AP Photo/Jacquelyn Martin

Obama Signs Order Boosting Federal Contract Worker Rights

President requires companies to disclose labor law violations, asks agencies to consider withholding contracts.

This story has been updated. 

Continuing his “year of action” to work around a stymied Congress, President Obama on Thursday signed an executive order to force prospective federal contractors to disclose any labor law violations. Agencies, in turn, must give greater consideration to such violations in contract awards.

“By cracking down on federal contractors who break the law, the president is helping ensure that all hardworking Americans get the fair pay and safe workplaces they deserve,” a White House fact sheet said. “Taxpayer dollars shouldn’t be used by unscrupulous employers to drive down living standards for our families, neighbors, and communities.”

“This order protects both workers and taxpayers,” Obama told a crowd at the signing in the White House South Court Auditorium, flanked by uniformed UPS workers and others. “It covers companies that make everything from fighter jets to flak jackets, from computers to pens.”

Drafters of the order acknowledged that many contractors already play by the rules and that contracting officers already assess the integrity of firms seeking federal business. “But these officers still may not necessarily know about companies’ workplace violations,” the White House said.

The order also sets up a new process to encourage companies to settle existing disputes, such as paying back wages, and requires them to give workers access to information to regularly verify the accuracy of their paychecks. In addition, “workers who may have been sexually assaulted or had their civil rights violated get their day in court by putting an end to mandatory arbitration agreements at corporations with large federal contracts,” the fact sheet said.

The order applies to contractors with more than $500,000, and could affect 24,000 businesses employing 28 million workers, according to Labor Department statistics.

Many in Congress have been calling for such a crackdown. A Government Accountability Office report in 2010 found that nearly two-thirds of the 50 largest wage-and-hour violations and almost 40 percent of the 50 largest workplace health-and-safety penalties issued between fiscal 2005 and 2009 were at companies that went on to receive new government contracts, the White House noted.

The order is designed, drafters said, to give a fairer shake to companies that do comply with labor laws as well as encourage all companies to improve their records.

Obama’s move drew praise from House Democratic Leader Nancy Pelosi, D-Calif., before Obama signed the order. "The federal government has no business contracting to those who would violate federal law and trample workers’ rights,” she said. “If we are to root out wage theft and labor abuses in America, we cannot overlook those perpetrated by federal contractors.”

Another lawmaker who was pleased was Rep. Keith Ellison, D-Minn., co-chair of the Congressional Progressive Caucus who this Monday participated in a rally at Washington’s Union Station   demanding that Obama issue an order allowing more collective bargaining among low-wage federal employees.

“President Obama is to be applauded for standing with the thousands of workers that have fought tirelessly and spoken courageously for dignity and fair work practices,” Ellison said. “This executive order builds on the president’s minimum wage executive order and will allow the federal government to lead in the fight for good jobs and hold workplaces accountable to fair standards.” 

Colleen Kelley, president of the National Treasury Employees Union, said Obama’s order takes “important steps in protecting the pay, benefits and rights of contractor employees. NTEU strongly agrees that the government should not do business with contractors that disregard employee rights or put their safety at risk.”

A more guarded response came from Paco Fabián, a spokesman for Good Jobs Nation, the coalition of faith and labor groups that organized Monday’s rally. “This is another step in the right direction, but as always, the devil is in the details,” he said in an email to Government Executive. “How the different agencies involved implement this order will ultimately determine its effect.”

The Associated Builders and Contractors issued a harsh critique. “President Obama’s executive order is yet another example of politically motivated executive overreach that will end up harming taxpayers and the economy in the long run,” said the group’s vice president of government affairs, Geoff Burr. “We are concerned these sweeping changes threaten the due process rights of federal contractors and conflict with existing federal procurement and labor law. While we appreciate efforts to ensure contractors comply with complex laws, the subjective nature of the order opens the door to favoritism and abuse of government contractors by administration officials.”

The Professional Services Council was also negative. “This order actually adds more complexity and confusion to the federal contracting process, risks adding further delays in agencies obtaining the goods and services they require, and does too little to promote labor law compliance and efficient federal contracting,” said the contractors group’s executive vice president and counsel, Alan Chvotkin, in a statement. “Even GAO, in its December 2013 report on the Fair Labor Standards Act, highlighted a need for a ‘systematic approach’ for identifying ‘areas of confusion that contribute to possible FLSA violations.’ This order is the opposite of GAO’s recommendation.”