Backgrounder

Blacklisting Federal Contractors

Background: Congressional Democrats have taken a renewed interest in resurrecting a failed Obama-era executive order, “Fair Pay and Safe Workplace (EO 13672),” also known as “Blacklisting.” The stated goal of the Blacklisting executive order, and subsequent regulations, was to promote efficiency in government procurement by ensuring federal agencies contract only with “responsible” contractors who comply with federal and state workplace laws.

In practice, however, federal contractors would have been required to report even alleged violations rather than just actual violations and the recordkeeping and reporting burdens could prove crippling for small businesses contracting or subcontracting on a federal government project. A day before the Obama rule was set to take effect in 2016 it was blocked by a court ruling (Associated Building Contractors of Southeast Texas, et al. v Anne Rung, et al.) and then subsequently overturned by Congress (H.J.Res. 37, 115th Congress) in 2017.

During this past presidential campaign, Joe Biden pledged to resurrect these blacklisting regulations and go further. Then-candidate Biden’s campaign wrote,

“[Biden] will ensure federal contracts only go to employers who sign neutrality agreements committing not to run anti-union campaigns. He also will only award contracts to employers who support their workers, including those who pay a $15 per hour minimum wage and family sustaining benefits.”

Renewed Interest: Sen. Bernie Sanders (I-VT) followed up on that campaign promise with a letter to President Biden on April 26, 2022, reminding him of that Blacklisting pledge and calling for action on a new executive order. Sanders wrote,

“The essence of your plan for strengthening union organizing was to make sure that federal dollars do not flow into the hands of unscrupulous employers who engage in union-busting, participate in wage theft, or violate labor law. In order to implement that plan, I urge you to sign an Executive Order preventing companies that violate federal labor laws from contracting with the federal government.”

Under the Obama Blacklisting rule, a federal contractor is required to disclose its labor law violations and alleged violations to federal government contracting officials.  That record would be taken into account during the process of awarding federal contracts, used to cancel an existing contract, or to require remedial action to address a pattern of violations.

The specifics of the “Fair Pay and Safe Workplaces” executive order mandated employers bidding on new federal contract solicitations with an estimated value greater than $500,000 to report violations and alleged violations of 14 federal laws (and the equivalent state laws) as part of the competitive bid process and, if awarded the contract, at six-month intervals thereafter for the duration of the contract.

Violations of the following federal laws must be reported under the “Fair Pay and Safe Workplaces executive order:

  • Fair Labor Standards Act
  • Occupational Health and Safety Act
  • Migrant and Seasonal Worker Agricultural Worker Protection Act
  • National Labor Relations Act
  • Davis-Bacon Act
  • Service Contract Act
  • Executive Order 11246 (Equal Employment Opportunity)
  • Section 503 of the Rehabilitation Act, Section 503 (Prohibits discrimination based on disability)
  • Vietnam Era Veterans’ Readjustment Assistance Act
  • Family and Medical Leave Act
  • Title VII of the Civil Rights Act
  • Americans with Disabilities Act
  • Age Discrimination in Employment Act
  • Executive Order 13658 (Establishing a Minimum Wage for Contractors )
  • State law equivalents of these laws and executive orders

Contractors would be required to inform workers of their classification as an employee or independent contractor, whether they have exempt or non-exempt status under the FLSA, and detailed information and disclosures about employees’ pay.  Employers with a contract exceeding $1 million would be prohibited from requiring employees to enter into mandatory pre-dispute arbitration agreements for disputes arising out of Title VII of the Civil Rights Act or related to sexual assault or harassment.

Status of Executive Order: Obama’s Blacklisting rule was overturned via the Congressional Review Act on March 27, 2017, near the start of the Trump administration.  Later in 2017 then-Rep. Keith Ellison (D-MN) offered an amendment to reinstate a Blacklisting rule in regard to FLSA via the labor appropriations bill.  Ellison’s Blacklisting amendment failed 191-226.  Rep. Pramila Jayapal (D-WA) offered a similar amendment to the National Defense Authorization Act (NDAA) in 2021, with the amendment being approved en block. Jayapal’s language was cut from the final version of the NDAA that became law.

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