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Federal Market Intelligence for Small Business |
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Contractor ‘de facto debarment’ measure in FY15 appropriationsRep. Ellison’s limitations on funds in three spending bills so farA campaign to ban federal funds from going to any contractor that has acknowledged violations of worker wage and hour standards is rapidly gaining traction in the House. A provision to that effect, offered as a floor amendment by Rep. Keith Ellison, D-MN, has been approved by the House in three appropriations bills for fiscal 2015 to date: Defense, Transportation-Housing, and Energy and Water. Previous to those votes, Ellison’s amendment had been defeated in a roll call vote in the Commerce/Justice/Science spending bill. But support has been growing and now includes more than two dozen Republicans. The campaign was inspired in part by a report by the Senate Health, Education, Labor and Pensions Committee last year that said nearly 30% of the top violators of federal wage and safety laws are also current federal contractors. The report also listed 49 contractors with multiple labor law violations. Ellison’s amendment targets violators of the Fair Labor Standards Act (FLSA) covering wages and hours. “Contractors pocket taxpayer money and then commit wage theft by denying workers overtime pay or forcing them to work off the clock,” Ellison said in a statement. “A recent National Employment Law Project survey found that 21% of federal contract workers surveyed were not paid overtime and 11% have been forced to work ‘off the clock.’” Contractor groups worry that the amendment is too broad in its scope and infringes upon their due process rights. A coalition led by the Professional Services Council is sounding an alarm about the potential devastating effects of the amendment on affected contractors, both large and small. The amendment could serve as an “automatic, de-facto, multi-year debarment” that circumvents the existing contractor suspension and debarment procedures in government, the council contends. “The effect is so deleterious to contractors,” Alan Chvotkin, executive vice president of the council, told Set-Aside Alert. “We view this effort as being designed to punish contractors, even for past behaviors that have been rectified and corrected.” The amendment would have severe impacts on affected contractors, large or small, barring them from receiving any funding from the affected agencies. “There is no exemption for small businesses,” Chvotkin said. Furthermore, it applies whether the FLSA violation was a “mistake” or a deliberate pattern of action, Chvotkin said. “We want to address wage-theft violations,” Chvotkin said. “But we think this goes too far.” The council joined with other organizations in the Acquisition Reform Working Group in writing a letter to members of Congress on July 9 opposing the amendment. The Ellison amendment refers to “Prohibition of Funds for Contractors that have Dispositions related to the FLSA,” according to an analysis by Littler Mendelson PC. It states: “None of the funds made available in this Act may be used to enter into a contract with any person whose disclosures of a proceeding with a disposition listed in section 2313(c)(1) of title 41, U.S. Code, in the Federal Awardee Performance and Integrity Information System (FAPIS) include the term ``Fair Labor Standards Act.'' The affected contractors are those who have had certain criminal, civil or administrative dispositions, or decisions, regarding FLSA violations. The dispositions could be criminal convictions, or findings of fault and liability in a civil proceeding or administrative proceeding that resulted in financial penalties at certain levels. Or it could be a consent agreement or settlement with an acknowledgement of fault that “could have” led to the same levels of penalties or to a criminal conviction. Under the “could have” standards, “contractors would be severely and negatively impacted for any FLSA investigation even if there is ultimately no finding of fault or liability,” the council claims. The council also predicted the amendment is likely to lead to additional litigation regarding alleged FLSA violations. Ellison did not respond to a request for comment. However, a staffer in his office said the Labor Department, which oversees FLSA enforcement, provides due process to contractors. In addition, he said there was no reason to exempt any contractors: “In our experience, if you have FLSA violations, it’s usually not an honest mistake.” How many contractors would be affected by the amendment? Neither the council nor Ellison’s office could provide a number. Ellison plans to submit his amendment to all the remaining appropriations bills as well. The U.S. Chamber of Commerce also is rallying opposition to the amendment.
More information: Senate Health, Education, Labor and Pensions Committee report: http://www.harkin.senate.gov/documents/pdf/52a876b0e4d63.pdf
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