Senate Rescinds Obama's Blacklist Rule

WH has indicated Trump will sign bill overturning rule that gave unions 'unprecedented new leverage'

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March 7, 2017

The Senate voted to roll back an Obama executive order that would have shut out businesses undergoing labor disputes from obtaining federal contracts.

The Senate passed a resolution Monday evening to reverse the "blacklisting" rule, which would force companies to disclose any allegations of unfair labor practices when bidding for federal contracts. Previously, contractors were only forced to disclose actual violations that had been determined following agency investigations.

The Senate vote came weeks after the House approved a resolution overturning the rule. House Majority Leader Kevin McCarthy (R., Calif.) had made overturning the executive order a priority, pointing to a study that estimated compliance "will cost companies $454.6 million in the first year alone." Sen. Lamar Alexander (R., Tenn.), chairman of the Senate Committee on Health, Education, Labor, & Pensions, said that the executive order was overly burdensome because it would punish companies before investigations into the allegations could be completed.

"The harmful Obama administration ‘blacklisting’ regulation … could have prevented our nation’s federal contractors from receiving a federal contract for an alleged labor violation before any wrongdoing has been proven," Alexander said in a release.

President Obama issued the blacklisting executive order in 2014 saying that it would produce "economy and efficiency in procurement by contracting with responsible sources who comply with labor laws." The Department of Labor released its finalized rules in August 2016 after receiving tens of thousands of comments from businesses, organized labor, and other interest groups.

Labor law experts on both sides of the union divide recognized that the executive order would benefit unions. Veteran union attorney Robert Schwartz wrote in a blog post that it provided "unions unprecedented new leverage against companies" because they could potentially derail contract opportunities with an allegation no matter how specious. Trey Kovacs, a labor law expert at the pro-free market Competitive Enterprise Institute, agreed with Schwartz's analysis.

"The rule may provide incentive to labor unions, attempting to organize a workplace, to file frivolous labor-related charges against companies that bid on federal contractors in order to extract favorable union election conditions," he said in a post.

The National Labor Relations Board is the nation's top federal labor arbiter and handles unfair labor practice complaints. After an investigation the agency can file official complaints against the organization, encourage settlement between the two parties, or dismiss the charges. Workers and unions filed more charges in 2016 than in 2015, but the number of settlements and official charges fell. Workers filed 21,326 complaints to the NLRB in 2016, a five percent increase from 2015. The NLRB issued complaints in 1,272 of those cases—equal to the number in 2015 —and settlements were reached in 6,010 cases, a seven percent decline.

Business groups had turned to the courts to block the rule. Federal Judge Marcia A. Crone issued a temporary injunction against the rule in October because it potentially violated the due process rights of businesses. Associated Builders & Contractors, which filed the suit, praised the Senate for exercising its Congressional Review Act powers to reverse the rule.

"Congress has taken an important step in removing burdensome and duplicative reporting requirements and eliminating a costly barrier to entry that would have discouraged many small contractors from bidding on government contracts," ABC spokesman Ben Brubeck said in a release.

The Senate resolution will now head to President Donald Trump's desk. The White House included the blacklisting rule in its list of Obama-era regulations that Trump wanted to overturn, saying that it "would bog down Federal procurement with unnecessary and burdensome processes that would result in delays, and decreased competition for Federal government contracts."

"Rolling back this rule will also help to reduce costs in federal procurement," the White House said. "The administration is committed to reducing onerous regulatory burdens on America's businesses and using existing authorities to continue enforcing the nation's workplace laws."

Trump has already taken action on some of the items on the list. He signed a bill in February reversing the Environmental Protection Agency's stream rules that had hindered coal mining for the past eight years.

Published under: NLRB , Unions