Discarded blacklist

President Obama and his EO’s

Remember the Blacklisting Order that required federal contractors to provide a rap sheet with a proposal? No? Well, President Obama issued 275 Executive Orders during his two terms on various subject matters, some of which were fairly controversial, the Blacklisting Order included. Back in 2014, he issued several high-profile executive orders focused on employment issues in particular. For example, executive orders were issued for federal contractors regarding minimum wage, affirmative action, disclosure of compensation information, and similar issues. So what happens to those EOs now? Although we can’t predict the future, we can tell you that the Blacklisting Order is gone for now.

Some Background: Fair Pay and Safe Workplaces Executive Order 13673

Executive Order 13673 (issued on July 31, 2014) was called the “Fair Pay and Safe Workplaces” order, and it required federal contractors and subcontractors to report any “administrative merits determination arbitral award or decision, or civil judgment” against them in the preceding three years that related to potential violations under the FLSA, NLRA, OSHA, FMLA, and other anti-discrimination laws. It was known as the “blacklisting” order because it required the federal contracting officer to consider such violations when awarding or extending government contracts. The order also barred contractors from imposing predispute arbitration agreements on their employees.

Successful Challenge to the Order: The FAR Rule and the Injunction

On August 24, 2016, the Federal Acquisition Regulatory Council and the Department of Labor published a final rule implementing the Fair Pay and Safe Workplaces Executive Order. The final rule required federal prime contractors and subcontractors, including federal construction contractors with contracts over $500,000, to disclose to the government labor violations occurring within an expanding lookback period. Among the labor laws listed were the Davis-Bacon Act, the Service Contract Act, the FLSA, OSHA, the Migrant and Seasonal Agricultural Worker Protection Act, and the NLRA.  The final rule, which was more than 500 pages, contained an effective date of October 25, 2016.

On October 7, 2016, the Associated Builders and Contractors (ABC) filed a lawsuit in the Eastern District of Texas to have the order and final rule declared unlawful and set aside. The ABC complaint stated that “[t]he Executive Order, FAR Rule, and DOL Guidance are unprecedented in their exercise of authority over matters previously controlled by Congress.” ABC further sought to have the regulation immediately enjoined. On October 24, 2016, the Texas federal judge granted ABC’s motion for a preliminary injunction against the reporting obligations in the new rule. The court also enjoined the restriction on arbitration agreements.

Enter the CRA and President Trump

Using a law passed in 1996 called the Congressional Review Act (CRA), in 2017 Congress immediately began reviewing regulations issued in the final months of the Obama administration. The CRA gives Congress an expedited process to revoke administrative regulations issued by the executive branch which it believes infringed when believed the regulations infringed upon the role of Congress. Although used only a few times since its passage, Congress has already invoked the CRA seven times this year. All of these actions have been signed into law by President Trump.

This week, on March 27, President Trump signed CRA legislation to repeal the Fair Play and Safe Workplaces regulations issued last August. Under the CRA, the House passed a resolution on February 2 to revoke the rule, and the Senate followed suit on March 6. With President Trump’s signature this week, the blacklisting rule finally and officially is blacklisted. In signing the CRA bill, the Trump administration commented that the blacklisting rule had been seen as one of the most significant threats to growing American businesses and hiring more American workers. We suspect that there will be more blacklisting of President Obama-era regulations in the days to come.

The White HouseEmployers that contract with the federal government are about to face a whole new ballgame with the Trump Administration. In Trump: The Art of the Deal, Mr. Trump explained that deals are his “art form” and that making big deals is how he gets his “kicks.” President Obama issued many executive orders and presidential memoranda that imposed new restrictions and requirements on government contractors, and Trump has made clear that he takes a dim view of them. Trump’s “Contract with the American Voter” provided that he would “cancel every unconstitutional executive action, memorandum and order issued by President Obama” and his campaign website promised to “[c]ancel immediately all illegal and overreaching executive orders.”

