Trump Repeals Obama's "Blacklisting" Executive Order

As part of a broader effort to reduce government regulations, President Donald Trump has signed a congressional joint resolution that permanently blocks the "Fair Pay and Safe Workplaces" rule, a regulation resulting from an executive order issued by President Barack Obama in 2014. The joint resolution, authorized by the Congressional Review Act, was approved by Congress on March 6, 2017, although much of the rule was already subject to an injunction issued by a federal district court in Texas in October 2016.

The controversial regulation—informally known as the "blacklisting" rule—would have required businesses to disclose violations of labor and employment laws within the previous three years to federal agencies when applying for or renewing government contracts worth at least $500,000. Agencies reviewing contract applications would be required to determine whether the disclosures revealed "serious, repeated, willful, or pervasive" violations of labor and employment laws, such as the Fair Labor Standards Act. In addition, the rule required contracting businesses to provide individuals working under government contracts with specific information regarding wages and hours, for every pay period worked during the term of the contract. The rule also restricted contractors' ability to use mandatory arbitration agreements for certain claims. Specifically, to arbitrate claims arising under Title VII or any tort claims based on harassment, the rule would have required voluntary consent from the claimant, after the dispute was initiated.

From the outset, the "blacklisting" rule encountered significant opposition from businesses and trade groups, including the three trade associations who filed for injunctions in Texas on behalf of construction industry employers, contractors, and companies employing security officers. Prior to the Trump administration, the Congressional Review Act rarely had been utilized for this purpose, but President Trump already has cited it several times to nullify regulations issued under President Obama. Under the Congressional Review Act, a government entity is prohibited from promulgating a rule "in substantially the same form" as the blocked rule. Thus, government contractors now may set aside their compliance concerns regarding the Fair Pay and Safe Workplaces rule and return to business as usual.

Ballard Spahr's Labor and Employment Group routinely helps employers comply with their obligations as federal contractors.