Congress is set to take the first steps today to block, through a resolution of disapproval, the final regulations of the Fair Pay and Safe Workplaces Executive Order issued by President Barack Obama. This seemingly minor action would pose great harm to workers, taxpayers, and law-abiding businesses by threatening wages, undermining workplace safety and protections, increasing cronyism, and reducing contractor accountability.
The fate of the Fair Pay and Safe Workplaces order—a little noticed but hugely impactful policy that requires contractors to comply with workplace laws before receiving new government contracts—does not look good because the congressional Republican leadership has long been hostile to the order. The regulations implementing the order are finalized, but a court order is preventing implementation. Initial voting on the resolution is scheduled to start today in the Rules Committee of the House of Representatives and could advance very quickly through House and Senate under the terms of the Congressional Review Act—a tool that requires only a simple majority and cannot be filibustered.
The ultimate outcome of the resolution to turn back the Obama executive order hinges on whether President Donald Trump will stand up for the workers he claims to champion. Given that Trump’s Cabinet nominees, such as Labor Secretary nominee Andrew Puzder, are virulently anti-worker, this may be a long shot. But it is possible—especially if progressives can highlight how workers, taxpayers, and law-abiding businesses will lose out if this resolution becomes law.
Specifically, the resolution, if approved, would harm the 1 in 5 Americans who are employed by companies that do business with the federal government, put law-abiding business at a competitive disadvantage, and lead to additional waste, fraud, and abuse of taxpayer funds. In short, lobbyists for massive corporations love it while advocates for workers, small businesses, veterans and people with disabilities, civil rights leaders, and many others support the underlying executive order.
As a result, the resolution presents an opportunity for progressives to show who stands with workers and who stands with corporate lobbyists looking to rig the system. Moreover, this resolution is but the first of many similar fights to come in which congressional Republicans may seek to overturn President Obama’s administrative actions that help workers.
What’s at stake
The regulations for the Fair Pay and Safe Workplaces order help contracting agencies identify companies with egregious violations and encourage these companies to clean up their acts. The rules address widespread problems in the contracting process that not only harm workers—including veterans, women, people of color, and construction and service workers—but business and taxpayers as well.
Here’s who will be harmed if the resolution passes
Too often, employees of federal contractors are cheated out of the wages they are owed, injured, or even killed on the job. Real people such as:
- Jason Sweat, who claimed he went unpaid for many of the hours he worked destroying chemical weapons for a government contractor
- Rodney Bridgett, who was killed when a piece of heavy equipment crushed him
- Calvin Bryant, who was crippled in a workplace explosion that killed 14 co-workers
- Alma Aranda, who reportedly faced so much paperwork when attempting to access her legally guaranteed unpaid time off to care for her dying mother that her hair fell out in clumps
- Ana Ayala, who said her employer cut hours in violation of its government contract, forcing her to leave her daughter alone for longer hours in order to find additional jobs on nights and weekends
Nearly 1 in 3 companies with the worst safety and wage violations are federal contractors. Law-breaking companies that do not pay their employees the wages they are owed or that violate health and safety rules continue to receive government contracts with no strings attached. A 2013 Senate report found that government contractors are often among the worst violators of workplace safety and wage laws. Of the 200 largest penalties and assessments for violations of federal wage and safety laws over a five-year period, about 30 percent of the top violators continued to receive federal contracts.
The same report found that at least 42 workers died at the contracting companies with the worst safety violations and that law-breaking government contractors shortchanged their workers by $82 million in wage theft. These law-breaking companies received $81 billion in federal contracts a single year. A 2010 Government Accountability Office study yielded similar results: One-third of all assessments were levied against companies that continued to receive federal contracts.
Women and families
Too many federal contract jobs are low-paying and poor quality, leaving workers especially vulnerable to abusive employment practices. One in five federal contract workers—many of them women—do not earn enough to keep a family of four out of poverty.
The executive order’s contractor paycheck transparency requirements are designed to decrease the frequency of contractors having unpaid back wages. Pay transparency also promotes workplace equality and helps close the wage gap that despite federal and state statutes banning wage discrimination based on gender, still sees American women earning only 80 cents for every dollar earned by men.
The executive order bans compulsory arbitration of claims of discrimination, sexual harassment, and sexual assault for large contractors, which is critical to ensuring that workers have their day in court. This helps level the playing field for companies that treat their employees fairly and ensure that workers can hold law-breaking corporations accountable for egregious cases of abuse.
Those facing discrimination
American workers, like the nation as a whole, are increasingly diverse. Upholding an equal opportunity to work is of growing importance. By requiring that an employer’s workplace violations be taken into consideration when the government awards federal contracts, it will no longer be acceptable to award federal contracts to companies that engage in age, disability, race, and sex discrimination.