With all of this in mind, federal contractor employers should expect the Trump administration to negotiate deals, both in style and substance, differently from those of the Obama administration. What will government contracting be like with the Trump Administration? We believe these Obama executive orders will be among the “First Five to Dive” under a Trump administration:

  1. Executive Order 13495: “Nondisplacement of Qualified Workers Under Service Contracts.” This was one of President Obama’s first executive orders, signed January 30, 2009. It requires a new federal contractor to offer jobs to workers employed by the outgoing contractor. It effectively gives the workers a right of first refusal to obtain jobs with the new contractor. Opponents say that this order limits the efficiency of new contractors.
  2. Executive Order 13502: “Use of Project Labor Agreements for Federal Construction Projects.” A project labor agreement (PLA) is a pre-hire collective bargaining agreement with a union that establishes the terms and conditions of employment for a construction project. President Obama signed this order on February 6, 2009, to require the use of PLAs on all federal construction projects valued at $25 million or more. Critics say that the order increases federal construction costs and limits the competitiveness of non-union contractors.
  3. Executive Order 13673: “Fair Pay and Safe Workplaces.” This order, signed by President Obama on July 31, 2014, requires prospective federal contractors to disclose labor law violations. Government officials are then required to consider a prospective contractor’s violation history when awarding contracts. The order also bars contractors from imposing pre-dispute arbitration agreements on their employees. Several companies sued to block implementation of this order, and on October 24, 2016, a federal district court in Texas sided with the employers against the Obama administration.
  4. Executive Order 13706: “Establishing Paid Sick Leave for Federal Contractors.” President Obama signed this order on September 7, 2015. It mandates that federal contractors allow employees at least one hour of paid sick leave for every 30 hours worked. The House Freedom Caucus has notified Trump’s transition team that this order needs to be rescinded. The Freedom Caucus also wants Trump to rescind Executive Order 13658, “Establishing a Minimum Wage for Contractors,” which sets a $10.10 minimum wage for the employees of federal contractors.
  5. Executive Order 13665: “Non-Retaliation for Disclosure of Compensation Information.” This order prohibits federal contractors from taking adverse employment actions against employees who disclose compensation information to other employees. President Obama signed the order on April 8, 2014. Critics of the order say that it increases government costs because salary transparency increases the employee expense of federal contractors.

Federal agencies have adopted rules implementing many of Obama’s executive orders, including those listed above. As a result, the rulemaking process will have to be used to eliminate these restrictions, and that process won’t be completed on “day one.”

In The Art of the Deal, Trump wrote: “The best thing you can do is deal from strength, and leverage is the biggest strength you have. Leverage is having something the other guy wants. Or better yet, needs. Or best of all, simply can’t do without.”

Trump is not one to voluntarily give up his leverage in a business deal. If federal contractors want or need the removal of government restrictions like those outlined above, Trump will likely expect something in return. Contractors can expect Trump to negotiate for lower prices, faster turn-arounds, and better deliverables.

President Obama limited government outsourcing, but a Trump administration will likely increase outsourcing. In his contract with the American voter, Trump promised a hiring freeze on all federal employees except those in the military, public safety, or public health, with the goal of reducing the federal workforce through attrition. At the same time, Trump has promised increased spending on defense, immigration enforcement, infrastructure, prison privatization, energy, law enforcement, cybersecurity, and school choice. Companies in these industries will likely have many new opportunities to obtain government contracts. On the other hand, spending on environmental enforcement and education regulations will likely decrease, and companies in these industries may have fewer opportunities.

Federal contractors should also be on the look-out for new regulations on hiring former government contracting officers. In a recent television interview, Trump said that “the people that are making these deals for the government, they should never be allowed to go to work for these companies.”

If you need assistance regarding revised employer obligations, Bradley has the experience to help. Our Governmental Affairs Group, Labor & Employment Group, and Government Contracts Practice Group can help with how these changes affect how you treat your employees. This multidisciplinary approach provides our clients with the broad range of experience and expertise needed to address their specific goals.

The White HouseWhat will a Trump administration do to the labor and employment law landscape? While we can’t predict for certain, we figure we can at least provide better insight than the pollsters who have spent the last year following the campaigns—so here is the first in a three-part blog series. First, here are some Executive Orders that could be rescinded or amended and administrative action that could affect the employer-employee relationship.

1. Executive Orders

Several of President Obama’s Executive Orders likely will be reviewed by President Trump during his first year in office. They could be rescinded or amended by new Executive Orders.

Executive Order 13502 promoted pre-hire collective bargaining agreements. Opponents of these “project labor agreements” argue that they negatively impact competition for project bids and can lead to higher costs. If one of President Trump’s top priorities is job creation and stimulation of the economy, a return by Executive Order to contract neutrality with regard to union involvement can be anticipated.

