OFCCP Week in Review: March 2022 | Direct Employers Association

Thursday, February 17, 2022: USDA Seeks to Criminalize Federal Contractors’ Non-Compliance with Federal Labor Laws

Agriculture Department seeks to revive Obama’s ‘blacklist rule’ requiring federal contractors to ‘certify’ compliance with 15 federal labor laws (and an unknown number of states TBD)

Yes, it’s the back! But in a more limited “form” applicable only to United States Department of Agriculture (“USDA”) contracts. [Can USDA lawfully do this? No. See far below to “How We Got Here.” Complete non-starter.]

What just happened?

The USDA has released a Proposed rule seeking to require every company having an (undefined) contract or subcontract with the USDA to “certify” “…that it is in compliance with all applicable labor laws and that, to its knowledge, its subcontractors of any level and its suppliers, also comply with all applicable labor laws See clause 452.22-70 of the proposed new contract [“Labor Law Violations (Month Year)”] of the proposed rule. We recite verbatim below the 15 “applicable” federal laws and reference to unknown and unidentified state laws to be identified via notices from the US Secretary of Labor (really… not making this up). The USDA’s proposed rule apparently leaves it up to whether a USDA contractor is subject to the fifteen federal laws and any state laws that the USDOL will identify to federal or state enforcement agencies. laws. However, this critical point is not addressed in the proposed rule or how a business would certify compliance with a law that does not extend coverage to the business.

First, the call for certification requires the contractor to state affirmatively “it is compliant”. And, of course, this certification is subject to criminal and civil penalties for “knowingly and willfully” making a materially false or misleading statement to the federal government pursuant to 5 USC Section 1001. This section also makes a person liable under this law if he “makes or uses a false writing or document knowing it to contain a materially false, fictitious or fraudulent statement or entry”. 5 USC Section 1001(a) requires that violators “shall be fined under this title, imprisonment for a term not exceeding 5 years…”

The USDA’s proposed rule also specifically states: “The Department of Agriculture considers certification under this clause to be certification for purposes of the False Claims Act.” (See bottom of first full paragraph of proposed new contract clause 452.222-70). The Misrepresentation Act (FCA), 31 USC §§ 3729 – 3733 imposes a civil penalty of not less than $5,000 and not more than $10,000 (as adjusted from time to time by the Federal Civil Penalties Inflation Adjustment Act of 1990 (28 USC 2461 Remark; Public Law 104–410) plus 3 times the amount of damages the government suffers as a result of that person’s act for various offenses including (A)”knowingly presents or causes to be presented false or fraudulent information claim for payment or approval; or (B)”knowingly makes, uses or causes to be made or used a false record or misrepresentation Equipment to a fake or fraudulent claim; or conspires to commit a violation of sub-paragraph (A) and/or (B).

Second, the USDA’s proposed rule requires the contractor to certify, but only “to the best of their knowledge,” that the contractor’s subcontractors comply with all applicable labor laws. Note that the proposed rule would not require the contractor to make an affirmative investigation of its subcontractors or to seek or initiate an investigation of its subcontractors (regardless of how the rule eventually defines which suppliers are covered as ” subcontractors”). So, this is a case of “less is more”.

Monday, March 21, 2022 is the last day you can comment on the USDA’s proposed rule

Here’s the other detail in fine print.

“The Department of Agriculture will vigorously pursue corrective action against the contractor and/or any sub-contractor (or supplier) for violations of labor law in the provision of supplies and/or services under this or any other government contract. The Contractor is responsible for promptly reporting to the contracting officer if and when evidence of non-compliance occurs. * * * The Department will cooperate, as appropriate, in with respect to labor laws applicable to the contract that are enforced by other agencies.” [EDITOR’S NOTE: So, USDA contract officers are also going to “cooperate” (i.e., “drop a dime on you”) with other federal agencies which enforce the laws to which you are certifying compliance.]

* * * * *

“The Contractor and all subcontractors shall incorporate into lower level subcontracts a requirement that the information described above be provided to the Contractor.”

Here are the 15 federal labor laws (and a generic number of states) that the USDA wants you to certify your company’s compliance with.

Applicable labor laws include:

1. The Fair Labor Standards Act;
2. Occupational Safety and Health Act;
3. The law on the protection of migrant and seasonal agricultural workers;
4. National labor relations law;
5. The Davis-Bacon Law;
6. The law on service contracts;
7. Executive Order 11246 (Equal Employment Opportunity);
8. section 503 of the Rehabilitation Act 1973;
9. Vietnam-era Veterans Readjustment Assistance Act;
10. The law on family and medical leave;
11. Title VII of the Civil Rights Act of 1964;
12. The Americans with Disabilities Act of 1990;
13. the Age Discrimination in Employment Act 1967;
14. Executive Order 13658 of February 12, 2014 (Establishment of a minimum wage for entrepreneurs);
15. Equivalent state laws, as defined by the Secretary of Labor in the guidelines.
16. Executive Order 13627 (Strengthening Human Trafficking Protections in Federal Contracts)

How we got here

July 2014: President Obama signed Executive Command 13673“Fair Pay and Safe Workplaces” (aka “The Blacklist Rule”) in which:

“For contracts for the purchase of goods and services, including construction, where the estimated value of supplies procured and services required exceeds US$500,000, each agency shall ensure that the terms of the tenders require that the Offeror declares, to the best of its knowledge and belief, whether there has been an administrative determination on the merits, an arbitral award or decision or a civil judgment, as defined in the guidelines issued by the Department of Labor, rendered against the Offeror within the preceding 3 year period for violation of any of the following Labor Laws and Executive Orders (Labour Laws)…”

October 2016: “A Texas federal court issues a nationwide preliminary injunction ending the public disclosure and disqualification requirements contained in the final rule of the OMB’s Fair Compensation and Safe Workplaces Act (FAR Council ) and the final “guidelines” from the U.S. Department of Labor

In other words, Congress has not given the president the power to enact public labor law violation disclosure requirements and disqualification penalties. [Note: It is hard to imagine how the new USDA proposed Rule would not be equally as infirm and illegal as the broader – in reach of contracts covered by the Obama Blacklisting Rule, and for the same reasons this federal Court relied upon to strike down the Obama Rule which has served as an exact template for the USDA Rule.]

April 2017: “Trump signs into law Congressional resolution to eliminate Obama’s dreaded ‘blacklist rule’“

It is done. The Fair Compensation and Safe Workplaces Executive Order and FAR Board Implementing Rules were withdrawn and were no longer legally effective. As we reported here, the Senate passed Joint Resolution 12 on March 6, 2017 revoking Obama’s Executive Order 13673 pursuant to the authority of Congress pursuant to the Congressional Review Act. The effect of a Congressional Review Act disapproval of an executive branch ordinance or rule (which can only occur by a majority of votes of disapproval from both houses of Congress) is that the executive may no longer pursue the same or similar ordinance or rule without first obtaining the express prior approval of Congress. [NOTE: It is hard to imagine how the new USDA proposed Rule would not now ALSO violate Senate Joint Resolution 12 since the USDA Proposed Rule contains the same substance as the Obama Order and Rules albeit reduced to just USDA contracts, even if not all federal Executive Branch contracts. But, if you cannot do the greater, you cannot do the lesser].

See also November 6, 2017 Federal Register Notice titled: Guidelines for Executive Order 13673, “Fair Compensation and Safe Workplaces” signaling the liquidation of Obama’s Executive Order.