Many federal contractors are on the verge of having to comply with the Obama administration’s Fair Play and Safe Workplaces Executive Order. The FAR Council’s Final Rule and the U.S. Department of Labor’s Final Guidance (I’ll refer to them collectively as “the Rule”) were published on August 25 – all 483 pages totaling nearly 191,000 words — and the effective date is tomorrow, October 25.
But will contractors get a reprieve? Associated Builders and Contractors, Inc., along with one of its Texas chapters and the National Association of Security Companies, have filed suit in federal court in Beaumont, Texas, in an attempt to derail the Rule. Arguments were heard this past Friday on the plaintiffs’ motion for a temporary restraining order and injunction.
The plaintiffs’ challenge to the Rule is many-faceted. They contend that the government did not have legal authority to issue the Rule, that the Rule is preempted by the 14 federal labor and employment laws to which it applies (including the National Labor Relations Act, the Fair Labor Standards Act, the Occupational Safety and Health Act, and all of the federal anti-discrimination laws), that the Rule violates the First Amendment prohibition on compelled speech by requiring federal contractors “to publicly condemn themselves” (even, in some cases, while they are continuing to contest the alleged violations), that the Rule violates federal contractors’ due process rights, that the Rule is arbitrary and capricious, and that the Rule violates the Federal Arbitration Act.
It’s hard to disagree with the plaintiffs in this case. For example, as the lawsuit notes, a WH-56 Summary of Unpaid Wages form is an administrative “merits” determination that would have to be disclosed even though employers often pay only because the cost of litigation may greatly exceed the amounts that the U.S. Department of Labor claims to be due as unpaid wages.
In arguing that the Rule is arbitrary and capricious, the plaintiffs’ lawsuit claims, “The Rule and Guidance do not adequately explain other than through sheer speculation how compelled disclosure of ‘administrative merits decisions’ — including those that are still being contested or settled without a hearing — demonstrate any degree of business integrity sufficiently lacking to affect the government’s responsibility determination.” Well said.
The government defendants have not filed answers, but as noted, a hearing was held Friday, and the court asked for more briefing, which was filed on Saturday:
If the court doesn’t block the Rule, it will take effect tomorrow. For what’s left of 2016, the disclosure requirements will apply to contractors under consideration for federal contracts worth $50 million or more. Beginning in 2017, the requirement will include contractors and subcontractors bidding on government work worth only $500,000 or more. These disclosures will be public record.