While no company should underpay its workers, maintain a hazardous work environment, or engage in illegal discrimination, federal contractors carrying out work on behalf of the American people deserve extra scrutiny. With 1 in 5 American workers employed by a company that receives federal contracts, efforts to improve standards for contract workers are far-reaching. By establishing a mechanism to encourage contractors to comply with workplace protections—and denying them contracts if they persistently refuse to follow the law—the Fair Pay and Safe Workplaces Executive Order is a critical tool to fight workplace violations.
- For a century, public officials of both political parties have taken responsibility for the conditions of people working to produce goods and deliver services on behalf of the American people.
- Approximately 40 percent of all federal contracting dollars in 2013 went to contractors with health, safety or wage violations on their record.
- Americans working for federal contractors lose up to $2.5 billion each year to violations of minimum wage laws alone.
- To address widespread workplace violations by federal contractors, the next president must implement and enforce the Fair Pay and Safe Workplaces Executive Order.
A Bipartisan Legacy of Concern for Contract Workers
In the midst of World War I, United States Secretary of War Newton Baker was concerned about federal contracting. “The government cannot permit its work to be done under sweatshop conditions,” he declared, establishing minimum workplace standards for workers sewing military uniforms.
From Baker’s time to our own, public officials of both political parties have taken responsibility for the conditions of people working to produce goods and deliver services on behalf of all Americans.
Following a century of precedent, President Obama used a series of executive orders to raise pay, guarantee paid sick time, and otherwise raise workplace standards for employees of federal contractors, culminating with an effort to ensure that federal tax dollars would not go to companies that violate employment laws. The Fair Pay and Safe Workplaces Executive Order set up a system to prevent companies that deliberately and repeatedly cheat or mistreat their employees from profiting off federal contracts on the taxpayer dime. Yet just as the regulations implementing the Fair Pay and Safe Workplaces Executive Order were set to go into effect in autumn 2016, they were temporarily halted in response to a lawsuit from contractor lobby groups. As a new president prepares to take office, widespread violations by federal contractors remain an urgent and unsolved problem. The next president must implement and enforce the Fair Pay and Safe Workplaces Executive Order to address these abuses.
Federal contractors violate basic worker protections, yet have their contracts renewed
Although most federal contractors obey the law, serious breaches of health, safety, and employment laws remain far too widespread. To track the prevalence of workplace abuses by U.S. government contractors, Dēmos merged public federal contracting records with violations data from the U.S. Department of Labor.
We find that between 1999 and 2013, contractors were fined nearly $722 million for serious violations of health, safety, and employment laws, accounting for 12 percent of all such fines. Approximately 40 percent of all federal contracting dollars in 2013—a total of $175 billion— went to contractors with health, safety or wage violations on their record. These findings mirror those of a previous investigation by the Government Accountability Office (GAO), which discovered that among the 50 companies receiving the largest penalties for violations of wage and hour laws between 2005 and 2009, half were federal contractors.
Federal contractors were also among the companies facing the largest penalties for health and safety violations. Yet the GAO concluded that none of these noncompliant companies had been debarred or suspended from federal contracts as a result of their workplace abuses. Research by the United States Senate’s Health, Education, Labor, and Pensions Committee provides additional evidence of large-scale workplace abuses—including cases of racial discrimination in hiring and breaches of child labor laws in addition to multiple wage and safety violations—by companies that continue to be awarded government contracts.
These represent only the cases where workplace violations were detected, investigated, and penalties were assessed. Research suggests that most workplace violations, whether committed by federal contractors or other employers, are never officially documented or punished. For example, a seminal 2009 study of employment violations in America’s largest cities found that two- thirds of workers employed in low-paying industries experienced some form of wage theft in the previous work week, including failures to pay the minimum wage or overtime compensation, being required to work “off the clock,” having tips stolen, denial of meal breaks, and illegal payroll deductions.
Some workers were never paid at all for work they performed in the last year. But only 20 percent of workers who experienced workplace violations reported to researchers that they made a complaint to their employer, their supervisor, or a government agency.
Most said that they feared losing their job or experiencing some other form of retaliation if they complained about illegal workplace conditions. Other workers expressed concern that a complaint would not make a difference.