The High Road to Labor Law Reform...
This article was written by Tom Walsh, a partner in our White Plains, NY office.
The specter of EFCA may seem to be fading as support dwindles for the more controversial aspects of the Administration’s agenda. But don’t count out the pro-union reform forces yet. Not by a long shot. Much has been said of the Craig Becker nomination – still a possibility either by formal confirmation or recess appointment – and the probability that a Becker-Liebman dominated NLRB could implement pieces of EFCA-style reform through Board decisions. But that’s not the only iron labor has in the fire.
The federal government’s ability to set rules for federal contractors gives it tremendous power to affect the employment and labor relations policies of such employers – without the pesky scrutiny that legislation attracts. Unions have long been aware of this, and have sought to tap into that power for years.
The news is that the Administration (encouraged by SEIU’s Andrew Stern, a frequent White House guest) is readying a new contracting initiative that would give a preference to unionized companies. Conversely, non-union would-be government contractors would be at a real disadvantage.
For generations, public contracts have been awarded to the lowest-bidding contractor capable of performing the work. To protect contractors’ employees from being squeezed by the competitive bidding rule, Congress enacted the Service Contract Act and the Davis Bacon Act (among others). Under these laws, the Department of Labor analyzes regional wages and benefits, and sets the prevailing wage contractors must pay.
While this system has worked pretty well, it has not completely pleased unions. The prevailing wage rate often is lower than inflated union contracts. That means unionized employers can’t compete as readily against non-union companies (and unionized employees lose work opportunities).
Labor and the White House are reportedly contemplating new rules – which have not yet been made public – to give unionized employers an advantage. Called the “High Road Contracting Policy,” it would require the DOL (and all federal agencies) to create new bureaucracies to assess the labor-friendliness of bidding contractors. “Prevailing wage” would be supplemented with standards of a “living” wage, health insurance, employer-paid retirement benefits, paid sick days, and possibly more. Agency officials would give a subjective preference to contractors, providing these higher levels of compensation. Applying these standards to those of area union contracts would instantly benefit union contractors.
But the potential new rules go further. Employers who have been found to have violated labor laws would be restricted (or possibly barred) from being awarded federal contracts.
Ironically, these contemplated rules seem likely to encourage federal agencies to award contracts to the highest bidder, not the lowest, contrary to the object of competitive bidding.
The good news is that some Senators have taken note and have raised concerns. They say, correctly, that the “High Road” rules would dramatically increase the cost of public work to taxpayers. They note that smaller companies (and, although unstated, non-union contractors) would be pushed out of competition. They’ve asked the Office of Management and Budget to address their concerns. No reply has been received yet.
We will keep you posted on developments.
