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NRCA issues comments expressing opposition to President Obama's Executive Order entitled "Fair Pay and Safe Workplaces"

Aug. 18, 2015

General Services Administration
Regulatory Secretariat (MVCB)
Attn: Ms. Flowers
1800 F Street, NW, 2nd Floor
Washington, DC 20405

Re: FAR Case 2014-025

Dear Sir or Madam:

The National Roofing Contractors Association wishes to express opposition to the Notice of Proposed Rulemaking (NPRM) published in the Federal Register on May 28, 2015, which would implement President Obama's Executive Order entitled "Fair Pay and Safe Workplaces." This proposed regulation, if finalized, would have serious adverse consequences for NRCA members who do business with the federal government, and thus NRCA urges that the proposed rule be withdrawn.

Established in 1886, NRCA is one of the nation's oldest trade associations and the voice of professional roofing contractors worldwide. NRCA has approximately 3,500 contractors in all 50 states who are typically small, privately held companies, with the average member employing 45 people and attaining sales of about $4.5 million per year. Many of NRCA's members participate in contracting with the federal government.

The NPRM and the Executive Order on which it is based is intended to "crack down on federal contractors who put workers' safety and hard-earned pay at risk." While this certainly is a laudable goal, NRCA is deeply concerned that the new regulation will likely increase costs and provide new risks for employers involved in federal contracting, while doing little if anything to make workplaces safer or increase worker compensation. The proposed regulation will impose multiple new obligations on government contractors and subcontractors providing goods and services to the federal government. Many of the new requirements are unprecedented in scope and thus could have substantial consequences for employers.

As proposed, companies bidding on contracts worth more than $500,000 would have to disclose violations of 14 federal labor laws and executive orders that have occurred within the past three years. The relevant three year period is that preceding the date of the offer, contract bid or proposal. The covered federal laws include the Occupational Safety and Health Act, National Labor Relations Act, Fair Labor Standards Act, Davis-Bacon Act, and Family and Medical Leave Act and others. Additionally, the Department of Labor will publish a list of state labor laws (including OSHA-approved state plans) that will also be covered under the regulation once it is finalized.

Another requirement of the regulation is that during each pay period, contractors holding contracts worth more than $500,000 must report to their employees detailed information, such as hours worked, overtime hours, pay levels and any additions to or subtractions from pay. Prime contractors must also incorporate this requirement into qualifying subcontracts worth more than $500,000. Employers will also be required to notify any worker in writing whether they are being treated as an independent contractor rather than an employee. While these actions may appear rather straightforward and many employers already do provide such information to employees, having the new requirements written into federal regulations could provide new opportunities for litigation against employers.

In order to enforce the regulation, new federal compliance officers will need to be hired to determine whether violations of the applicable federal and state laws will disqualify the contractor from receiving the contract. Contractors and subcontractors will be required to disclose such violations to the government every six months. Contractors will also be required to certify that subcontractors meet the newly established standards and are "a responsible source that has a satisfactory record of integrity and business ethics."

Additionally, for federal contracts and subcontracts worth more than $1 million, contractors will be prohibited from arbitrating claims under Title VII of the Civil Rights Act of 1964, as well as sexual assault and sexual harassment claims, unless the complaining employee agrees to arbitration. Again, if implemented, the new regulation will be ripe for providing plaintiffs' attorneys with new opportunities for lawsuits aimed at employers, which will result in more uncertainty, risks and ultimately greater costs.

The proposed regulation would enable federal agencies to reject a bid or cancel and existing government contract and initiate suspension and debarment proceedings based on violations that a contractor may have already resolved or that have not been fully adjudicated. The new requirements will result in much uncertainty for both contractors and the government in the procurement process. The unintended consequences would be compounded by the reporting requirement imposed on prime contractors, whereby a large contractor would have to review numerous possible labor law violations (in various stages of adjudication) from dozens of subcontractors. Many employers, particularly small businesses, may incur new staffing and legal expenses in order to identify and confirm potential subcontractor violations that may be covered by the new requirements.

In addition to concerns listed above, NRCA believes the new requirements in the proposed rule are beyond the statutory authority granted to the executive branch by Congress. The regulation effectively establishes new degrees of violations and new enforcement mechanisms for federal labor laws that are not included in the underlying statutes. The president and the executive branch are simply not authorized to change enforcement mechanisms contained in statute without clear approval from Congress.

Another problem is the proposed regulation disregards existing enforcement authority the administration already has through the Federal Acquisition Regulation (FAR) and various labor laws. Federal agencies already have authority under the FAR to consider contractor compliance with federal labor laws and share relevant information with federal contracting offices or agency suspension and debarment officials. The proposed regulation will only duplicate and complicate the current system by imposing new data collection, review, inter-agency consultation and enforcement procedures on top of the already balanced remedial provisions under the covered 14 federal labor laws and related state laws. Adding another layer of bureaucracy and uncertainty will only be counterproductive for employers and the government contracting process while doing little, if anything to make workplaces safer or increase worker pay.

Finally, NRCA believes the economic analysis in the NPRM is fundamentally flawed and thus greatly underestimates the costs that would be imposed on employers. For example, the economic cost estimate fails to recognize the new reporting obligations will impact unsuccessful as well as successful bidders on government contracts. It also ignores the fact that prime contractors will be required to collect and report information for each covered subcontractors, which will involve a substantial reporting burden. As such, the estimate of over $87 million in new reporting costs for employers contained in the NPRM is woefully unrealistic, and in reality the costs will run into the hundreds of millions or even billions of dollars. Clearly the administration has not conducted a complete analysis of the economic impacts of this proposed rule.

To summarize, NRCA believes the proposed regulation goes beyond the executive branch's authority and if implemented would prove to be counterproductive in making workplaces safer or increasing worker pay. As such, NRCA strongly urges that the proposed rule be withdrawn.

Thank you for your consideration of NRCA's views and concerns on this issue. If you have questions or need more information about NRCA, please contact Duane Musser, NRCA's vice president of government relations, at (202) 546-7584 or dmusser@nrca.net.


Lindy Ryan,
Tecta American Southeast LLC
Chairman, NRCA

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