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NRCA issues a statement about the Department of Labor's "Fair Pay and Safe Workplaces" regulation

Oct. 26, 2016

NRCA is pleased to report that on Monday, Oct. 24, a Texas judge issued a preliminary injunction against the Department of Labor's (DOL's) "Fair Pay and Safe Workplaces" final regulation, which contains new requirements for contractors bidding on federal contracts. The regulation was scheduled to take effect Oct. 25, 2016, and be phased into full implementation by Oct. 25, 2017.

NRCA strongly opposed this regulation when it was proposed by DOL in 2015 and submitted detailed comments outlining NRCA members' concerns with the regulation. The primary concerns are the regulation will 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. In addition, NRCA believes the new requirements go beyond the statutory authority granted the executive branch by Congress. NRCA urged DOL to withdraw the regulation. Click here to view NRCA's comments.

The final rule, sometimes referred to as the "blacklisting" regulation, if implemented, will impose new obligations on most government contractors bidding on federal contracts worth $500,000 or more. Companies bidding on qualifying contracts will have to disclose any violations of 14 federal labor laws (and some state law equivalents) that occurred within the past three years, including violations of safety and health rules, collective bargaining, family and medical leave rules, and civil rights protections. New federal compliance officers will determine whether such violations will disqualify the contractor from receiving the contract. Contractors and subcontractors will be required to disclose such violations every six months.

On Oct. 24, Judge Marcia Crone of the U.S. District Court for Eastern Texas issued a preliminary injunction against the new regulation. In the court order, Crone wrote the organizations that sued over the regulations "properly demonstrated immediate and ongoing injury to their members if the rule is allowed to take effect." Crone said the regulations' public disclosure and disqualification requirements "are nowhere found in or authorized by the statute" that they rely on. In addition, she said the regulations "appear to conflict directly with every one of the labor laws they purport to invoke by permitting disqualification based solely upon 'administrative merits determinations' that are nothing more than allegations of fault asserted by agency employees and do not constitute final agency findings of any violation at all."

The preliminary injunction in is effect nationwide and blocks all aspects of the regulation except the paycheck transparency provision, which requires some federal contractors to disclose to their employees various details about the employee status and whether they are owed overtime compensation. The government is likely to appeal to injunction to the Fifth Circuit and will seek expedited briefing and argument. A ruling on any appeal would likely occur during the first quarter of 2017 though it could come earlier.

NRCA will continue to monitor further litigation regarding this regulation.

The complete final regulation, along with accompanying DOL guidance, amendment to the original Executive Order and other related information can be found on DOL's website by clicking here.

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