Thursday, February 17, 2022: USDA Seeks To Criminalize Federal Contractor Non-Compliance With Federal Labor Laws
Agriculture Department Seeks To Revive The Obama “Blacklisting Rule” Requiring Federal Contractors to “Certify” Compliance With 15 Federal (and an unknown number of state TBD) Labor Laws
Yep, its back! But in a more limited “form” applicable only to U.S. 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?
USDA published a Proposed Rule seeking to require every company with a contract or subcontract (undefined) with USDA to “certify” “…that it is in compliance with all applicable labor laws and that, to the best of its knowledge, its subcontractors of any tier, and suppliers, are also in compliance with all applicable labor laws.” See proposed new contract clause 452.22-70 [“Labor Law Violations (Month Year)”] of the Proposed Rule. We recite verbatim below the 15 “applicable” federal laws and the reference to unknown and unidentified state laws to be identified via Notices from the U.S. Secretary of Labor (really…not making this up). The USDA Proposed Rule apparently leaves the determination whether a USDA contractor is subject to the fifteen federal and whatever state laws USDOL will identify to the federal or state agencies charged to enforce the statutes. However, that critical point is not discussed in the Proposed Rule or how a company would certify compliance with a statute which does not extend coverage to the company.
First, the called for certification requires the Contactor to affirmatively state “it is in compliance.” And, of course, that certification comes subject to criminal and civil sanctions for “knowingly and willingly” making a materially false or misleading statement to the federal government pursuant to 5 U.S.C. Section 1001. That section also makes a person liable under this law if s/he “makes or uses any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry.” 5 U.S.C. Section 1001 (a) requires that offenders “shall be fined under this title, imprisoned not more than 5 years…”
The USDA Proposed Rule also specifically states: “The Department of Agriculture considers certification under this clause to be a certification for purposes of the False Claims Act.” (See bottom of first full para of proposed new contract clause 452.222-70). The False Claims Act (FCA), 31 U.S.C. §§ 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 U.S.C. 2461 note; Public Law 104–410) plus 3 times the amount of damages which the Government sustains because of the act of that person for a variety of offenses, including (A) “knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval;” or (B) “knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim;” or conspires to commit a violation of subparagraph (A) and/or (B).
Second, the proposed USDA Rule requires the contractor to certify, but only to “the best of its knowledge” that the contractor’s subcontractors are in compliance with all applicable labor laws. Note that proposed Rule would not require the contractor to make an affirmative inquiry of its subcontractors or to search or launch an investigation of its subcontractors (regardless of how the Rule eventually defines what suppliers are covered “subcontractors”). So, this is a case where “less is more.”
Monday, March 21, 2022, Is The Last Day You May Comment On USDA’s Proposed Rule
Here Is The Other Fine Print Detail.
“The Department of Agriculture will vigorously pursue corrective action against the contractor and/or any tier subcontractor (or supplier) in the event of a violation of labor law(s) made 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 adjudicated evidence of noncompliance occurs. * * *The Department will cooperate as appropriate regarding labor laws applicable to the contract which 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 any subcontractors shall incorporate into lower tier subcontracts a requirement that the information described above be provided to the contractor.”
Here Are The 15 Federal (and a wildcard number of State) Labor Laws As To Which USDA Wants You To Certify Your Company’s Compliance.
Applicable Labor Laws include:
- The Fair Labor Standards Act;
- The Occupational Safety and Health Act;
- The Migrant and Seasonal Agricultural Workers Protection Act;
- The National Labor Relations Act;
- The Davis-Bacon Act;
- The Service Contract Act;
- Executive Order 11246 (Equal Employment Opportunity);
- Section 503 of the Rehabilitation Act of 1973;
- The Vietnam Era Veterans’ Readjustment Assistance Act;
- The Family and Medical Leave Act;
- Title VII of the Civil Rights Act of 1964;
- The Americans with Disabilities Act of 1990;
- The Age Discrimination in Employment Act of 1967;
- Executive Order 13658 of February 12, 2014 (Establishing a Minimum Wage for Contractors);
- Equivalent State laws, as defined by the Secretary of Labor in guidance.
- Executive Order 13627 (Strengthening Protections Against Trafficking in Persons in Federal Contracts)
How We Got Here
July 2014: President Obama signed Executive Oder 13673, “Fair Pay & Safe Workplaces” (aka “The Blacklisting Rule”) in which:
“For procurement contracts for goods and services, including construction, where the estimated value of the supplies acquired and services required exceeds $500,000, each agency shall ensure that provisions in solicitations require that the offeror represent, to the best of the offeror’s knowledge and belief, whether there has been any administrative merits determination, arbitral award or decision, or civil judgment, as defined in guidance issued by the Department of Labor, rendered against the offeror within the preceding 3-year period for violations of any of the following labor laws and Executive Orders (labor laws)…”
October 2016: “A Texas Federal Court Issues a Nationwide Preliminary Injunction Stopping the Public Disclosure and Disqualification Requirements Contained in the OMB’s (FAR Council’s) Fair Pay and Safe Workplaces Act Final Rule and the U.S. Department of Labor’s Final “Guidance”
In other words, Congress did not give the President authority to promulgate the public labor law violation disclosure requirements and contract disqualification sanctions. [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 the Congressional Resolution to Kill Obama’s Dreaded “Blacklisting Rule“
It is done. The Fair Pay and Safe Workplaces Executive Order and the FAR Council’s 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 Executive Order 13673 pursuant to the Congress’ authority pursuant to the Congressional Review Act. The effect of a Congressional Review Act disapproval of an Executive Branch Order or Rule (which can only occur on majority votes of disapproval by both Houses of Congress) is that the Executive Branch may not again pursue the same or similar Order or Rule without first obtaining the Congress’ explicit prior approval. [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].
Also see the November 6, 2017 Federal Register Notice titled: Guidance for Executive Order 13673, “Fair Pay and Safe Workplaces” reporting the wind-up of the Obama Executive Order.