By Susan Schoenfeld,/a., JD, Senior Legal Editor

The so-called “blacklisting” EO requires covered contractors and subcontractors to report during the bidding process if they have violated any of the 14 federal labor laws or EOs and their state equivalents in the past 3 years. Those laws include Section 503 of the Rehabilitation Act, Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA), and EO 11246. Those awarded contracts must make violation-related updates every 6 months.

The EO also contains provisions requiring employers to fully document wage calculations in wage statements.

The criticism—a timeline

Since the proposed guidance and regulations were issued in May 2015, the DOL and FAR Council have implemented two delays in the rulemaking process and, along the way, have been subjected to a steady barrage of criticism, including:

• July 14: First delay—After receiving criticism from the regulated community regarding the complexity of the proposals and the brief period for notice and comment, the DOL and FAR Council grant a 2-week extension on the notice and comment period for the proposed guidance and regulations from July 27, 2015, to August 11, 2015.
• July 15: House criticism—Eight members of the U.S. House of Representatives send a letter to DOL Secretary Perez requesting that the proposed guidance and regulations be withdrawn, calling the new requirements “burdensome and unnecessary,” as well as being based on reports “lack[ing] empirical evidence.” The letter also criticizes the proposed rules as lacking important information necessary for the regulated community to comment fully.
• July 30: Second delay—The DOL and FAR Council grant a second 2-week extension on the deadline for submitting comments from August 11, 2015, to August 26, 2015.
• August 6: Senate criticism—Members of the U.S. Senate Committee on Homeland Security and Governmental Affairs send a letter to Secretary Perez requesting withdrawal of the proposed guidance and regulations, and criticizing the proposed guidance as being “intentionally published before it was completed, leaving significant issues unresolved—including which state laws will be covered by the guidance and whether prime contractors will be required to facilitate subcontractor reporting.”

What the critics say

Since the time period for notice and comment closed on August 26, 2015, opponents to the proposed guidance and regulations have been relatively quiet, waiting for the next step from the DOL and the FAR Council.

Of the 146 comments received by the DOL on the proposed guidance, some commenters called the proposed guidance and regulations “almost impossible to comply with” and imposing “extensive and often unnecessary burdens on both the government and on contractors ….” (Pacific Architects and Engineers, Inc.).

The Section of Public Contract Law of the American Bar Association (ABA) submitted an 18-page letter to the DOL containing comments on the proposed regulations and guidance, calling them “difficult to implement” and proposing changes that “would significantly disrupt procurements, and would impose significant costs and burdens on [the contracting community] that the FAR Council has not yet fully evaluated.”

In its comments, the ABA suggested that the DOL and FAR Council substantially revise and reissue the proposed guidance and rule prior to implementation in order to fix substantial errors and allow for a proper notice and comment period.

On behalf of the Littler Workplace Policy Institute, attorney Mike Lotito commented that “[t]he proposals represent an unprecedented Executive overreach that attempt to rewrite 14 federal labor laws and an untold number of ‘state law equivalents,’ while saddling thousands of contractors, subcontractors, and federal agents with monitoring responsibilities that will grind the procurement system to a halt.”

Many others echoed Lotito’s comments. According to Lotito (and others), the DOL and FAR Council should withdraw the proposed guidance and regulations for four primary reasons:

1. “Agencies that lack the statutory responsibility to administer the 14 labor laws cannot alter them;
2. Due process rights guaranteed by the Constitution are a nullity if an entity can be punished before it has had an opportunity to vindicate itself;
3. The time, resources, and infrastructure that the private and public sector must expend will strangle the federal contracting system, yet these costs go unaccounted for in the proposals; and,
4. Unknown future additions to the proposed overhaul, regarding, for example, the “state law equivalents” and subcontracting reporting requirements, prevent the public from understanding what the final rule may look like, in blatant violation of the Administrative Procedure Act.”

What the supporters say

Although the proposed guidance and regulations have been severely criticized, the Fair Pay and Safe Workplaces Executive Order does have its supporters. Terry O’Neill, president of the National Organization for Women, commented that the EO was “needed to hold employers accountable and ensure that our tax dollars are supporting quality jobs for women ….” O’Neill further supported the order for “[i]ncreasing pay transparency and allowing employees to more easily determine they are being rightfully paid . . . .“

The United Brotherhood of Carpenters and Joiners also submitted comments supporting the paycheck transparency provisions of the order and the proposed guidance and rule, noting that the proposal to simplify and clarify pay reporting is essential in helping workers detect improper pay practices.

Next steps

Will the proposed guidance and regulations survive? Due to the heavy criticism they have received, it is likely that the proposed guidance and regulations will, at the very least, be revised before being finalized.

The Obama Administration has indicated that it expects the Executive Order to be implemented on new contracts in stages, on a prioritized basis, during 2016. This means that any final guidance and regulations would need to be issued late in 2015 or early in 2016 to take effect during the 2016 calendar year.

In the meantime, experts urge contractors to treat the Executive Order as “good law” and begin preparations such as:

• Implementing appropriate policies to protect against violations of labor laws;
• Training managers to effectively and consistently apply those policies;
• Handling concerns, lawsuits, and complaints properly; and
• Having a mechanism in place for collecting and reporting violations.