Industry objects to new labor rule, cites extra burden on contractors

Six industry groups are objecting to a new Agriculture Department rule on labor law violations, claiming the rule is redundant and would cause extra work for businesses and contracting officers. The groups made their complaint known in a Jan. 26 letter to department officials.

Under USDA’s rule, companies contracting with the department must certify that they comply with labor laws and that their subcontractors of any tier and their suppliers also comply. It includes reporting requirements for violations and the threat of tough action if there are violations.

The rule was issued Dec. 1 as a direct final rule, amending the Agriculture Acquisition Regulation (AGAR). It takes effect on Feb. 29. In their notice, department officials said they would pull back their final rule, if they received “adverse comments” on it.

In the letter, six business groups, called the Council of Defense and Space Industry Associations, said the government already has 180 federal labor laws, as well as regulations to implement those laws. The government also has numerous offices within the Labor Department, such as the Office of Federal Contract Compliance Programs, to ensure companies abide by the complex web of laws. The council said the USDA officials would have to be careful that they not usurp other agencies' authorities, which could lead to conflicting rulings on enforcement.

The rule would add a significant burden on companies with large numbers of employees and facilities, and with significant numbers of subcontractors and suppliers. They would have to develop procedures to monitor and report on their own compliance with each of the labor laws. Then, companies would have to set up similar procedures to monitor compliance up and down their supply chain.

Contracting officers also would have a lot of extra work as a result of the law. Acquisition officials would be responsible for reviewing reports of noncompliance and taking action against companies. Meanwhile, officials may not have the expertise and resources to interpret and then enforce the myriad labor laws.

The council noted several ambiguities in the rule, such as which labor laws apply to the rule. Another concern was with the compliance clause. When awarded a contract, the prime contractor deems that all its subcontractors and suppliers are complying with labor laws. However, companies often will not have a contractual relationship with its subcontractors until after award.

“We urge USDA to immediately cancel the direct final rule and also withdraw the proposed rule,” the letter said.

The council is comprised of the Aerospace Industries Association, American Council of Engineering Companies, U.S. Chamber of Commerce, National Defense Industrial Association, Professional Services Council, and TechAmerica.