On Monday, March 27, President Trump exercised his authority under the Congressional Review Act (“CRA”) to nullify the Obama-era Fair Pay and Safe Workplaces Rule, which was promulgated pursuant to President Obama’s 2014 Executive Order 13673. The rollback, which has been much anticipated by the contracting community, is part of a push by the Trump administration and the 115th Congress to scale back a number of contracting regulations that were put into effect under the Obama administration (for more on this topic, see our prior post here).
President Trump’s March 27th signing of the resolution—which effectively removes the rule from the books—follows the passage of a joint disapproval of the rule by the House and Senate. Though the rule’s reporting requirements and arbitration prohibitions had already been blocked in October 2016 by a district judge in the Eastern District of Texas, the CRA resolution, now bearing a Presidential signature, fully nullifies the entire rule and all of its requirements on federal contractors—including its paycheck transparency provisions, which were previously left intact by the court in Texas. Indeed, pursuant to the CRA, a rule that is nullified using this process “shall be treated as though such rule had never taken effect.” 5 U.S.C. § 801(f).
Generally speaking, the Fair Pay and Safe Workplaces Rule—also known as the “blacklisting rule”—required federal government contractors to disclose violations and alleged violations of certain labor laws to the government when bidding on federal contracts or subcontracts worth more than $500,000. Of particular concern to contractors, the rule required contracting officers to consider the disclosed violations or alleged violations when determining the responsibility of the offeror or its proposed subcontractors, even though many such reports would pertain to unproven allegations of labor law violations. The rule also prohibited arbitration agreements in contractor employment agreements, and required paycheck transparency, which included disclosure to the worker of his or her worked hours (including overtime), rate of pay, and gross pay.
Now that the rule has been extinguished, contractors should review recent, pending, and planned contracts and subcontracts to remove or preclude inclusion of clauses related to the defunct rule and Executive Order 13673, which include FAR 52.522-57 (Representation Regarding Compliance with Labor Laws), FAR 52.522-58 (Subcontractor Responsibility Matters Regarding Compliance with Labor Laws), FAR 52.522-59 (Compliance with Labor Laws), and FAR 52.522-61 (Arbitration of Contractor Employee Claims). Where any of these clauses have already been made part of a contract or subcontract, contractors should, as a precaution, request in writing that the contracting officer formally remove the clauses via a contract modification.