US Senate Committee on Health, Education, Labor, & Pensions

Following Harkin Report Uncovering Labor Law Violations by Federal Contractors, White House Announces Executive Order to Strengthen Protections and Improve Workplace Conditions

Wednesday, July 30, 2014

WASHINGTON, D.C.—Today, the White House announced that President Barack Obama will sign an Executive Order to improve the federal contracting system by taking new steps to ensure that companies paid by taxpayers provide safe and fair workplaces for American workers. The Executive Order will require prospective federal contractors to disclose labor law violations and will give agencies more guidance on how to consider labor violations when awarding federal contracts. The White House action comes less than a year after a HELP Committee investigation revealed widespread labor law violations by major government contractors that went unnoticed in the contracting process. Senator Tom Harkin (D-IA), Chairman of the Senate Health, Education, Labor, and Pensions (HELP) Committee, released the following statement:

“The Executive Order announced by the White House is a bold response to a report I released last year and I applaud President Obama for his leadership. My report found that in 2012 alone, taxpayers provided more than $80 billion in contracts to companies that had committed significant violations of our basic labor laws, which are designed to ensure workers are paid fairly and are safe on the job. The President’s action will be an important step forward to give the government more tools to effectively confront and deter workplace wage and safety violations. Companies that receive federal contracts employ 22 percent of the workforce, so this action will raise working conditions for millions of Americans,” said Harkin.

The HELP Committee’s investigation represented the first comprehensive report of its kind. It found that the amount of federal service contracts had increased by more than $200 billion since 2000, with an increasing number of private-sector employees paid with taxpayer dollars.  It found that almost 30 percent of companies receiving the highest penalties for violations of federal labor law are also federal contractors. Specifically, the report identified that between 2007 and 2012, 49 federal contractors were accountable for almost 1,800 separate enforcement actions taken by the Department of Labor and paid $196 million in back wages and initial penalties over that period.

Additional findings of the HELP Committee’s investigation include:

  • Eighteen federal contractors were recipients of one of the largest 100 penalties issued by the Occupational Safety and Health Administration (OSHA) of the Department of Labor between 2007 and 2012.  Almost half of the total initial penalty dollars assessed for OSHA violations were against companies holding federal contracts in 2012. 
  • Forty-two American workers died during this period as a result of OSHA violations by companies holding federal contracts in 2012. For instance, in 2010, seven workers were killed at a Tesoro-owned refinery in Anacortes, Washington when a heat exchanger ruptured and spewed vapor and liquid that exploded.  The workers who died were standing near the area of the rupture specifically to attempt to stop leaks of the volatile, flammable gases in the facility, which had not been inspected for 12 years prior to the rupture.  Nevertheless, Tesoro received $463 million in federal contracts in fiscal year 2012.
  • Among the largest 100 back wage assessments issued by the Wage and Hour Division of the Department of Labor between 2007 and 2012, 32 were federal contractors.
  •  Overall, the 49 federal contractors responsible for large violations of federal labor laws were cited for 1,776 separate violations of these laws and paid $196 million in penalties and assessments.  In fiscal year 2012, these same companies were awarded $81 billion in taxpayer dollars. 
  • Thirty-five of these 49 federal contractors responsible for large violations of federal labor laws violated both wage and safety laws.

Read more about the investigation by clicking here.

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