By including Title VII of the Civil Rights Act within its covered laws, the executive order provides greater oversight of and accountability for federal contractors that discriminate on the basis of race, national origin, religion, and sex.
The regulations help prevent discrimination against Americans with disabilities—including veterans with disabilities—by providing greater oversight of and accountability for federal contractors and requiring that violations of the Americans with Disabilities Act, Vietnam Era Veterans’ Readjustment Assistance Act, and Section 503 of the Rehabilitation Act be taken into account by the federal government in its contracting process.
The executive order includes among its covered laws the Age Discrimination in Employment Act, or ADEA, as well as other laws important to older workers. Approximately two-thirds, or 64 percent, of older workers say they have witnessed or experienced age discrimination in the workplace. Although age discrimination continues to be a major barrier for many older workers, eradicating this type of discrimination among federal contractors has received scant attention.
Law-breaking companies that do not respect their workers also have little respect for the American taxpayer. When government continues to do business with law-breaking companies, it also frequently results in poor contract performance.
One in four contractors with the worst workplace violations also had significant performance problems. These problems, according to a CAP Action report, included contractors submitting fraudulent billing statements; cost overruns; performance problems; and schedule delays that cost taxpayers billions of dollars.
By ensuring companies comply with workplace laws before they receive federal contracts, the regulations can help improve contract performance and ensure that taxpayers receive better value for their investment.
The Fair Pay and Safe Workplaces Executive Order promises to ensure that companies, including small businesses, that abide by workplace laws will be able to compete on an even playing field.
After Maryland implemented a contractor living wage standard, the average number of bids for state contracts increased nearly 30 percent. Nearly half of contractors interviewed by the state said that the new standards encouraged them to bid because they leveled the playing field.
At a U.S. House Committee on Small Business hearing last fall, construction contractor Bill Albanese concluded, “It makes good business sense to vet the contractor before he gets this job. It’s common in our industry; we do it all the time, and we don’t see it as being a burden to any legitimate fair contractor that’s playing by the rules.”
Responsible bidder policies have a proven track record of protecting workers and improving the quality of contractors at all levels of government and even in the private sector.
Many states—including California, Connecticut, Illinois, Massachusetts, Minnesota, and New York—as well as the District of Columbia and other major cities, have responsible bidder programs that have improved contractor quality by identifying companies with long track records of committing fraud, wasting taxpayer funds, and violating workplace laws. Even some federal contracting programs use a thorough responsibility review process. The U.S. Department of Defense conducts a pre-award safety survey on all department ammunition and explosives contracts.
Requiring contractors with legal violations to disclose their workplace records before they are able to receive a contract is increasingly common in the private sector. Companies find that it is a cost-effective way to ensure future compliance. Eight of the top 10 U.S. Department of Defense contractors have experience reviewing their own contractors’ safety records—and some even go further than the order’s safety reporting requirements. For example, while the executive order requires the reporting on workplace safety citations that occurred over the past three years, Raytheon requires contractors to report on any safety citations for the past 10 years.
Claims that the rules under the executive order create a so-called blacklist simply have no merit. Current law already requires a company to be determined responsible before it receives a federal contract. The goal of the order is to encourage companies with responsibility problems to come into compliance—not to debar or blacklist them.
In fact, the regulations actually provide contractors with greater protections than they currently enjoy. No contractors can be disqualified merely as a result of disclosures of labor-law violations. Instead, contractors have the opportunity to bring to the attention of contracting officers evidence of relevant mitigating circumstances during the responsibility determination process. Where appropriate, they have the further opportunity to negotiate the terms of a labor compliance agreement that will result in a responsibility finding.
The Campaign for Quality Construction—representing more than 20,000 employers—noted that, “Employers—primes and subs have more rights, remedies and redress for non-responsibility determinations based on lack of integrity or business ethics under the EO than the current [Federal Acquisition Regulation] procedures specifically provide.”
An analysis by the Congressional Research Service noted that “agency officials may be more likely to encourage contractors whose disclosed violations could constitute grounds for exclusion to enter into labor compliance agreements than they are to debar or suspend them.”
The Fair Pay and Safe Workplaces Executive Order is necessary to address long standing problems with the contracting system and protect workers’ wages and safety, reduce cronyism, and increase contractor accountability. The resolution to undo the order is anti-worker, anti-taxpayer, and anti-law-abiding business.
David Madland is a Senior Fellow and the Senior Adviser to the American Worker Project at the Center for American Progress Action Fund. Karla Walter is Director of the American Worker Project at CAP Action.