Clinton Administration Issues Proposed Penalties for Alleged Labor and Employment Law Violation...

September 09, 1999

Earlier this month, the Clinton administration issued a controversial new proposal which could deny federal contracts to employers who have violated or even just allegedly violated labor and employment laws.  The proposal also would prohibit the reimbursement of contractors’ legal expenses when they lose in a civil proceeding brought by the federal government and of contractors’ costs incurred for activities designed to influence employees with respect to unionization (either for or against unionization).

This long-anticipated proposal amends the Federal Acquisition Regulation (“FAR”)–the rule that governs all government contracting procedures.  Currently, federal contracts may be awarded only to companies that have a record of “integrity and business ethics.”  The proposed amendment aims to more clearly indicate what would constitute a record of “integrity and business ethics.”  Examples provided in the proposal of what constitutes an unsatisfactory work record include the “prospective contractor’s lack of compliance with tax laws, or substantial noncompliance with labor laws, employment laws, environmental laws, antitrust laws or consumer protection laws.”

While contracting officers, who make award determinations, should normally rely on final adjudications of charges related to violations of laws or regulations, the proposal allows adverse “pre-award responsibility determinations” to be based on “persuasive evidence of substantial noncompliance with a law or regulation.”  Such evidence may be based upon an unfair labor practice charge or an EEOC charge that has not been fully adjudicated.

To put it simply, mere allegations of violations of the labor laws, especially if carefully orchestrated by disgruntled employees, unions, or others, could place contractors in jeopardy.  It is feared that the proposal could be used in corporate campaigns, union organizing drives, litigation settlement negotiations, and collective bargaining to manipulate employers or force them to capitulate to unreasonable, costly demands.  It is also feared that the proposal would result in blacklisting if an employer is found to have–or even be suspected of having–“unsatisfactory” labor relations and employment policies and practices.

These proposed changes were first announced by Vice President Gore at the AFL-CIO Executive Council meeting in February 1997, a fact which has many in the business community muttering “political payback.”  If you would like to see this proposal tabled, it is not too late to act.  The 120-day comment period will end in mid-November.  Send your written comments to the attention of Laurie Duarte at : General Services Administration, FAR Secretariat (MVR), 1800 F. Street NW, Room 4035, Washington DC 20405.  You can also add your voice to the National Alliance Against Blacklisting, an organization formed by the U.S. Chambers of Commerce.  Additional information on the issue and on-line registration is available at their website, www.noblacklisting.org.  Also, if you are a current or prospective federal contractor and would like to receive relevant legal updates by Email, send your Email address to mrossa@haynesboone.com and you will be added to our Federal Contractor Email Group.

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