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HR Policy Weighs in Against Blacklisting Federal Contractors

The Association submitted written testimony for the Senate Budget Committee’s hearing “Should Taxpayer Dollars go to Companies that Violate Labor Laws?,” clarifying several misconceptions regarding labor and employment law compliance and arguing against debarring companies for even unintentional violations of the law. 

The hearing, led by Sen. Bernie Sanders (I-VT), focused on whether companies should be prohibited from receiving federal contracts for previous violations of labor and employment laws, even if such violations were unintentional, as well as recent unionization efforts at Amazon. Sen. Sanders called for President Biden to issue an executive order prohibiting companies with labor and employment law violations on their records from federal contracts and accused Amazon of engaging in illegal anti-union behavior. 

The Association’s testimony refuted many of Sanders’ claims regarding federal labor law and companies’ conduct during union elections, articulated the practical realities of compliance with labor and employment law, and argued against debarring companies for previous violations. The Association noted that the complex nature of many such laws, along with the never-ending policy whiplash at the Department of Labor and the National Labor Relations Board, make it extremely difficult for companies to remain in continuous perfect compliance and that consequentially, many such violations are unintentional. Significantly, a Democratic witness testifying at the hearing from the Government Accountability Office noted the government does not—or is otherwise unable to—distinguish between “honest mistakes” and intentional violations when weighing debarment. 

Our testimony also highlighted the significant economic consequences of pursuing such an aggressive debarment approach. For many companies, federal contracts comprise large percentages of their businesses, and debarment on the basis of unintentional and sporadic labor and employment law violations would be a disproportionate penalty that could unnecessarily eliminate substantial business for thousands of companies and consequently thousands of jobs. Such an approach would also drastically reduce the pool of qualified federal contractors and prevent federal contracts from being performed as effectively and efficiently as possible, at the taxpayer’s expense. Finally, our testimony also noted that companies are already penalized for noncompliance under the labor or employment law in question. 

Outlook: Based on presidential campaign promises President Biden made, the administration has been expected to repeat the Obama administration’s efforts at blacklisting federal contractors for labor and employment law violations. Sen. Sanders noted these promises, and his hearing could be an initial step towards that goal. 

Published on: May 6, 2022

Authors: Gregory Hoff

Topics: Employment Law

Gregory Hoff

Associate Counsel, HR Policy Association

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