Hunton Employment & Labor Perspectives

On March 27, 2017, President Trump signed H.J. Res. 37, blocking the Fair Pay and Safe Workplaces Rule, the controversial rule enacted by the Federal Acquisition Regulatory (FAR) Council in August 2016, that legislators have criticized as a method to blackball federal contractors. The bill’s signing follows the U.S. Senate’s March 6, 2017 vote of 49-48 (along party lines) to formally disapprove of the rule.

The Fair Pay and Safe Workplaces Rule was subject to much debate and controversy since its enactment on August 25, 2016 by the FAR Council under the Obama Administration.  According to the rule and concurrent guidance issued by the Department of Labor, federal contractors and subcontractors would have had an obligation to publicly disclose any violation or alleged violation of labor laws within the preceding three years – regardless of whether they had been adjudicated – when bidding on federal contracts worth more than $500,000.

Based on the broad scope of the rule’s reporting obligations, implementation of the rule was expected to effectively blacklist contractors and subcontractors based on purported violations that had not been subject to judicial review or that were not final decisions. As an illustration, an agency could rely on preliminary determinations – such as a decision by the NLRB to issue a complaint in an unfair labor practice investigation or a “cause” determination by the EEOC – to block access to federal contracts. In part because of the due process concerns, among other perceived constitutional defects, the most onerous provisions of the rule were enjoined by a U.S. District Court in Texas in October 2016.

The Fair Pay and Safe Workplaces Rule is now nullified in its entirety and the injunction order is moot. In addition, because the rule was disapproved of by use of the Congressional Review Act (CRA), federal agencies will not be able to issue a substantially similar rule without specific authorization from Congress.  Federal contracting agencies will likely be directed to stop the implementation of the regulations.

Since the arrival of the Trump Administration in Washington, D.C., Congress has moved swiftly to overturn final regulations passed in the waning days of the Obama Administration through the seldom-used powers in the CRA. Notably, Congress has acted to disapprove of: Dodd-Frank regulations on the energy industry (H.J. Res. 41); Bureau of Land Management regulations curtailing methane waste (H.J. Res. 36); and Social Security regulations instituting the National Instant Criminal Background Check System (H.J. Res. 40). But Congress’ action to disapprove the Fair Pay and Safe Workplaces Rule is its first foray into rolling back the Obama Administration’s workplace regulations.

The CRA empowers Congress to review, by means of an expedited legislative process, new federal regulations issued by government agencies and, by passage of a resolution, to overrule such regulations. In effect, Congress can nullify a previous administration’s rulemaking through simple majority vote, which is then sent to the President for signature. The CRA has been successfully used to invalidate a regulation only once – in March 2001.  Then, Congress and President George W. Bush used the CRA to disapprove of a controversial regulation that required employers to take measures to prevent ergonomic injuries. The regulation had been issued by OSHA in November 2000 (in the waning days of the Clinton Administration).