President Obama’s Executive Order 13496 required contractors to inform employees of their rights to unionize or refrain from unionizing. This order rescinded a prior Executive Order issued by President George W. Bush informing employees that unions could not use member dues for purposes unrelated to union contract administration without the members’ consent. President Trump could rescind EO 13496.

Executive Order 13672 and its Final Rule, which became effective on April 8, 2015, provided that covered federal contracting agencies must include gender identity and sexual orientation in their list of protected classifications under EEO law. Likewise, the EEOC has taken the position that Title VII’s prohibition of sex discrimination includes discrimination based on gender identity, gender transition, and sexual orientation. This issue is now before several courts and will continue to be litigated. While it is not anticipated that a Republican-controlled Congress will pass legislation prohibiting discrimination based on gender identity and sexual orientation, it is also clear that any scaling back of the EEOC’s strategic enforcement plan that promotes LGBT employee rights would not occur immediately. President Trump could rescind EO 13672, but the likelihood of that is not clear at this time.

Two orders with January 1, 2017 triggers (EO 13706 and EO 13658) may not be a top priority for rescission. Executive Order 13706 requires employers with certain types of federal contracts to provide employees working on those contracts of one hour of paid sick leave for every 30 hours worked on the contract (up to 56 hours per year). It applies to contracts stemming from solicitations on or after January 1, 2017 and existing contracts replaced or amended after that date. Executive Order 13658 requires federal contractors to pay covered workers at least $10.20 per hour starting on January 1, 2017. The new administration may think federal contractors have already made adjustments to comply with these Eos and not expend much effort on them in the short run.

Executive Order 13673, the Fair Pay and Safe Workplaces Order, requires federal contractors and subcontractors to report any “administrative merits determination arbitral award or decision, or civil judgment” against them in the preceding three years. This so-called “blacklisting” order requires disclosure of potential violations under the FLSA, NLRA, OSHA, FMLA and other anti-discrimination laws and requires the contracting officer to consider such violations when awarding or extending contracts. Litigation to enjoin the rule is pending and will not be decided quickly, but President Trump could rescind the EO, making the issue moot.

Executive Order 13495 creates hiring rights of first refusal for current employees of federal contractors when the contract changes hands. The new administration will review this in light of whether it promotes or hinders growth and job creation.

Executive Order 13494 prevents the government from reimbursing contractor employers for costs associated with union campaign activities. This is one the employer community would like to see rescinded and rescission will not cause a lot of disruption.

2. NLRB and DOL Actions

In the last several years, initiatives driven by Obama Administration agencies significantly changed the nature of the employer-employee relationship. While President Obama was issuing Executive Orders, the National Labor Relations Board and the Department of Labor handed down rules and decisions which the new administration may seek to change.

The NLRB’s quickie election rule shortened the time for an election following a union’s filing of a representation petition and is widely seen as pro-union. While President Trump’s position on specific rules may not yet be clear, the Republican Party is expected to push back against this perceived overreaching, perhaps by restricting funding to the NLRB for enforcement or reintroducing legislation to protect employees’ rights to secret ballot union elections.

While class action waivers in arbitration agreements are viewed askance by the current NLRB (which has announced they violate the NLRA), this could change with the new administration. The Trump Administration will change the composition of the Board, which could result in a new direction on this issue.

We may see the winds of change on the joint employer front. In last year’s Browning-Ferris Industries case, the NLRB presented a new standard for determining whether two or more entities are joint employers of a single workforce. Indirect control and “unexercised potential control” could establish joint employer status, which has potentially wide-ranging implications for franchisee and independent contractor relationships. To the extent that the new administration views this as detrimental to economic growth, it will seek to appoint board members who hold a more employer-friendly view.

The DOL’s persuader rule requires employers to file public reports with the DOL when they obtain advice from consultants and lawyers regarding labor activities, even if such advice involves no direct employee contact. This was a change from the prior disclosure rules. A court has enjoined the rule for now. President Trump also will have an opportunity to reshape the NLRB to address this issue.

And let’s not forget the DOL’s currently enjoined Final Rule on the Salary Basis for the White Collar Exemptions.


Look for installments 2 and 3 in this series covering possible changes to immigration policy, the Affordable Care Act (ACA), social issues and expected judicial appointments.