House Passes Appropriations Bill Barring Contractors with Some FLSA Violations from Government Contracts

  • July 16, 2014

Approving its fiscal year 2015 Energy and Water Development, and Related Agencies Appropriations bill (H.R. 4923), the U.S. House of Representatives also has agreed to prohibit funding for any contractor found to have violated certain wage requirements under the Fair Labor Standards Act. 

The bill, approved on July 10 by a vote of 253-170, included an amendment (H. Amt. 1021) offered by Representative Keith Ellison (D-Minn.) that worries federal contractors, as it may be a harbinger of similar actions under other federal funding statutes, according to its author. The amendment states:

Sec. __. 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, United States Code, in the Federal Awardee Performance and Integrity Information System include the term “Fair Labor Standards Act.”

The measure was approved despite existing procedures intended to compel contractor compliance with workplace laws and requirements, including the FLSA, by allowing the suspension and debarment from federal contracting for recurring or severe violations. 

The Federal Awardee Performance and Integrity Information System is a government database that includes information for the most recent five-year period of the following: 

Each civil or criminal proceeding, or any administrative proceeding, in connection with the award or performance of a contract or grant with the Federal Government with respect to the person during the period to the extent that the proceeding results in the following dispositions:

(B) In a civil proceeding, a finding of fault and liability that results in the payment of a monetary fine, penalty, reimbursement, restitution, or damages of $5,000 or more.

(C) In an administrative proceeding, a finding of fault and liability that results in—

(i) the payment of a monetary fine or penalty of $5,000 or more; or

(ii) the payment of a reimbursement, restitution, or damages in excess of $100,000.

(D) To the maximum extent practicable and consistent with applicable laws and regulations, in a criminal, civil, or administrative proceeding, a disposition of the matter by consent or compromise with an acknowledgment of fault by the person if the proceeding could have led to any of the outcomes specified in subparagraph (A), (B), or (C).

(E) In an administrative proceeding—

(i) a final determination of contractor fault ….

Thus, federal contractors who have committed recent wage and hour violations with a finding of fault of as little as $5,000 could be barred from receiving federal contracts.

Representative Ellison intends to add similar language to other appropriations bills. This trend to single out federal contractors is consistent with other recent actions by the Administration to make these businesses toe the line with its policies. Over the past several years, the House of Representatives has been reluctant to pass such anti-contractor legislation, but “must have” appropriations riders can be the exception to this rule, especially where legislators may not fully understand the effect of an amendment’s language.

If you have any question about this or other development affecting your business, please contact a member of our Government Relations practice or the Jackson Lewis attorney with whom you regularly work.

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