Judge issues block on Labor Dept. ‘blacklisting rule’

A federal judge has temporarily blocked a Labor Department rule requiring all federal contractors bidding on contracts over $500,000 to report any labor law violations they’ve had in the last three years.

U.S. District Court Judge Marcia Crone of the Eastern District of Texas issued the last-minute order late Monday, a day before the rule was set to take effect for contracts worth $50 million or more. The rule did not extend to any contract worth $500,000 or more until April 25, 2017.

In the 32-page order, Crone said the executive order and subsequent rule from the Federal Acquisition Regulatory Council (FARC) violates the First Amendment because it requires contractors to publicly disclose violations of any of the 14 federal labor laws even if those violations are being challenged in court or have been settled without any actual violation of the law.

“The Executive Order and FARC Rule present an imminent and non-speculative threat to plaintiffs’ members’ First Amendment rights by virtue of the fact that their public reports of alleged violations may be used by their competitors and adversaries to gain competitive advantage over Plaintiffs and their members,” Crone wrote.

“They will likely suffer increased costs, loss of customers, and loss of goodwill, regardless of whether they are actually disqualified from government contracts, by being labeled labor law violators.”

Associated Builders and Contractors (ABC) requested the temporary stay while it’s challenging the rule in court. The national trade group claims the regulation finalized in August “blacklists” prospective firms from the procurement process. 

Ben Brubeck, ABC’s vice president of regulatory, labor and state affairs, hailed the court’s decision in a statement Tuesday.

“ABC supports policies that promote fairness and competition in government contracting while holding bad actors accountable, but has long maintained that this rule would violate the constitutional rights of contractors and drive up costs to taxpayers,” Brubeck said.

“Not only does the court’s ruling protect the constitutional rights of government contractors and their employees from the latest attack by the Obama administration, but it will prevent a disruption to the federal government’s procurement process for critical goods and services that benefit the public.”

In a statement Tuesday, the Department of Labor stood behind the FARC rule and its subsequent guidance. 

“The Fair Pay and Safe Workplaces final rule and guidance promote contracting efficiency by ensuring compliance with basic labor standards during the performance of federal contracts, level the playing field so that contractors who comply with the law don’t have to compete against those that don’t, and promote responsible stewardship of taxpayer dollars,” the agency said. 

It continued, saying it’s “confident that the rule and guidance are legally sound and the Department of Justice is considering options for next steps.”

This story was updated at 3:09 p.m.