The Labor Department finalized a new rule Wednesday requiring all federal contractors to disclose any past violations of labor law when bidding for a project.
In effect, any company that has had run-ins with unions or labor law enforcement agencies will find themselves at the back of the list. The rule is the latest pro-union regulation issued by the Obama administration, which has aggressively sought to use new federal rules to aid its union allies.
The new regulation, which Obama called for in a 2014 executive order, would require any company bidding on a contract larger than $500,000 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. If the company wins the contract, it must make follow-up reports at six-month intervals until the contract is completed.
The rule extends disclosure to any "administrative merits determinations," that is, any complaints or charges issued against the company by a government agency "whether final or subject to appeal or further review." Thus, the companies would be required to report as violations any complaint they are contesting in court.
"Federal contracts should deliver value for taxpayers in a way that is consistent with our nation's values," said Labor Secretary Tom Perez.
"Contractors that illegally cut corners at the expense of their workers should not benefit from taxpayer-funded federal contracts. At the same time, employers who meet their legal responsibilities should not have to compete with those who do not. The regulations and guidance we are announcing today seek to ensure a level playing field for contractors and workers alike."
Obama's 2014 executive order said the rules changes were necessary to "promote economy and efficiency in procurement by contracting with responsible sources who comply with labor laws."
Business groups blasted the new rule.
"The reality is that this initiative has nothing to do with improving the efficiency of federal contracting and everything to do with satisfying the administration's organized labor allies. Ultimately, the administration is claiming that this initiative will help America's workers, but it is really a sop to organized labor at the expense of American taxpayers," said Randy Johnson, the Chamber of Commerce's senior vice president of labor, immigration and employee benefits.
Labor unions praised the announcement. "The Communications Workers of America commends the Department of Labor for looking out for the millions of working Americans who have seen their workplace rights abused by contractors doing business with the federal government," the union said in a statement.
"That means a company like T-Mobile U.S., which has been found guilty by a National Labor Relations Board judge of violating workers' rights, would be forced to disclose those violations, affecting its ability to win federal contracts."
CWA was referring to an April sanction against T-Mobile issued by the labor board, the main federal labor law enforcement agency, based on a complaint the union had filed. The complaint said T-Mobile's requirement that employees maintain a "positive work environment" and communicate "in a manner that is conducive to effective working relationships" violated their labor rights.
"We find that employees would reasonably construe the rule to restrict potentially controversial or contentious communications and discussions, including those protected by [the National Labor Relations Act]," the board found.