Can the government blacklist contractors for safety violations?

On the front lines with Fisher Phillips

by Travis Vance and Patrick Dennison

Dr. David Michaels, former Assistant Secretary of Labor for OSHA, recently tweeted a suggestion that the government ban a construction contractor from work on public lands after the company pleaded guilty on charges related to the death of a worker. This is somewhat reminiscent of the “blacklists” imposed by the Obama Administration. Now, you ask, can the government even do that?

Unfortunately, the answer is potentially yes, at least to some extent. In July 2014, then-president Barack Obama issued Executive Order 13673, titled “Fair Pay and Safe Workplaces,” which many referred to as the “blacklisting” executive order. The so-called blacklisting order required companies bidding or submitting offers for federal contract work over a certain amount to disclose any administrative merits determinations, arbitral awards or decisions and civil judgments against them in the preceding three years related to potential violations of the Fair Labor Standards Act, Occupational Safety and Health Act, National Labor Relations Act and Family Medical Leave Act, among others. Before making an award, the federal contracting officer would then consider safety violations when awarding government contracts, putting companies with records of numerous serious, repeated or willful OSHA violations at risk of being denied work.

Shortly after the order was issued, the Department of Labor and the Federal Acquisition Regulatory Council proposed regulations and guidance to administer the law, which the Obama Administration finalized in August 2016. After that, industry trade associations challenged the rule’s validity in federal court, securing a preliminary injunction to bar the enforcement of the rule’s “blacklisting” provisions. In March 2017, President Trump used the 1996 Congressional Review Act to effectively invalidate the “blacklisting” rule.

Where does that leave us? It is still possible the government could “blacklist” a company and hinder its ability to secure public contracts because of habitual OSHA volations. However, despite former Assistant Secretary Michaels’ continued public endorsement of the practice, the federal “blacklisting” of companies remains prohibited, at least for now.

For Dr. Michaels’ suggestion to move forward, the federal government would need to once again set up a formal apparatus for levying and enforcing a blacklisting order, and that order would need to withstand the inevitable court challenges that would follow. There seems to be no appetite under the current administration to enact such a process, but employers should at least be aware of the fact that blacklisting remains a possible legal maneuver a future administration could choose to unleash.

Travis Vance is a partner in the firm’s Charlotte office. He can be reached at tvance@fisherphillips.com or 704.778.4164. Patrick Dennison is a partner in the firm’s Pittsburgh office. He may be reached at 412.822.6627. Visit their website at fisherphillips.com

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