Lobbyists Plan for Battle Over Contractor Fair Pay Rule

Daily Labor Report® is the objective resource the nation’s foremost labor and employment professionals read and rely on, providing reliable, analytical coverage of top labor and employment...

By Ben Penn

March 3 — A controversial executive order requiring federal contractors to disclose past employment law violations has trade association lobbyists, worker advocates and attorneys gearing up for a fierce debate on Capitol Hill and in the courts.

The Federal Acquisition Regulatory Council and the Labor Department are busy finalizing a regulation and guidance to implement the president's Fair Pay and Safe Workplaces Executive Order .

The legal complexities involved when federal procurement policy and labor and employment laws intertwine have advocates skeptical that the dispute over the executive order will capture the public's attention. But behind the scenes, the volume of debate is certain to increase after the regulation is published, stakeholders told Bloomberg BNA.

“I expect there’s going to be a lot of push and shove on that between now and the end of the administration,” Judy Conti, federal advocacy coordinator at the National Employment Law Project, told Bloomberg BNA. “As the opponents ratchet up their voice, we will do the same.”

The FAR Council estimated last fall that the final regulation will come out in April , although a DOL official tasked with implementing the executive order told Bloomberg BNA March 1 there might be a delay.

Look-Back Period is Three Years

The order requires businesses to disclose any violations of 14 federal labor and employment laws—as well as comparable state laws—for the previous three years to be eligible for contracts worth more than $500,000. It allows agencies to deny contracts based on the information.

Organizations representing federal contracting employers are preparing to attack the rule through litigation and by pushing for legislation, lobbyists said in recent interviews.

Meanwhile, NELP, the Center for American Progress and other progressive groups are asking the administration not to succumb to business-backed pressure to delay the release.

Adding to their sense of urgency, advocates for the rule remember that a somewhat similar contracting regulation was issued in the final days of the Clinton administration , only to be immediately frozen and then repealed under President George W. Bush.

“We don't want to see” a repeat of 2001, Karla Walter, director of CAP's American Worker Project, told Bloomberg BNA. “For this order to be real, we think it's important for the Obama administration to finish the really great work they started by getting the final regulation out” and getting started on enforcement.

`Legal Temper Tantrum' Coming

Even as a coalition of worker, women's and civil rights groups called for an expeditious completion of work by the FAR Council and the DOL , they realize that a battle is coming regardless of the publication date.

The opposition is “going to throw everything at the wall and see what sticks,” Andrew Rogers, a senior federal relations counsel at the American Association for Justice, told Bloomberg BNA March 2. “There will be a legal temper tantrum” from opponents in the form of a Congressional Review Act motion of disapproval, appropriations policy riders and lawsuits that allege the executive order is unconstitutional, said Rogers, who is lobbying in favor of the rule.

Daniel Yager, president and general counsel of the HR Policy Association, agrees with Rogers's assessment. “Obviously, anything Congress can do to block this or delay” the final rule's implementation, “we would be strongly supportive of,” Yager told Bloomberg BNA. “We recognize that’s likely to generate veto threats” from Obama, “so we really are looking very closely, along with the other business groups, at trying to block this in the federal courts” and “we think we would have a strong case.”

Even though the exact legal strategy can't be formulated until the regulation's final language is unveiled, business associations are already talking to potential law firms, said Yager, who advocated against the rule throughout 2015.

In addition to the HR Policy Association, groups leading the resistance include the National Association of Manufacturers, Associated Builders and Contractors, Associated General Contractors, U.S. Chamber of Commerce and Professional Services Council.

Worker Groups, Businesses Divided

The regulation appeals to a broad range of proponents, such as worker advocacy organizations, unions, women's groups and nonprofits that support government efficiency. They believe the rule provides necessary employee protections and ensures the government doesn't partner with severe violators. Civil rights groups have also stressed the need for the executive order's provision forbidding contractors from forcing employees to arbitrate claims of sexual assault or civil rights violations.

