Republicans Hurt Low Wage Workers by Overturning Obama Era Worker Protection Rule

In this blog post, Staff Editor Keith Taubenblatt reflects on the Fair Pay and Safe Workplaces rule and its recent repeal.

By Keith Taubenblatt

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Republicans in Congress and President Trump have done away with an important Obama era worker protection measure.[1] On July 31, 2014, President Obama signed Executive Order 13673, requiring companies seeking or holding federal contracts in excess of $500,000 to disclose their prior labor law violations to the government. EO 13673 was the Obama administration’s response to decades of evidence showing labor law violations by federal contractors, and it was an attempt to protect workers employed by those companies from hazardous working conditions and wage theft.[2] A significant number of the workers employed by federal contractors are low-wage earners most at risk for abuse by employers.[3] Nonetheless, Congressional Republicans and the President have deemed EO 13673 unnecessary to the protection of these vulnerable workers.[4] The evidence suggests that their judgment is flawed.

Better known as the Fair Pay and Safe Workplaces rule, EO 13673 required that solicitous companies disclose to their federal agency customers any adverse adjudicative outcomes resulting from violation of wage and safety laws, such as the Fair Labor Standards Act (FLSA) and the Occupational Safety and Health Act of 1970 (OSHA), occurring within the previous three years.[5] The agencies would consider the disclosed information when making contracting decisions and monitor existing suppliers by requiring updated compliance reports every six months.[6] The Obama administration’s intent was to protect workers and ensure that taxpayer dollars were kept from the coffers of companies guilty of chronically and purposefully mistreating workers.[7] On February 2, 2017, House Republicans voted to overturn EO 13673 with only one defector and three Democratic votes.[8] On March 6, 2017, Senate Republicans followed suit in a strict party line vote.[9] On March 27, 2017, President Trump signed the repeal of EO 13673.[10] It is an unfortunate end to an unfortunately necessary measure.

As of 2013, federal contracting was a $500 billion business.[11] Companies with federal contracts employed 26 million people, or nearly a quarter of the U.S. workforce.[12] Between 2007 and 2012, 49 large federal contractors representing almost 20 percent of the federal contracting market were subject to 1,776 separate enforcement actions for violating labor laws. In just one year, these same companies were assessed penalties totaling $196 million for failure to maintain safe working conditions and for failure to pay workers earned wages.[13]

Contractor violations of workplace safety laws have resulted in several worker injuries and, in some cases, even deaths.[14] For example, Tyson Foods, Inc. was responsible for several OSHA violations between 1999 and 2010, causing the death of six Tyson employees.[15] Tyson Foods was awarded $555.5 million in federal contracts in 2012.[16]

Since 2005, contractor wage and hour law violations have led to over $500 million in back pay awards to short-paid employees.[17] In 2007, Electronic Data Systems (EDS), a Hewlett Packard subsidiary, failed to pay more than $5 million in wages earned by over 1,000 employees in contravention of the FLSA.[18] EDS received $2.1 billion in federal contracts in 2008.[19] In total, the last decade has seen 692 federal contractors caught repeatedly violating wage-related labor laws, and over 300,000 workers have fallen victim to such violations at the hands of their federal contractor employers.[20]

Workers employed by federal contractors cannot afford to be physically harmed in the workplace, nor can they afford to have their wages withheld, reduced, or stolen. As of 2013, nearly 2 million employees of federal contractors were paid $12 or less per hour.[21] This amounts to about $24,000 per year.[22] The federal poverty line for a family of four as of 2017 is $24,600.[23] Simply put, many of the private sector employees doing the nation’s work are poorly compensated, low-income workers. For these people, a debilitating workplace injury preventing future work and wages can be catastrophic. Failure to collect wages agreed upon and overtime earned adds outrageous insult to grievous injury. That such worker mistreatment is supported and financed by taxpayer dollars shocks the conscience and begs for redress.

Critics of EO 13673 claim that the rule was unnecessary and duplicative because similar provisions already exist.[24] However, these critics neither note nor explain why these similar provisions fail to prevent companies from continuing to receive lucrative federal contracts despite records of repeated and severe labor law violations. Fortunately, Congressional study of the matter shows why: operational limitations in agency data gathering systems results in incomplete employer data, insufficient agency access to available data, and lack of necessary expertise among agencies’ contracting officers to process and analyze raw information pertaining to violations.[25] Thus, compulsory disclosure requirements for federal contractors are not duplicative, but an efficient and effective solution to a longstanding information deficit problem.

Other EO 13673 opponents described the rule as a form of “blacklisting,” concluding that disclosure of past violations would necessarily lead to denial of federal contracts.[26] But, as Senator Patty Murray (D-WA) explained on the floor of the Senate last month, exclusion was not the goal of the rule.[27] Rather, disclosure of past violations was designed to improve transparency and coordination between agencies and contractors in an effort to help honest offenders achieve future compliance.[28] Of course, this suggests that “blacklist” concerns might remain valid for deliberate, repeat offenders, but it is obviously right and just that serial offenders be denied federal contracts. The goal of the rule is to limit labor law violations and protect workers. Companies who willfully and repeatedly violate labor laws and abuse workers should not benefit from taxpayer funded work.

