WIOA Reauthorization Draft Includes “Blacklisting” Provision, Violating Employers’ Due Process Rights
On June 21, the Senate Health, Education, Labor, and Pensions (HELP) Committee released its discussion draft to reauthorize the Workforce Innovation and Opportunity Act (WIOA), a federal law that provides funding for workforce development initiatives around the country. The draft includes a “blacklisting” provision that will result in employers losing the ability to participate in WIOA-funded programs if they have any allegations of wrongdoing under various federal labor and employment laws.
The provision, Sec. 191(1)(B), can be found on page 370 of the discussion draft:
Each recipient of funds under this title shall provide to the Secretary a commitment by the recipient to comply with each applicable covered Federal labor law and a representation that, to the best of the recipient’s knowledge, there has not been any final administrative merits determination, arbitral award or decision, or civil judgment, for a violation of a covered Federal labor law rendered against the recipient in the 2 years preceding the submission of the commitment.
‘Covered Federal labor law’ under this provision includes any and all laws enforced by the Equal Employment Opportunity Commission, the National Labor Relations Board, or the Department of Labor.
The blacklisting provision, if implemented, would bar employers from WIOA funding based on findings that are still subject to appeal. As a result, an employer may be denied funding even though a court may rule on appeal that the employer did not violate the law.
Efforts to blacklist employers from federal initiatives and funding began under the Obama administration when it issued Executive Order 13673, “Fair Pay and Safe Workplaces,” in July 2014. The Executive Order called for the debarment or suspension of federal contractors from the federal procurement process for allegations of labor and employment law violations. A final rule and guidance implementing the Executive Order were issued in August 2016, but both were blocked from taking effect by the U.S. District Court for the Eastern District of Texas and by Congress via a Congressional Review Act (CRA) resolution.
What Organizations Have Said about Prior Efforts by the Federal Government to Blacklist Companies
American Trucking Associations statement:
“The trucking industry is not opposed to sensible, data-supported regulations, but this rule was a prime example of a rushed, partisan and ill-conceived regulation that the CRA was designed to be a check on. We appreciate Congress stepping up and taking a leadership role in reversing this rule that could have unduly excluded carriers from earning contracts to move freight for the government.”
Associated Builders and Contractors statement:
“Associated Builders and Contractors commends Congress for taking action to free the contracting community and taxpayers from the disastrous effects of the Obama administration’s illegal blacklisting rule. Since first proposed as an executive order, ABC has led the fight against this policy—which a U.S. District Court correctly ruled would violate federal contractors’ due process rights by treating non-adjudicated and often nefarious and frivolous per-adjudicated claims of violations the same as actual wrongdoing. By using the Congressional Review Act to nullify this rule, Congress has taken an important step in removing burdensome and duplicative reporting requirements and eliminating a costly barrier to entry that would have discouraged many small contractors from bidding on government contracts.”
Coalition of Employer Organizations’ letter of opposition
“Taxpayers, contractors and their employees deserve a fair and transparent process in which contracts are awarded based on merit to firms that can deliver the highest quality product at the best price. Instead, EO 13673’s blacklisting regulations will needlessly increase costs, add uncertainty and subjectivity to the federal acquisition process and increase the frequency and cost of labor and employment disputes and related bid protests. Blacklisting regulations impose a de facto debarment system that will restrict a federal contractor’s ability to counter alleged violations of the 14 federal laws and equivalent state laws identified in the final rule. Depriving contractors of due process rights against frivolous allegations will lead to litigation, reduced competition, increased costs and needless delays to the detriment of all taxpayers, the federal acquisition workforce, federal contractors and their employees.”
Professional Services Council testimony before the house Education and the Workforce Committee
“[W]e are strongly opposed to this Executive Order because it goes far beyond its stated intent and is unnecessarily excessive, largely unworkable and inexecutable. More specifically, the Executive Order will act as a de facto blacklisting of well-intentioned, ethical businesses, further restrict competition for contracts, create procurement delays, and add to the cost of doing business with the government. And despite its laudable intent, the Executive Order will also create significant new implementation and oversight costs for the government for what even the administration acknowledges is a relatively small problem. In simple terms, this Executive Order lacks crucial, fundamental characteristics of fairness, logic, and objectivity.”
U.S. Chamber of Commerce Key Vote Alert:
“[The rule and executive order] create a virtual ‘guilty until proven innocent’ process on contractors, subcontractors, and would-be contractors to report ‘violations’ of 14 different labor and employment laws and executive orders. But, ‘violations’ are defined to include even minor citations and unproven allegations. Therefore, contractors could lose their ability to perform federal work on baseless claims, and before they have had the opportunity to adjudicate the charges.”
“The addition of contracting penalties and new levels of severity for violations usurps Congress’s exclusive authority to write labor and employment laws.”
“They exceed the authority provided under the Procurement Act, which allows the president to change federal procurement only to increase ‘economy and efficiency.’”
“The reporting requirements will likely spur massive delays for procurement, particularly for key Department of Defense items.”
“Because of any contractor’s desire to remain eligible, enforcement agencies will have extraordinary leverage to extract agency-favorable “labor compliance agreements” from contractors to resolve violations, even before the contractors will have had a chance to present their defense.”