The Electrical Worker online
November 2014

Executive Order Strikes Blow Against
Crooked Federal Contractors
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Federal contractors who steal their employees' wages, tolerate unsafe working conditions or fail to pay their taxes may soon be iced out of future federal contracts.

The Fair Pay and Safe Workplaces Executive Order requires agencies to weigh corporate compliance with not only wage and safety, collective bargaining, family and medical leave and civil rights laws. Under the order, the companies themselves must include all fines, penalties and judgments against them in their bids.

"I praise the president for issuing this executive order. It is long past time a president took action to ensure fair pay and working conditions for federal employees covered by the Service Contract Act," said the IBEW's Government Employees Department Director Dennis Phelps.

Despite a 2008 law requiring federal contractors stay in compliance with federal law, a study issued by the U.S. Senate's Health, Education, Labor and Pensions Committee in December found that from 2007 to 2012, 49 federal contractors were cited 1,776 times for wage and safety violations and paid almost $200 million in fines, yet those same companies won more than $80 billion in federal contracts in 2012 alone.

Even safety violations resulting in the deaths of workers were not a bar to more federal work. The report cited seven companies that were fined for Occupational Safety and Health Administration violations that killed 42 workers won additional federal work.

"Even repeated and serious violations of federal labor laws… do not factor into contracting decisions," wrote the study's author, Iowa's Sen. Tom Harkin.

The most common violation was wage theft, including non-payment of overtime, not giving workers their last paycheck, not paying for all the hours worked, not paying minimum wage, and not paying workers at all. Wage theft has become a prominent issue in Washington recently and is finding political traction in both parties. At the end of July, about the same time as the executive order, the Republican-led Congress approved a Democrat-sponsored amendment to the defense appropriations that would immediately bar contractors that violate federal wage and safety laws. The bill has not been taken up yet in the U.S. Senate.

"For Obama's whole first term, the economic conversation was about debt ceilings and austerity. A bunch of factors, from [the] "Occupy" [movement] to low wage workers rising up across the country, have made the second term very different," said Change to Win Federation's Communications Director Paco Fabian. "This executive order is the direct result of individuals taking action together and getting income inequality, not the debt ceiling, on front pages."

Hundreds of IBEW members covered by the Service Contract Act will be directly affected by the executive order, but if the final rule is written broadly, all IBEW government employees might feel changes.

For example, Phelps said that thousands of IBEW members work at privately owned shipyards, contracting with the Navy at Huntington-Ingalls in Pascagoula, Miss., Bath Iron Works in Bath, Maine, and Portsmouth Naval Shipyard in Kittery, Maine. They are not covered by the Service Contract Act, but their employers are competing against nonunion shipbuilders like Austal, which has had multiple accusations of unfair labor and unsafe working conditions filed against it.

Because all federal acquisitions are included in the scope of the executive order, Austal could be prevented from doing future work.

"One of the intentions of this order is that upstanding, good actors will take work away from the ones that successfully underbid and then cut corners on safety and wages," Phelps said. "If Austal is found guilty, and there is reason to expect that may happen soon, that work would shift to more reputable contractors like Ingalls and Newport News, which are both union organized."

Nevertheless, there are voices opposing the change. The International Franchise Association's president, Steve Caldeira, said the new requirements would require an "unreasonable standard of perfection" and would create a "blacklist."

Geoff Burr, vice president of federal affairs for the Associated Builders and Contractors — an alliance of antiunion construction companies — said the order was "heavy handed… red tape [that] may lead to additional costs and the blacklisting of some federal contractors."

Even before the start of the public comment period, Burr said ABC had "focused a lot of our energies on how we can roll back these things" and said they would fight the rule in Congress and the courts. In the last year, ABC has also announced it would fight executive orders raising the minimum wage for federal contract employees to $10.10 an hour, prohibiting discrimination against disabled construction workers and new rules requiring companies to disclose spending on union-busting consultants.

The executive order will now go through a multiyear drafting process overseen by the Federal Acquisition Regulatory Council that Phelps expects will take until 2016.

"We will push for the strongest possible rules so that only companies that do right by workers and taxpayers see money from the federal government," Phelps said.


President Obama signs an executive order making it more difficult for companies that violate labor and safety laws to win federal contracts.


By the Numbers:
Wage Theft

1 in 5 American workers are employed by a company that does business with the federal government

1 in 5 federal contractors failed to pay overtime and

1 in 10 forced their employees to work off the clock

1 in 3 of the largest penalties handed down for violating federal labor laws from 2007-2013 were given to federal contractors

35% of the 100 largest federal contractors violated both wage and worker safety laws between 2007 and 2012.

$2,634 — Average amount

Sources: U.S. Senate Health, Education, Labor and Pensions Committee; National Employment Law Project; Economic Policy Institute