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Tax Dollars for Law Breakers?

Amy Traub

Here’s a policy idea that should be as uncontroversial as they get: America should stop doing business with chronic lawbreakers. If a company repeatedly exposes their employees to dangerous working conditions that have triggered serious OSHA penalties, we should think twice before signing another contract with that company to do work for the federal government. If a contractor can’t bother to pay the minimum wage and follow other basic employment laws, we can surely find someone else to run government call centers and carry out public construction projects.

As my colleague Robert Hiltonsmith and I argued in our report “Underwriting Bad Jobs,” we can, and should, ask a lot more of the companies we give hundreds of billions of dollars in federal government contracts to—we could be calling for all the workers keeping our nation humming to be paid enough to support their families—but at the very minimum, a record of basic responsibility abiding by the same laws that apply to every employer in the nation should be non-negotiable. And yet a new investigation by the U.S. Senate’s Health, Education, Labor, and Pensions Committee finds extensive violations of labor law occurring right now among major government contractors.

According to the study, released today by Committee Chairman Tom Harkin, almost 30 percent of companies receiving the largest penalties for violating federal labor law are also federal contractors. The study looks at 49 contractors responsible for large-scale labor law violations who were nonetheless paid more than $81 billion in taxpayer funds in 2012. “By law,” Senator Harkin notes,  “the government is only supposed to contract with companies that it first determines to have a ‘satisfactory record of integrity and business ethics.’” Yet this law is clearly not being sufficiently enforced and monitored.

The report accounts a chilling series of preventable employee deaths resulting from legal violations which nevertheless did not prevent the employers from once again qualifying for federal contracts:

The death of a 46-year-old father of four, who was working as a washroom operator at a Cintas Corporation facility in Tulsa, Oklahoma. He was killed after being swept into an industrial dryer when he attempted to dislodge a clothes jam. The dryer continued to spin with him inside for 20 minutes at over 300 degrees. Cintas received $3.4 million in federal contracts in fiscal year 2012.


The death of two employees of a Mississippi shipbuilding and ship repair company owned by ST Engineering Limited, who were killed when highly flammable materials being used to prepare a tugboat for painting ignited, leading to an explosion and fire. Findings of the investigation included failure to properly ventilate a confined space and lack of a rescue service available for a confined space.ST Engineering received $1.9 million in federal contracts in fiscal year 2012.


The deaths of seven workers at an Anacortes, Washington refinery owned by Texas based Tesoro Corporation, who were killed 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. Tesoro received $463million in federal contracts in fiscal year 2012.

In the New York Times coverage of the study, a series of public relations spokespeople for corporate contractors assert that they’ve cleaned up their act and really believe that safety is important. At the moment, these professions of good faith look like the most we have to rely on, given a state of affairs in which, as the Times details, “a major database on federal contractors contained no allegations of misconduct about BP related to the Deepwater Horizon and Texas City explosions” which together killed more than 26 workers and contaminated the Gulf of Mexico with oil.

But the commonsense recommendations in the new Senate report, which include Executive Orders and actions by the Department of Labor, could improve transparency and enforcement and change the game, enabling us to finally hold contractors accountable for the bare minimum: following the law.