Government contractors concerned over the potential impact of President Obama’s 2014 Executive Order 13673 “Fair Pay and Safe Workplaces” (EO) can breathe a sigh of relief. On March 6, 2017, the US Senate narrowly approved House Joint Resolution 37 (H.J. Res. 37), which overturns the EO in its entirety. All that remains now is for President Trump to sign the resolution into law, and with the stroke of a pen, years of debate and vitriol over the costs and constitutionality of the EO will be put to rest.
By way of background, the EO would have required offerors on federal contracts or subcontracts over $500,000 in value to disclose any violation or alleged violation of fourteen enumerated labor laws for the three years preceding submission of a bid or proposal and to update these disclosures in SAM. Contracting officers would have then considered these disclosures when awarding federal contracts. Additionally, the EO would have placed restrictions on a contractor’s use of pre-dispute arbitration agreements and required contractors with contracts over $500,000 to provide a wage statement to all individuals performing work on the contract each pay period.
Unsurprisingly, the EO together with the proposed Federal Acquisition Regulation (FAR) and the Department of Labor (DOL) proposed guidance, sparked immediate controversy and garnered thousands of industry comments. In fact, the final regulations and guidance, published in August of 2016 (the “Rule”), were challenged in federal court on constitutional grounds. Subsequently, in October of 2016, the federal court issued a nationwide order that sidelined implementation of the EO, with the exception of the “paycheck transparency” provision, which went into effect on January 1, 2017.
With the ushering in of a new Administration, the EO along with other Obama-era “midnight” regulations, have now found themselves in the congressional crosshairs. Indeed, rather than waiting for the constitutionality of the EO to be fully adjudicated in court, Congress took independent action to rescind the EO using its rarely exercised authority under the Congressional Review Act (CRA). Interestingly, CRA gives a new session of Congress authority to pass a “resolution of disapproval” for any regulation issued within 60 legislative days of the end of the Congressional session. This means any regulation promulgated after approximately mid-June 2016 may be on the congressional chopping block, such as the Rule.
Once the President signs H.J. Res. 37, the Rule will be nullified and provisions in effect will be retroactively negated. As such, H.J. Res. 37 will not only negate the “paycheck transparency” provision that went into effect earlier this year, but will also officially remove the Rule from the FAR and will prevent its future enforcement. In effect, the Rule will be treated as if it was never enacted. Additionally, the CRA resolution would prohibit any similar regulation from being issued in the future without express authorization from Congress.
On March 27, 2017, the President signed H.J. Res. 37 into law.
About the Author: Sam Finnerty is an associate with PilieroMazza in the Government Contracts Group. He may be reached at sfinnerty@pilieromazza.com.
