Are employers being blacklisted from doing business with the government? The Obama Administration's onerous new requirements are deterring many franchisees from doing business with the federal government and reducing the products and services available.

Author:Layman, Michael

The legislative and regulatory assault on franchises can start to feel personal to our businesses. Overtime, joint employer, discriminatory minimum wage, franchise relationship bills, predictive scheduling bills--the current list of federal, state and local government actions harmful to franchising goes on and on. But if there is another segment of industry that has been hit even harder than franchises during the Obama years, it may be employers that do business with the federal government.

Through overly complex regulations --and often bypassing the will of Congress--the Obama Administration has required federal contractors to pay a $10.10 minimum wage, meet a seven percent benchmark for hiring veterans and disabled workers, provide paid sick leave, and protect an expanded set of workers based on their status. But the biggest whopper of all the new federal contractor regulations is the so-called "Fair Pay and Safe Workplaces" rule, more commonly known as the "blacklisting" rule, because the rule bars employers from receiving federal contracts if they have committed labor violations.


President Obama called for the blacklisting rule in July 2014, and the rule implementing the order was finalized on Aug. 25, 2016, by the U.S. Department of Labor and the Federal Acquisition Regulatory Council. The rule will require federal government contracting firms to report past violations under 14 federal labor laws AND all of their state law equivalents to the U.S. Department of Labor before engaging in contracts with the federal government.

Beginning on Oct. 25, 2016, prospective contracting firms will be required to disclose violations issued during the past three years pursuant to workplace protections, including matters of workplace safety, workplace discrimination, and minimum wage. Somewhat outrageously, the rule also will require businesses to report alleged violations that have not been fully adjudicated.

What will the government do with all this reported information? Good question. The rule directs the DOL to oversee an extensive review of reported violations. Each violation will be assessed to determine whether it is "serious, willful, repeated, or pervasive." If the violations raise concern, the federal agency has the option of rejecting, suspending, or even cancelling existing contracts, rendering the contactors unable to conduct further business with the federal government. Additionally, contractors who enter...

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