Congress Puts Dept. of Labor’s Blacklisting Rule in Crosshairs

Congress is taking a first step in rolling back parts of the Obama administration’s costly red-tape put out by the Department of Labor.

On Monday, House Education and Workforce Committee Chairman Virginia Foxx (R-NC), Representatives Jason Chaffetz (R-UT), Steve Chabot (R-OH) and Paul Mitchell (R-MI), together with Senators Ron Johnson (R-WI) and Lamar Alexander (R-TN), filed a joint resolution of disapproval under the Congressional Review Act to abolish the Department of Labor’s “blacklisting rule.”

This rule in particular needs the axe because it imposes massive costs and provides no quantifiable benefits. The rule institutes new reporting provisions, requiring contractors who bid on federal contracts in excess of $500,000 to report alleged as well as actual labor violations from the last three years. Reported violations of any of the 14 federal labor statutes may be used to block a company’s bid.

The rule suggested that it would increase efficiency and cost savings by ensuring that federal contractors are complying with labor laws. But according to the government’s Regulatory Impact Analysis, an insufficient amount of data was presented to “accurately quantify the benefits presented.” And the federal government asked for more data to “allow more thorough benefit estimations, however no data were received that could be used to quantify the benefits of the final rule.”

Although the benefits of the rule could not be accurately estimated, the costs are massive. In the first year, the cost to government and employers added up to $474,075,099, and another $423,862,572 in the second year.

Besides the overwhelming costs, the rule forces federal contractors to “publicly condemn” themselves over alleged violations of wrongdoing, not actual labor law violations. Meaning, a federal contractor may lose out on a contractor without ever violating a labor law.

The Teamsters have already stated that the blacklisting rule provides unions with “unprecedented new leverage against companies and institutions that contract with the federal government.”

Requiring the reporting of alleged violations incentivizes labor unions to file frivolous charges against any companies they are seeking to organize which might bid on federal contracts. In exchange for withdrawing alleged charges, a union can demand an employer agree to ease the organizing campaign by allowing a card-check election or greater access to the workplace.

The Congressional Review Act is a perfect tool to combat government regulation like the blacklisting rule that imposes immense costs and unquantifiable benefits.

For more congressional reform ideas, see the labor and employment chapter of Free to Prosper: A Pro-Growth Agenda for the 115th Congress. For actions the White House can take, see my recent Web Memo (with Iain Murray), First Steps for the Trump Administration: Unleash America’s Labor Force.

>> Letter to Members of Congress