Kiyoshi Ota/AP

Trump Admin Tells Agencies to Strip Contract Provisions Guarding Against Wage Theft

New rule was required by a vote in Congress earlier this year.

Federal contractors will not face requirements aimed at protecting employees from wage theft and unsafe working conditions under a rule the Trump administration finalized on Monday.

The rule follows a resolution Republican lawmakers passed and President Trump signed in March under the Congressional Review Act, which voided an Obama administration push for more transparent compliance with workplace laws for employees working on federal contracts. While most of the provisions of the Fair Pay and Safe Workplaces initiative were never enforced after a federal court blocked their implementation, the Trump administration noted at least one key reform may have made its way into some contracts.

President Obama pushed a rule known as “paycheck transparency,” which required contractors to provide detailed statements on their hours worked and compensation earned. That provision was never enjoined in court, meaning some federal contracts signed in 2017 with an estimated value of more than $500,000 may have already included the requirement. The goal of provision was to ensure employees were protected against wage theft by their employer.

“This and all other Fair Pay and Safe Workplaces provisions and clauses are unenforceable,” the Defense Department, General Services Administration and NASA wrote in the joint rule. “That clause will need to be removed if it was included.”

Alan Chvotkin, executive vice president and counsel for the Professional Services Council, an advocacy group representing more than 400 member companies that contract with to the federal government, said the final rule providing the death knell to Fair Pay and Safe Workplaces was “long overdue.”

“We’re obviously very pleased with this,” Chvotkin said, adding it was “disappointing” that it “took them so long to do that.”

Chvotkin said he had heard from his members that most contracting officers “weren’t looking to enforce” the paycheck transparency clause, even though it had not technically been eliminated. Still, he noted some contracts may have included the requirements despite the congressional repeal.

“Agencies prepare for those well in advance so it’s possible some slipped through the cracks,” he said. In most cases, he added, companies and agencies were already working to remove the wage theft provision.  

Obama’s 2016 rule would have required employers bidding on federal contracts to disclose violations and alleged violations of 14 federal labor laws and similar state labor laws. Many contractors and Republican lawmakers resisted the plan as a burdensome form of “blacklisting” that penalized companies for unproven violations. Congressional Democrats issued a report that found 66 of the 100 largest federal contractors in 2015 have been caught breaking federal labor laws.

Amit Narang, a regulatory policy expert for Public Citizen, said the repeal was a win for "unscrupulous contractors." 

"Everyone should agree that we should have the best contractors contracting with our government," Narang said. He added that no one wants to see "taxpayers subsidizing" contracts going toward companies who are "putting their employees at risk" or not paying them fairly. 

He contended the paycheck provision withdrawal would particularly hurt employees. 

"Wage theft transparency is badly needed," Narang said.