As we previously reported, Congress has taken its final steps in repealing Obama’s Fair Pay & Safe Workplaces rule, one of the most controversial rules enacted by the Federal Acquisition Regulatory (FAR) Council under President Obama. On February 6, the Senate gave the final vote of approval of the House Resolution overturning the rule, and on March 27, President Trump, unsurprisingly, signed the Resolution into law. At the same time, he also signed legislation overturning three other rules, including the U.S. Bureau of Land Management’s land use planning rule and two rules issued by the U.S. Department of Education. Though much of the Fair Pay rule had never been implemented due to a court injunction, this legislation formally revokes the rule and ensures that the FAR Council cannot enact a similar rule without Congressional approval.
Based on the final rule and guidance issued by the Department of Labor (DOL), the Fair Pay & Safe Workplaces rule would have required federal contractors and subcontractors to publicly disclose any violations or alleged violations of labor laws – regardless of whether they had been adjudicated – when bidding on federal contracts worth more than $500,000. Agencies could then use such public disclosures to potentially disqualify offerors from contract awards.
Following its genesis in Executive Order 13673, signed by President Obama on July 31, 2014, the rule has faced consistent opposition in the last two years from both Congress and the courts. Though purporting to be “fair” in name, the rule would potentially penalize contractors without due process. The rule has also been criticized for its high cost and compliance burden, for its overlap with existing federal regulations, and for its constitutional violations. According to the Regulatory Impact Analysis, the rule was estimated to impose a $458,352,949 burden on contractors and subcontractors for the first year and a $413,733,272 burden in the second year. The rule would have additionally cost the government $15,772,150 in the first year and $10,129,299 in the second year.
While President Trump’s signing of the legislation will permanently repeal it, practically speaking, most of rule had not been implemented, and likely never would have been. On October 24, 2016, U.S. District Judge Marcia Crone granted a preliminary injunction halting the implementation of the vast majority of the regulation, allowing only the “paycheck transparency” provision to go forward. The court found that the Executive Order, the rule and the accompanying DOL guidance: (1) reached beyond executive authority; (2) were otherwise preempted by federal labor laws; (3) violated due process; (4) violated the First Amendment; (5) violated the Federal Arbitration Act; and (6) were arbitrary and capricious. Following the order, all federal agencies were enjoined from requiring that all labor law violation allegations be reported.
Despite the court order and available alternative of President Trump simply revoking Executive Order 13673, Congress and the Trump Administration has taken a more aggressive approach to reversing the rule using the Congressional Review Act (CRA). This action both voids the regulation, including the paycheck transparency provisions, and prohibits the FAR Council from issuing a substantially similar rule without express congressional authorization.
Though this action is in keeping with the Trump Administration’s overall policy of eliminating costly and inefficient regulation, this particular rule, which would have imposed costs estimated by the government to total $4 billion in the first decade, was largely dead before Trump’s arrival. Inaptly, but artfully, named, the rule would have deprived federal contractors and subcontractors of their right to due process, while simultaneously costing taxpayer billions of dollars in the decade to come. This particular rule, which is only one of a host of regulations that Congress has already taken action to repeal, was doomed from the start.