Companies seeking to do business with the federal government will now have to verify their workplace safety track record, according to new regulations finalized on Wednesday.
The rule could block firms that flout labor regulations from securing lucrative government contracts in the future.
Under the new regulations, businesses working to procure contracts over $500,000 will have to inform the government of any labor violations they have incurred over the previous three years. Those include any non-compliance of the department’s 14 basic workplace protections, such as those governing wages, collective bargaining, and safety.
President Obama called for the new controls on contractors in 2014, when he issued the Fair Pay and Safe Workplaces Executive Order.
“The regulations and guidance announced today are designed to increase efficiency and cost savings by ensuring that federal contractors are responsible and provide basic workplace protections,” the Department of Labor said in a statement Wednesday.
Business interest groups heavily opposed the rule. After it was finalized, the National Association of Manufacturers President Jay Timmons described the regulation as a “bizarre ‘guilty until proven innocent’ policy.”
He claimed that it “significantly burdens manufacturers who will have to expend countless hours and resources to ensure they do not run afoul of a fundamentally unfair regulation.”
The department noted in its statement that “most federal contractors will only have to attest that they comply with laws providing basic workplace protections.”
Labor chief Tom Perez defended the guidance, saying that it ensured corporate responsibility and fairness.
“Contractors that illegally cut corners at the expense of their workers should not benefit from taxpayer-funded federal contracts,” he said in a department press release. “At the same time, employers who meet their legal responsibilities should not have to compete with those who do not.”
The regulation also requires contractors to ensure that employees are provided enough time to review the accuracy of their paychecks.
It also dissolved mandatory pre-dispute arbitration clauses that often prevented workers who claimed they were sexually assaulted or denied civil rights on the job from having their day in court. The department noted that large federal contractors often employ such forced arbitration agreements in their employee contracts.
The rule takes effect on October 25, 2016.