Congressional Republicans and some business groups have loudly criticized the order, saying it gives agencies the power to “blacklist” certain businesses from the contracting process based on subjective legal determinations . They've also expressed concerns about whether large prime contractors will be able to certify that they and their subcontractors haven't violated the covered laws.

The Mechanical Contractors Association of America and the Campaign for Quality Construction Coalition are among the contractor groups that generally support the order because they don't want their members to be undercut in the bidding process by companies that skirt laws such as the Fair Labor Standards Act.

Signal in FY 2016 Budget

During fiscal year 2016 appropriations negotiations, Republican lawmakers demonstrated their willingness to fight the executive order. Buried within the omnibus report, Congress noted that it denied the president's request to create a new DOL Office of Labor Compliance, which would have ensured federal agency enforcement of the Fair Pay and Safe Workplaces order.

This provision was a compromise from an earlier rider proposed by Republican appropriators that would have prohibited the administration from finalizing the rule at all.

By refusing to create the new office, appropriators sent a “very strong statement” about their concerns over the administration's rulemaking plans, Marc Freedman, executive director of labor law policy at the U.S. Chamber of Commerce, told Bloomberg BNA.

The refusal to establish the DOL office didn't spark much public controversy in December. To Conti, it was more about signaling that opponents' concerns were on Republicans' radar. “It was as much about them trying to send a message to their donors and constituents among the business community as it was a message about actually trying to kill this executive order per se,” she said.

GOP Holding Preliminary Talks

But preliminary discussions for a more sweeping legislative measure to thwart the entire rule are currently taking place among congressional Republicans, a senior staffer for a Republican on the House Small Business Committee told Bloomberg BNA March 1.

The staffer, who spoke on the condition of anonymity so as not to affect ongoing policy discussions, said Republicans on the Small Business Committee are coordinating with their counterparts on the Education and the Workforce Committee and the Oversight and Government Reform Committee to prepare a strategy to defeat the regulation.

Members are waiting to see what's in the final rule before talks truly pick up, but appropriations riders and a Congressional Review Act challenge are definitely on the table, the source said.

The HR Policy Association's Yager said the business community has reached out to members on both sides of the aisle, where their talking points got positive responses. “Every single member of Congress has federal contractors in their district and employees of federal contractors,” he said, adding that the regulation “poses a threat to the jobs in their district.”

Still, lobbyists might have a hard time convincing lawmakers to make this issue a priority considering the legal complexities involved.

“There are all these moving parts that I don't think people understand or have given consideration to,” Ben Brubeck, vice president of regulatory, labor and state affairs at the Associated Builders and Contractors, told Bloomberg BNA. “Whether that’s something that we can boil down to a ten-second sound bite, we’ll have to see what the final rule says.”

Despite Yager's assertion that most Democrats have quiet reservations about the executive order, one senior lobbyist advocating in favor of the regulation told Bloomberg BNA March 2 that it has strong champions on Capitol Hill—including Reps. Jared Polis (D-Colo.), Bobby Scott (D-Va.) and Rosa DeLauro (D-Conn.) and Sen. Patty Murray (D-Wash.).

Polis is not convinced that any attempts to derail the Fair Pay and Safe Workplaces order can succeed. “There are efforts to fight every executive order and, inevitably, they fail,” he told Bloomberg BNA in a March 2 interview.

“This one will be particularly hard to go after because it's hard to make the argument that labor laws don't need to be enforced,” Polis said. He added that he's “absolutely” ready to galvanize colleagues, if need be, to defend the order from a legislative challenge.

But it's clear that trade associations will continue to fight the executive order. “It is such a significantly inappropriate and constitutionally vulnerable executive order that it’s going to get attention when it finally shows up as a final rule—and when we start to launch our attack against it,” the Chamber's Freedman said.

To contact the reporter on this story: Ben Penn in Washington at bpenn@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com