Fair pay proposed rule draws industry's ire

The proposed rule implementing the executive order known as Fair Pay and Safe Workplaces is huge, weighing in at 131 pages, and there are still several unanswered questions.

The executive order requires contractors to disclose labor violations as part of the procurement process so contracting officers can determine whether they are responsible businesses. The order also requires contractors and subcontractors to provide information to their workers about how they are paid and which workers they are treating as independent contractors.

Many in industry are up in arms about the proposed rule, which they say will add tremendous data collection and reporting requirements as well as putting them at increased risk.

First off, there are some 14 federal laws that fall into the category of labor laws. But the executive order also wants contractors to report about violations of equivalent state and local laws. How that will be done is one of the big unanswered questions in the proposed rule, according to attorney Linda Jackson with Littler Mendelson.

There also are questions about whether primes will be responsible for collecting information from their subcontractors. Apparently there is some work being done by the FAR Council to have subs report directly to agencies. “That would take some pressure off of the primes,” she said.

But there are three other bigger concerns that Jackson and others described to me.

First, there are major concerns about due process. The proposed rule requires contractors to report labor violations that haven’t been fully adjudicated. The end results, i.e. guilt or innocence, haven’t been determined yet, or are still under appeal.

“The rule and guidance treat mere allegations of wrongdoing—which have not been fully adjudicated—similar to adjudicated cases where the established legal procedures have been allowed to play out as intended,” said Stan Soloway, president and CEO of the Professional Services Council.

One is the fact that 14 laws are involved, and each of those laws is administered by different groups such as the Equal Employment Opportunity Commission. These entities have the expertise in these laws to make judgments. There also are processes for appeals.

But even though the proposed rule includes requirements for agencies to create agency labor compliance advisors (ALCA) to help, there are serious concerns that the agencies won’t have the expertise to evaluate the violations, Jackson said.

There is no appeals process described in the proposed rule, so the assumption is that appeals will go to the Government Accountability Office in the form of bid protests.

The rule, in fact, sets up two parallel tracks for the evaluating the violations. In essence, contractors will face off with the enforcement agency that oversees the law and any other agency that they are pursuing a contract with.

Soloway said it is “tantamount to double jeopardy.”

The government already has laws and regulations in place to enforce labor laws. “We’ve been encouraging the administration and federal agencies to better use the considerable enforcement tools they already have … to ensure fair pay and a safe workplace,” said Trey Hodgkins, senior vice president at the Information Technology Alliance for Public Sector.

Jackson said she’s been hearing from many government contractor clients who are very concerned about the proposed rule. She said wouldn’t be surprised if there is litigation once the final rule comes out.

But there also seems to be a sense of inevitability that a final rule, which will likely look very much like the proposed rule, will be issued. The rulemaking process generally doesn’t get this far down the road without something final happening. Litigation may be the only way for the industry to turn these requirements back.

The frustration I get from people in industry is that there are very few bad actors, and there are already ways to punish them.

This proposed rule with its reporting and data collection requirements seems like overkill, like bringing a tank to a knife fight.