Obama To Crack Down On Federal Contractors Who Break Labor Laws

WASHINGTON–Democratic President Barack Obama will soon sign a wide-ranging executive order cracking down on all federal contractors who break labor laws, including collective bargaining rights, safety and health laws and wage and hour laws, the White House press office announced on July 31.

The order mandates all firms that have a contract worth at least $500,000 must obey labor laws and make workers whole for past abuses, violations and law-breaking, or risk losing contracts, business and money, starting when they sign new contracts in 2016.

“By cracking down on federal contractors who break the law, the president is helping ensure all hardworking Americans get the fair pay and safe workplaces they deserve,” a White House fact sheet on the executive order says.

AFL-CIO President Richard Trumka hailed the order.  Running for an elevator at the end of the federation’s Executive Council meeting, he said, “It’s good…better than what we had.”

Labor Secretary Thomas Perez made an unannounced visit to close the council meeting and discuss Obama’s order.  Perez did not stay around for media questions afterwards, but union leaders reacted to his remarks with repeated applause.

The Labor Department calculates the order would cover government procurement from approximately 24,000 businesses, employing 28 million people.  Many have Defense Department contracts.  Key points of Obama’s order include:

  • Requiring contractors to disclose major labor law violations within the last three years.   Those include breaking wage and hour laws, safety and health laws, violating the Family and Medical Leave Act, breaking civil rights laws and “violating collective bargaining laws.”  Obama’s executive order covers subcontractors, too.
  • Special scrutiny for past labor law-breakers.  Citing various studies, those same companies “also had significant performance problems as well,” the fact sheet says.

“There is a strong relationship between contractors with a history of labor law violations and those that cannot deliver adequate performance for taxpayer dollars,” it adds.

From 2005-2009, “almost two-thirds of the 50 largest wage-and-hour violations and almost 40 percent of the 50 largest health-and-safety violations were at companies that went on to receive new contracts,” the fact sheet adds.

  • Establishing compliance auditors.  Each federal agency will have a “senior compliance officer” to review contractor violations and rule out “the worst actors.”
  • Responsible contractors can say so.  Procurement forms would have a “1-check box” where responsible firms can vow they didn’t break labor laws in the last three years.
  • Opportunity for violators to make good.  The fact sheet says the administration’s goal “is to help more contractors come into compliance with workplace protections, not to deny contracts.”   It says the Labor Department will offer potential violators “early guidance on whether those violations are potentially problematic and (how to) remedy any problems.”  DOL will offer the guidance before agencies decide or award contracts – and on how to make their workers whole for past law-breaking.
  • Ban mandatory arbitration of civil rights or sexual harassment violations against workers under any contract worth at least $1 million.  Arbitrators, more often than not, rule for the company and against the complaining worker, statistics show.  Banning arbitration in those two areas “would give workers their day in court,” by letting them sue, the fact sheet adds.
  •  Streamlined contractor reporting.  Contractors would send details of all their pacts to one, unspecified, government agency.  Contractors sought that change, the fact sheet says.
  • Reducing wage theft possibilities by ordering contractors to show total hours, pay, overtime hours and overtime pay on pay stubs they give to workers with their checks.

“Contractors who invest in workers’ safety and maintain a fair and equitable workplace shouldn’t have to compete with contractors who offer low-ball bids – based on savings from skirting the law – and then ultimately deliver poorer performance,” the fact sheet says.

One AFL-CIO staffer aware of the order told Press Associates that “it had been in the works for weeks.”   His only problem with Obama’s order is that it doesn’t take effect in 2014.

“Why not do it right now?”  he asked.  Since Obama’s move is an executive order, which the next president could repeal or alter, and not a law, “It means we’ll have to elect a Democratic president in 2016 to keep it in force.”