The Obama administration finalized a rule Wednesday requiring firms to report past labor law violations to qualify for contracts with the federal government.
President Obama signed the final rule for the Fair Pay and Safe Workplaces executive order, which he issued two years ago.
“Contractors that illegally cut corners at the expense of their workers should not benefit from taxpayer-funded federal contracts,” Labor Secretary Thomas Perez said in a statement.
The rule requires disclosure of even minor violations that businesses or their subcontractors received in the previous three years for contracts worth more than $500,000. The categories of violations include safety and health, wage and hour, family and medical leave, and civil rights, among others.
Businesses blasted the new regulation, saying it will “blacklist” them from doing business with the federal government.
“Now hardworking, responsible manufacturers could lose out on valuable job-creating work with the federal government for no good reason,” said Jay Timmons, president of the National Association of Manufacturers. “This regulation is akin to a bizarre ‘guilty until proven innocent’ policy that significantly burdens manufacturers who will have to expend countless hours and resources to ensure they do not run afoul of a fundamentally unfair regulation.”
The rule will take effect Oct. 25 and will be implemented in phases.
Three House Republican lawmakers on the Education and the Workforce Committee said protections are already exist to bar “bad actors” from obtaining government contracts, and the new rule only adds a “new layer of bureaucracy” to the system.
“This redundant, unnecessary and unworkable regulatory scheme isn’t about protecting the rights of workers,” said Reps. John Kline of Minnesota, Tim Walberg of Michigan and Phil Roe of Tennessee. “It’s about growing government and promoting a culture of union favoritism.”
They said the regulation “will only tie law-abiding employers in a maze of red tape and make a system intended to protect workers less efficient.”