Government Contracts Monitor

Congress Votes to Repeal Former President Obama’s Fair Pay and Safe Workplaces Regulations

March 6, 2017

On Monday, March 6, 2017, the U.S. Senate voted, 49-48 on a straight party-line vote, to join the U.S. House of Representatives in repealing the Fair Pay and Safe Workplaces final rule issued last August, implementing President Obama’s Executive Order 13673 (Fair Pay and Safe Workplaces). Assuming President Trump signs the joint repeal resolution in the coming days, which appears highly likely in view of his determination to reduce unnecessary regulatory burdens, this action will close the books on this controversial rule and avoid the associated heavy burdens and substantial compliance challenges for contractors. Importantly, this action under the Congressional Review Act, 5 U.S.C. § 801 et seq., means that no new similar future rule may be issued “in substantially the same form,” unless explicitly authorized by Congress.

As you may recall, the Fair Pay and Safe Workplaces rule encompasses three separate elements: (1) offerors bidding on contracts valued at $500,000 or more would have been required to disclose a wide range of labor law “violations” over the prior three years, even if those “violations” had not been fully adjudicated, and federal contracting officers, with input from new Agency Labor Compliance Advisors (ALCAs), would have been required to consider such “violations” in determining the offeror’s responsibility (the so-called “blacklisting” provision), and awardees would have required to report updated such information every six months; (2) contractors would have been prohibited from entering into pre-dispute arbitration agreements with their employees with respect to claims under Title VII of the Civil Rights Act of 1964, or any tort relating to or arising out of sexual assault or harassment; and (3) contractors and subcontractors were required to communicate certain paycheck information and employee/independent contractor status to their workers (Paycheck Transparency).

As previously advised, the U.S. District Court for the Eastern District of Texas enjoined implementation of the first and second aspects of the rule late last October, just before they were scheduled to become effective. The Court identified numerous perceived issues, including violations of the First (free speech) and Fifth (due process) Amendments, the Federal Arbitration Act and that the rule was preempted by federal labor laws. That decision has been on appeal, which appeal will be mooted by the pending repeal when finalized. However, the Court did not stay the Paycheck Transparency rules, and those became effective January 1, 2017, for new solicitations issued after that date for contracts valued at over $500,000, as previously discussed here.

Assuming President Trump signs the joint repeal resolution, the final rule will be repealed in its entirety, and none of its provisions, including Paycheck Transparency, will remain in effect. The FAR Council presumably will promptly withdraw the final rule in full, as they previously notified Contacting Officers as to the Court’s stay. Conspicuously, the subject repeal does not eliminate per se either the actual underlying Executive Order or the Department of Labor’s published Guidelines interpreting various terms in the Executive Order. However, both of these documents are effectively nullified by the repeal, and left without any implementing platform.

On a practical level, if you are responding to a new solicitation incorporating Paycheck Transparency, you may want to ask the Contracting Officer to amend the solicitation once the repeal becomes final. Similarly, if you operating under a contract that has been modified to incorporate or otherwise includes Paycheck Transparency, you may want to ask the Contracting Officer to mod the contract to remove those requirements.