When Republicans voted to overturn EO 13673, they voted against protecting workers. When President Trump signed the repeal, he removed an important check on abusive conduct by employers holding or seeking federal contracts. Many who will be hurt by this repeal are low-wage earners and the most economically vulnerable among us. The evidence suggests a decades-old problem of labor law violations perpetrated by federal contractors. EO 13673 was a reasonable response to that problem, and overturning it only ensures a continuation of the status quo. Federal contractors will keep enriching themselves with taxpayer dollars while violating labor laws and hurting workers who can least afford the physical and economic injuries. This is a serious mistake. America’s workers deserve better.

[1] Lydia Wheeler, House votes to repeal Obama ‘blacklisting’ rule, Hill (Feb. 2, 2017, 4:10 PM), http://thehill.com/regulation/legislation/317638-house-votes-to-repeal-obama-blacklisting-rule; Kimberly Kindy, Senate votes to kill worker safety rule aimed at federal contractors, Wash. Post (Mar. 6, 2017), https://www.washingtonpost.com/national/republicans-poised-to-roll-back-worker-safety-regulations/2017/03/06/87a6c266-fd27-11e6-8f41-ea6ed597e4ca_story.html?utm_term=.5262a977301b; Tim Devaney, Trump repeals ‘blacklisting rule’, Hill (Mar. 27, 2017, 4:04 PM), http://thehill.com/regulation/325963-trump-repeals-blacklisting-rule

[2] Press Release, Exec. Order, Fair Pay and Safe Workplaces (July 31, 2014), https://obamawhitehouse.archives.gov/the-press-office/2014/07/31/executive-order-fair-pay-and-safe-workplaces; Dept. of Labor, Executive Order 13673: Fair Pay and Safe Workplaces, https://www.dol.gov/asp/fairpayandsafeworkplaces/FAQs.htm [https://web.archive.org/web/20170205001022/https://www.dol.gov/asp/fairpayandsafeworkplaces/FAQs.htm] (last visited Mar. 8, 2017).

[3] Amy Traub & Robert Hiltonsmith,  Demos,  Underwriting Bad Jobs: How Our Tax Dollars Are Funding Low-Wage Work and Fueling Inequality 1 (2013), http://www.demos.org/sites/default/files/publications/UnderwritingBadJobs-Final-2.pdf.

[4] Wheeler, supra note 1.

[5] Id.

[6] Id.

[7] Wheeler, supra note 1.

[8] H.R. Res. 37, 115th Cong. (Feb. 2, 2017) (Recorded Vote), http://clerk.house.gov/evs/2017/roll076.xml

[9] United States Senate, U.S. Senate Roll Call Votes 115th Congress, 1st Session, H.J. Res. 37 (Mar. 6, 2017), https://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=115&session=1&vote=00081.

[10] Devaney, supra note 1.

[11] U.S. Senate Health, Educ., Labor, and Pensions Comm., Acting Responsibly? Federal Contractors Frequently Put Workers’ Lives and Livelihoods at Risk 1 (Majority Comm. Staff Rep. 2013) , http://www.help.senate.gov/imo/media/doc/Labor%20Law%20Violations%20by%20Contractors%20Report.pdf.

[12] Id.

[13] Id. at 8.

[14] Id. at 11

[15] Id. at 12-13.

[16] Id. at 9.

[17] Office of S.Elizabeth Warren, Breach of Contract: How Federal Contractors Fail American Workers on the Taxpayer’s Dime 1, 5 (2017), https://www.warren.senate.gov/files/documents/2017-3-6_Warren_Contractor_Report.pdf.

[18] Id. at 6

[19] Id.

[20] Id. at 2.

[21] Traub & Hiltonsmith, supra note 3, at 1.

[22] Id. at 4.

[23] Annual Update of the HHS Poverty Guidelines, 82 Fed. Reg. 8831 (Jan. 31, 2017), https://www.federalregister.gov/documents/2017/01/31/2017-02076/annual-update-of-the-hhs-poverty-guidelines.

[24] Wheeler, supra note 1.

[25] U.S. Senate Health, Educ., Labor, and Pensions Comm., supra note 10, at 23-28.

[26] Joe Davidson, Obama’s fair-pay order for contractors under attack in congress, Wash. Post (Feb. 28, 2017), https://www.washingtonpost.com/news/powerpost/wp/2017/02/28/obamas-fair-pay-order-for-contractors-under-attack-in-congress/?utm_term=.1ff4a833575d.

[27] 163 Cong. Rec. S1600 (daily ed. Mar. 6, 2017) (statement of Sen. Patty Murray), https://www.congress.gov/crec/2017/03/06/CREC-2017-03-06.pdf.

[28] Id.