Fairness in construction payment has a long way to go. The construction payment chain gives rise to a number of difficulties, and the risk of non-payment is always looming. The construction industry is also one of the most dangerous industries in the country. Health and wealth are probably the two most important aspects of every trade, but the country’s most important industry, construction, lacks in both. For these reasons the Fair Pay and Safe Workplaces Order sounds like a much needed fix. Signed by President Obama in July of 2014, the Order purported to block contractors with spotty payment records from attaining federal contracts. However, the Order went a step to far, effectively creating a blacklisting rule that troubled industry members.

Fair Pay and Safe Workplaces Order Blocked

Just as key provisions of the Fair Pay and Safe Workplaces Order were about to go into effect, a Texas court issued an injunction, temporarily blocking the Order. The suit that lead to the injunction was brought by Associated Builders and Contractors and its southeast Texas chapter. The case was filed in Beaumont, Texas and alleged that the executive branch exceeded its authority and stepped on the toes of contractors’ rights.

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The court agreed and ABC got their injunction. Two of the more important arguments posed by ABC were that contractors’ First Amendment rights and rights to Due Process would be restricted. Under the Fair Pay and Safe Workplaces Order, contractors would be forced to disclose allegations of violations that had not yet been determined. While a contractor had not yet gotten to defend themselves, such an allegation could very well have blocked them from securing a federal contract. What’s more, the cost of implementation could cripple small construction businesses unable to keep up with the requirements. The industry should be helping small businesses secure public contracts, not hurting them.

While there were serious issues with the Order, one part was left intact: the Paycheck Transparency Requirements. Under these requirements, federal contractors must provide a wage statement document to those performing work under the contract. The wage statement, perhaps better described as a pay stub, must include how many hours were worked (including overtime), gross pay, and additions or subtractions that have been made. For now, this part of the Order remains in effect.

Here’s a full breakdown of the Fair Pay and Safe Workplaces injunction.

Congress, Trump May Repeal

Earlier this month, the House of Representatives voted 236-187 on a measure to get rid of the Fair Pay and Safe Workplaces Order. If the measure also passes the Senate, it would go to President Trump’s desk for approval. It is well understood that electing Donald Trump would lead to a deregulatory environment, and it would be a surprise if Trump decided to veto. Considering his own payment issues (there always seems to be a mechanics lien against Trump), cleaning up construction payment would likely not be a priority even without the issues of the Fair Pay and Safe Workplaces order.

Takeaway

By title, the Fair Pay and Safe Workplaces Order sounds like the fix that construction desperately needs. Getting paid in the construction industry is a battle, and a solution is certainly needed. However, this Order was beyond imperfect. Reserving federal contracts for contractors who abide by payment laws makes perfect sense, but allowing mere allegations to derail a construction company’s bid for federal work is a step too far. The Order did seem to get the Paycheck Transparency Requirements right, though, and it would be a shame to see them disappear if the Order is repealed. Transparency and clear communication on construction sites go a long way to improve payment issues.

For more on the issues faced by federal contractors, head over to the Federal Projects tag on the blog. Also, stop by our Miller Act FAQs for more on payment on federal projects.

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Fair Pay and Safe Workplaces Order May Be Repealed
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Fair Pay and Safe Workplaces Order May Be Repealed
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The House of Representatives recently voted to repeal the Fair Pay and Safe Workplaces Order. If Senate does the same, it will go to Trump for approval.
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Lien Law News
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