The government contracts out hundreds of billions of dollars’ worth of business to private entities, who in turn employ a huge share of American workers.
But on Monday, President Trump signed a measure that will make it easier for those same firms to get a slice of that business even if they abuse their employees.
The measure rolls back an order signed by President Obama, known as the Fair Pay and Safe Workplaces Executive Order, that required any company bidding on a contract of $500,00 or more to disclose labor law violations over the last three years. Those disclosures then had to be taken into account during the bidding process.
“It’s essentially a deterrent,” explained Joseph Geevarghese, campaign director at Good Jobs Nation, a group that organized extensively in favor of the executive order. “Major companies who want to do business with the federal government, which is incredibly lucrative, will think twice about breaking the law across the board.”
But earlier this month, Republicans in the Senate used the Congressional Review Act and voted along party lines to undo the order. They sent it to Trump, who signed it on Monday.
“The signal Donald Trump is sending today…is it’s okay to break the law, you will continue to get taxpayer dollars,” said Geevarghese. “There is no consequence for violating the rights of American workers.”
This affects not just employees who work directly on government contracts, but all of a company’s workers, given that the company is held responsible for all of its violations. As a result, the executive order had a large reach — federal contractors are estimated to employ over 18 percent of the American workforce.
The impetus to fix or altogether avoid wage or safety violations will now disappear. “This takes away any positive incentive for firms to tighten their operations, make sure workers are respected,” Geevarghese said.
A large share of companies that work for the federal government have spotty records on how they treat their employees. According to research by Demos, a New York-based think tank, approximately 40 percent of the money the government spent on federal contracts between 1999 and 2013 went to companies with records of violating health and safety or wage and hour laws. Contractors were fined nearly $722 million for these violations, or 12 percent of all fines paid by U.S. businesses.
Nearly 12,000 companies that receive federal contracts have violated wage and hour laws, illegally underpaying more than 300,000 people, according to a report prepared by the staff of Sen. Elizabeth Warren (D-MA), a supporter of Obama’s measure. Nearly 700 are repeat offenders but still receive government work. Among the 100 largest government contractors—which combined received $240 billion for their work—two-thirds of them have violated labor laws.
Safety violations are also a widespread problem. Among the 100 largest penalties that the Occupational Safety and Health Administration has handed out since 2015, over a third were to companies that contracted with the government in last decade. Twelve were for firms that got a contract of at least $100,000 last year.
When Trump first promised that he would sign a roll back of Obama’s executive order, he said it was in pursuit of “reducing onerous regulatory burdens on America’s businesses.” But Geevarghese disputes this, saying it would have only required firms to check a box as to whether or not they had been cited for violations over the past three years.
Instead, it has the potential to rob workers of the wages they’re due by law if there is less of a penalty for illegally underpaying them. That flies in the face of promises Trump made on the campaign trail to raise American’s incomes.
Trump himself has a lengthy track record of failing to pay what was owed to those who worked as contractors for his companies, as well as 24 violations of wage and hour laws at Trump companies since 2005.