WASHINGTON – Facing the hostility of big business and its congressional puppets, a progressive think-tank went to bat on March 4 to defend President Obama’s executive order cracking down on federal contractors who break labor laws.
In testimony to the ideologically polarized House Education and the Workforce Committee, Karla Walter of the Center for American Progress’ American Worker Project reminded lawmakers of findings-stretching back years-of widespread law-breaking by firms that get federal cash.
Company law-breaking ranges from labor law violations to denial of overtime pay to outright refusal to pay workers to dozens of workers killed on the job while employed by those same contractors, she said.
Obama issued an executive order last July telling federal procurement officers that they must take a company’s overall record in obeying labor laws, tax laws and anti-discrimination laws into account when awarding federal contracts.
Other laws his order covers include the Davis-Bacon Act-which mandates locally prevailing wages on federally funded construction projects-the Service Contract Act, and the Family and Medical Leave Act.
Obama’s order is important because “more than one in five American workers are employed by a company that contracts with the federal government” for some or all of its business, Walter said.
And many of those businesses break labor law, while the government has a jury-rigged, ineffective system to let its understaffed analysts in the field monitor them, she noted. In the prime example, Walter said, at the Defense Department, contract monitors can only flag law-breakers if the law-breaking occurs in the context of a defense contract-and not the firm’s overall business.
“Far too often companies with long and egregious records of violating workplace laws continue to receive federal contracts. This not only harms workers, but also taxpayers, and law-abiding businesses,” Walter told the House panel. “The contractor review process is supposed to prevent this from happening by ensuring that only responsible companies receive federal contracts, but the current system is broken.
“President Obama’s Fair Pay and Safe Workplaces executive order-informed by proven methods adopted by state governments, the private sector, and even federal agencies in limited instances-strives to help fix the broken system and ensure that law-breaking contractors come into compliance before they are able to receive new contracts,” she said.
Walter explained that Obama’s intent is not necessarily to throw the bad actors out of contracts, but to get them to mend their ways before they bid. She said that benefits honest contractors and governments by, among other things, increasing competition.
In Maryland, she reported, the number of bids per contract rose from 3.7 before a similar law-abiding requirement was instituted, to 4.7 after it. Honest contractors-who had stayed away from bidding due to low-ball bids by lawbreakers who shaved money from their workers-jumped in. “It leveled the playing field” for them, she quoted the firms as saying.
And workers benefit, too, Walter said.
“Only contractors that have shortchanged their workers and cut corners on workplace safety should be subject to a heightened review process and any potential costs associated with complying with current workplace laws,” as a result of Obama’s order, she noted.
“The government can encourage these companies to clean up their acts and ensure an efficient contract award process by creating a way for companies to come forward in order to rectify ongoing problems before they bid.”
And she reminded the Republican-run committee that in at least one money bill for the current fiscal year, approved in 2014, lawmakers banned federal Transportation Department and Housing Department funds from firms that broke the Fair Labor Standards Act. That law mandates overtime pay and the minimum wage. Rep. Keith Ellison, DFL-Minn., inserted the ban.
“President Obama’s order strives to ensure that companies that respect their workers are not put at a competitive disadvantage compared to bad actors that reduce costs by paying wages lower than required by law and cutting corners on workplace safety,” Walter said.
“While opponents have argued these sorts of policies could bar or even ‘black list’ companies with minor workplace violations from receiving any federal contracts, improved responsibility guidance and a thorough investigation process should allow the government to identify only persistent violators of workplace laws and provide them an opportunity to clean up their acts.”
As expected, the committee’s ruling Republicans denounced Obama’s order as “executive overreach,” a party line they have used in responding to other presidential decisions. So did the Chamber of Commerce. It’ll also cost businesses money said chamber attorney Willis Goldsmith, of the anti-worker law firm of Jones Day.
“The executive order imposes extremely onerous and expensive compliance obligations on regulated contractors and subcontractors and, as a result, will drive many employers from the contracting world to the detriment of both the taxpayers who benefit from increased competition, and the employees who work for those companies,” he claimed.