Marcia Crone, a little-known federal district court judge in Beaumont, Tex., played David to President Obama’s Goliath when she blocked most of an executive order that would have widespread impact on companies nationwide.
Now, administration officials are plotting how to proceed in the wake of Crone’s action.
The Labor Department was ready to implement the 2014 order last Tuesday, when Crone issued her last-minute decision stopping those plans — to the delight of industry agents and the dismay of employee advocates.
“[I]t is in the public interest to ensure the delivery of economical and efficient services from government contractors to federal government agencies, which would likely be impaired by the arbitrary and unnecessary burdens imposed by the Executive Order,” Crone wrote. The former Houston lawyer was appointed to the bench in 2003 by President George W. Bush.
Under the order, companies doing business worth at least $500,000 with the federal government would have been required to disclose three years of state and federal labor law violations.
“Our tax dollars shouldn’t go to companies that violate workplace laws,” Obama said when he signed the order.
But they do.
A 2010 Government Accountability Office (GAO) investigation found “the federal government has awarded contracts to companies that had been cited for large back-wage liabilities by Labor.” Of the 50 largest firms with wage and hour violation fines from fiscal years 2005 through 2009, over 60 percent of the assessed monetary penalties “were made against companies that subsequently received contracts in fiscal year 2009,” the report said. Twenty-five of the 50 largest fines were against 20 federal contractors “for over $80 million in back wages.” Government agencies “awarded over $9 billion in federal contract obligations to these 20 contractors during fiscal year 2009.”
GAO provides this salient point: “None of the 20 federal contractors had been debarred or suspended from federal contracts.” Furthermore, the report said GAO “does not know the extent, if any, that contracting officials considered” the fines when awarding federal contracts.
Obama wanted to change that, but he was met with a fierce fight from contractors. They won this round.
Associated Builders and Contractors (ABC), its Southeast Texas Chapter and the National Association of Security Companies launched the challenge to Obama’s order, which they termed “blacklisting.”
“Associated Builders and Contractors is pleased the court ruled that the Obama administration cannot order private businesses to publicly disclose mere accusations of labor law violations that have not been fully adjudicated,” said Ben Brubeck, an ABC vice president. “By issuing this decision, the court has maintained the First Amendment rights of government contractors and protected them and taxpayers from the poorly crafted blacklisting rule.”
Crone did not block another portion of the order requiring companies to provide workers information on their hours worked, deductions and overtime pay.
Because the government deals with so many contractors, the executive order potentially had a very broad impact. About 26 million people work for federal government contractors, according to a 2013 Senate report. That’s almost a quarter of the workforce. Moreover, falling out with Uncle Sam can be detrimental to business with a firm’s other customers.
As the administration was preparing to implement the executive order, Labor Secretary Thomas E. Perez told The Washington Post that the directive was designed to ensure “that tax dollars do not support low-road contractors who discriminate in hiring and pay, treat veterans unfairly, withhold overtime, subject their employees to physical danger, or otherwise deny some basic workplace protections.”
Added Jason Surbey, a Labor Department spokesman, after Crone’s decision: “We are confident that the rule and guidance are legally sound and the Department of Justice is considering options for next steps.”
While the Justice Department contemplates legal moves, the Congressional Progressive Caucus urged the administration to use already available tools to reach the ends envisioned by the executive order.
“The Department has full authority to hold contractors accountable under current law, regardless of this injunction,” said a statement from Caucus Co-Chairs Reps. Raul M. Grijalva (D-Ariz.) and Rep. Keith Ellison (D-Minn.). “We look forward to working with this Administration and the next one to ensure that our labor laws are enforced while the process established in the Fair Pay and Safe Workplaces moves through our judicial system. This Executive Order is about ensuring workers are treated fairly — and we will continue to fight with workers to get every penny and the workplace protections they deserve.”