Department of Agriculture Latest Agency to Wade into Labor Issues

In a move that could presage similar actions by other federal agencies that traditionally do not engage in labor policy, the U.S. Department of Agriculture has proposed that its contractors certify compliance with 14 federal labor laws (and their state counterparts). Any inaccuracies could then prompt a private lawsuit under the False Claims Act.

Background: Tying labor law compliance to federal contracts has been a priority of the last three Democratic administrations, starting with President Clinton. In 2012, the USDA issued a similar proposal to the current one, which was then withdrawn. In 2014, President Obama signed Executive Order 13673, which would have imposed similar but much broader reporting requirements on contractors at all federal agencies, along with various other requirements. The disclosures would have been required to include allegations of violations; disclosed violations could eventually lead to loss of federal contracts (i.e., debarment), which led to it being labelled “blacklisting” by the employer community. The implementing regulations were blocked by a federal judge and Congress subsequently enacted a law that precludes any substantially similar regulations from being issued.

A narrower rule with stronger teeth: The rule proposed by the USDA is limited to reporting “adjudicated evidence of noncompliance” rather than the broader Obama-era rule, which would have included lawsuits filed against the company and complaints issued by regulatory agencies. However, by inviting private parties to file lawsuits under the False Claims Act, the proposed rule raises the stakes substantially for any potential violations, as penalties under the FCA can be tripled and include debarment. A key criticism of the proposal is that every employment law is already backed up by specific enforcement procedures and penalties.

Meanwhile, Congressional Republicans are mobilizing to fight back against the Biden administration’s labor regulatory push. Forty-three Republican Senators sent a letter to the White House opposing the administration’s push to mandate project labor collective bargaining requirements for federally funded construction projects. Meanwhile, House Republicans sent a letter to DOL chief Marty Walsh criticizing the White House Labor Task Force report as a waste of taxpayer money and unfairly slanted towards organized labor, and demanded more information about the Task Force’s activities.

More to come? The regulated community has anticipated a revival of the Obama-era blacklisting rules since President Biden took office. The USDA’s proposal signals a potential alternative path: inclusion of blacklisting provisions in procurement rules on an agency-by-agency basis. In a similar vein, the White House Task Force on Worker Organizing and Empowerment recommended that federal agencies “assess the effectiveness of their programs in advancing job quality" in the awarding of grants and contracts. Labor law violations already carry heavy penalties by their own terms, but for federal contractors, the stakes are likely to continue growing higher.