoined the limitations on arbitration agreements but not the paycheck transparency provisions. Starting on January 1, 2017, contracting officers were required to include FAR clause 52.222-60, Paycheck Transparency, in solicitations with estimated values of more than $500,000.
What will President Trump do? Although FPSW had strong support among unions and their members, who in turn voted in significant numbers for Trump, it was very unpopular among industry. The President's commitment to creating an obstacle-free environment for businesses indicates that he will sign the resolution into law. On February 1, 2017, prior to the House vote on the resolution, the Office of Management and Budget expressed the Administration's official view on the bill as follows: "The rule would bog down Federal procurement with unnecessary and burdensome processes that would result in delays, and decreased competition for Federal government contracts. . . . If it was presented to the President in the current form, his advisors would recommend that he sign [it] into law." If the President signs the bill into law, no federal government agency can reissue a substantially similar rule in the future. But if the President chose to veto the bill, it is very unlikely that Congress can muster the two-thirds majority in both houses necessary to override the veto.
Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
© Morrison & Foerster LLP. All rights reserved