Committee Statements

The vast majority of federal contractors are responsible employers who obey the law and do right by their employees. There will always be, as the Chairman noted, bad actors who deny workers basic protections and we can all agree they should not receive taxpayer dollars for work on federal contracts. However, even the most responsible employer can occasionally run afoul of labor and employment laws, or simply be accused of doing so.

The Executive Order we’re examining today unfairly shifts the regulatory burden to employers while removing the burden of proof from labor violation claims, resulting in a much less efficient system of government acquisition for both taxpayers and those seeking government contracts.

Furthermore, the Executive Order’s ban on pre-dispute arbitration clauses is a direct violation of the Federal Arbitration Act, which ensures the validity and enforcement of arbitration agreements - a practice that the United States Supreme Court has repeatedly reaffirmed. The President has exceeded his authority to make such a change and is in direct violation of the law.

What’s worse – through its new reporting requirements, this Executive Order shifts an incredible regulatory burden to contractors themselves by requiring prime contractors, some of which have thousands of subcontractors, to collect information on their subcontractors related to 14 different federal labor and employment laws and over 500 different state laws.

For example, the Fair Labor Standards Act is the cornerstone of worker wage and hour protection. However, the regulations implementing that law are flawed and outdated. Even the Department of Labor, which enforces the Fair Labor Standards Act, has run afoul of the law’s requirements from time to time.

This will have a major effect on these sub-contractors, many of them small businesses with limited resources to handle such an undertaking. Many will be forced to divert resources to handle this new administrative task that will not have to be completed just once, but every six months.

These aggressive new regulations are going to unreasonably block responsible parties from participating in federal government contracts while seriously affecting the willingness of new employers to even seek federal contracts in the first place. The result of this new process will be a significantly delayed contracting process that limits both healthy competition and the efficient delivery of goods to the U.S. government at a reasonable price to taxpayers.

Instead of helping employers comply with complicated regulatory requirements, the administration has added yet more red tape to the federal procurement system that has the potential of blacklisting responsible employers when there is already a system in place for weeding out truly bad actors.

To make matters worse, contracts will be put in jeopardy by alleged violations. This could be particularly devastating for employers that are the target of union corporate campaigns or competitors who simply want a competitive edge against their competition. This highly elevates the risk of frivolous complaints and the loss of business.

 

This executive order represents an overstep of authority by the President at the expense of employers and workers. Rather than impose additional layers of bureaucracy the administration would be better served working with Congress and stakeholders to ensure the rules and regulations implementing our laws are modernized and streamlined. Then the administration can work with good employers to ensure compliance rather than punishing them after the damage is done.

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