A Texas District Court told the White House it couldn’t enforce a proposed blacklist for federal contractors, saying that President Obama exceeded his authority when he called for the new rule.
The court’s decision was a preliminary injunction, but the sharp tone of the ruling suggested the administration would face an uphill battle to preserve the rule, which was scheduled to start Tuesday.
“The executive branch appears to have departed from Congress’s explicit instructions dictating how violations of the labor law statutes are to be addressed,” Judge Marcia Crone said in a ruling issued Monday.
The decision involves a 2014 executive order regarding any company bidding on a federal contract larger than $500,000. Obama’s order, issued by the Labor Department last year, requires bidders to report any violations within the last three years of 14 federal labor and safety laws, as well as violations of any equivalent state laws. The contractors also had to report any pending complaints made against it, regardless of whether of a court has reviewed them. If the company wins the contract, it must make follow-up reports every six months until the contract is completed.
A coalition of business groups led by the Associated Builders and Contractors challenged the rule, arguing it was unfair because it meant that companies could lose out on contracts even if the complaints against them were ultimately dismissed. Crone agreed.
“Contracting agencies [are given] the authority to require contractors to report for public disclosure mere allegations of labor law violations, and then to disqualify or require contractors to enter into premature labor compliance agreements based on their alleged violations of such laws in order to obtain or retain federal contracts,” Crone wrote. “By these actions, the executive branch appears to have departed from Congress’s explicit instructions dictating how violations of the labor law statutes are to be addressed.”
Later in the ruling, Crone said Obama’s executive order “explicitly conflict[s]” with existing federal rules for banning contractors that violate labor laws and that it “defies reason” that Congress meant to give federal agencies that power.
The National Labor Relations Board, the main federal labor law enforcement agency, reported in its 2015 performance review that it issued more than 1,200 unfair labor practice complaints and that it prevailed “in whole or in part” in 88 percent of the cases litigated.
The Associated Builders and Contractors’ vice president of regulatory, labor and state affairs, Ben Brubeck, said his organization was “pleased” with the ruling. “The Obama administration cannot order private businesses to publicly disclose mere accusations of labor law violations that have not been fully adjudicated,” he said.
Sen. Lamar Alexander, R-Tenn., chairman of the Senate Health, Education, Labor and Pensions Committee, also applauded the decision. He argued that the rule would have allowed the government to “to play political favorites, picking and choosing which businesses are ineligible to receive federal contracts — even blocking them for a labor violation that hasn’t been proven.”
A Labor Department spokesman could not be reached for comment.
