The Fair Pay and Safe Workplaces Order, an executive order issued while President Obama was in office, is dead. This comes as little surprise- we actually posted about the possibility of repeal back in February. By title, the order sounds like a much needed solution for the construction industry. After all, construction payment and construction safety are two areas where the industry most desperately needs improvement. Improvement in these areas is certainly on the forefront of industry members’ minds, but the Fair Pay and Safe Workplaces Order had its warts. Ultimately, flaws in the order resulted in a partial injunction back in October. Months later, the order has now been nullified in its entirety by Congress and President Trump.
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What is the Fair Pay and Safe Workplaces Order?
The Fair Pay and Safe Workplaces Order specifically aimed to increase transparency and accountability on the job site. However, at least on the accountability front, the order went a step too far. Below is a breakdown of the “blacklisting rule” that put this order in the crosshairs of industry members as well as a look at the more palatable, and actually desirable, paycheck transparency provisions.
The Blacklisting Rule
The Fair Pay and Safe Workplaces Order called for contractors to disclose labor violations when bidding on federal projects. The idea was that those contractors with substandard histories with labor disputes should be prohibited from bidding on federal projects. What proved fatal to the bill was that the required disclosures would include labor claims that had not yet been substantiated and claims that contractors had not yet had the chance to dispute. This lack of due process was among the reasons the Eastern District of Texas blocked the order. Other reasons included findings that the Executive Branch acted outside of its authority in issuing the order, the order compelled speech that violated First Amendment rights, the New Rule and Guidance provisions were considered arbitrary and capricious, and the order violated the Federal Arbitration Act.
For more on the Eastern District’s holding, here’s our post on the topic: Texas Judge Blocks Fair Pay and Safe Workplaces Order.
While the disclosure provisions rightfully troubled industry members, the paycheck transparency provisions made a lot of sense. For this reason, they had survived the partial blocking of the order. For projects that exceed $500,000, the paycheck transparency provisions would have required a detailed record of payment information for employees, including: hours worked, overtime, rate of pay, gross pay, and deductions made. Also, a contractor would’ve been required to notify a worker whether they were considered an employee or an independent contractor. Essentially, this detailed pay stub would have called for better communication on federal projects. As transparency and communication go a long way to preventing payment disputes, this portion of the order seemed less obtrusive.
While the paycheck transparency provisions might be a welcome, or at least a necessary, improvement to construction payment on federal projects, the Fair Pay and Safe Workplaces Order has been eliminated in its entirety. Because of the blacklisting provision, the order was opposed by many construction groups. Unfortunately, this reaction to part of the order (admittedly, a very crucial part) means that the rest of the order has also gone by the wayside. Improving construction payment through transparency and accountability just might be the road to a construction payment utopia. However, this must be done in a way that does not violate the rights of industry members.
For more on federal projects, head over to our Miller Act tag on the blog.