Government Contractors Win Court Fight To Block Obama’s Labor Rules

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After a construction trade group sued the administration, a Texas federal judge temporarily blocked an Obama administration rule from taking effect Monday.

The U.S. Department of Labor’s Fair Pay and Safe Workplaces Act would deny federal contracts to firms with any history of labor violations, and require firms competing for contracts to voluntarily provide the government with any allegations of employer misconduct.

The rules, which apply to federal contracts worth $50 million or more and worth more than $500,000 after next April, would put a huge burden on employers who would have to sort through years of allegations, Associated Builders and Contractors claimed when they filed the law suit.

Companies “would likely be impaired by the arbitrary and unnecessary burdens imposed,” U.S. District Judge Marcia Crone said in the written order of injunction.  “By these actions, the Executive Branch appears to have departed from Congress’s explicit instructions dictating how violations of the labor law statutes are to be addressed,” said Crone, who is a George W. Bush-appointed Texas judge.

One of the big issues is that companies could lose or be denied contracts based on alleged labor violations, whether or not the allegations were accurate. (RELATED: Small Businesses Ask Obama’s Labor Board To Delay New Overtime Rules)

“The administration should spend time improving its existing suspension and debarment process instead of creating a new regulatory regime that will increase costs, kill jobs, harm responsible small and large businesses and stifle innovators from entering the federal contracting marketplace,” said Ben Brubeck, vice president at the Associated Builders and Contractors told the Wall Street Journal.

The Labor Department believes the rules will eventually be upheld. “We are confident that the rule and guidance are legally sound and the Department of Justice is considering options for next steps,” Jason Surbey, spokesman for the Labor Department, told Politico.

“The Fair Pay and Safe Workplaces final rule and guidance promote contracting efficiency by ensuring compliance with basic labor standards during the performance of federal contracts, level the playing field so that contractors who comply with the law don’t have to compete against those that don’t, and promote responsible stewardship of taxpayer dollars,” Surbey said.

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