The man who argued that the federal government had the authority to block companies from moving operations from one state to another might soon be in charge of deciding which companies qualify for hundreds of billions of dollars in federal contracts — but not right away.
A federal judge has issued a preliminary injunction blocking implementation of the so-called “blacklisting” rule, which would require federal contractors and subcontractors bidding on jobs of $500,000 or more to publicly report any resolved, pending or alleged violations of 14 federal labor laws.
In her order, U.S. District Judge Marcia A. Crone of the Eastern District of Texas agreed with the plaintiffs, Associated Builders and Contractors, its Southeast Texas chapter and National Association of Security Companies that the rule violates their constitutional rights “by virtue of the fact that their public reports of alleged violations may be used by their competitors and adversaries to gain competitive advantage over Plaintiffs and their members. They will likely suffer increased costs, loss of customers, and loss of goodwill, regardless of whether they are actually disqualified from government contracts, by being labeled labor law violators.”
Contractors say they hope the injunction will give the administration pause about acting without Congress.
“The ruling also pushes back against the Obama administration’s executive overreach and unfortunate attempt to circumvent the will of Congress, which has carefully crafted laws to deal with companies that violate contracting rules,” Ben Brubeck, ABC’s vice president of regulatory, labor and state affairs, said in a statement.
The Department of Labor is certain to appeal.
When the president signed the “Fair Pay and Safe Workplaces” executive order in 2014, it was met with immediate legal threats from contractors.
Over the next two years, their concerns grew as they learned who would be tasked with enforcing the rules the Labor Department was writing to formalize the order.
Lafe Solomon is the former acting general counsel for the National Labor Relations Board. Now he is a senior labor compliance officer with the U.S. Department of Labor, where he will oversee implementation of President Barack Obama’s blacklisting executive order issued in August.
“This is a huge power grab,” said Patrick Semmens, spokesman for the National Right to Work Legal Defense Foundation. “It’s a tool that can be used by unions as leverage against companies. And I don’t think Solomon should be in a position to administer any rule. Frankly, if you look at his track record at the NLRB … it raises about as many red flags as you can raise.”
The order is commonly referred to as the “blacklisting” rule because the government could use the information — even unproven allegations — to suspend or deny a federal contract.
In a policy statement on the executive order and the accompanying rule, the Department of Labor argues that “taxpayer dollars should not reward companies that break the law, and contractors who meet their legal responsibilities should not have to compete with those who do not.”
Critics say it’s a license to practice political favoritism and intimidation of opponents, using the federal contracting process as leverage.
Even labor unions acknowledge that the increased leverage will redound to their benefit.
And there’s a lot of leverage to be had. Federal agencies dished out $4 trillion in contracts from 2008 to 2016.
Obama hand-picked Solomon, whose career started at the National Labor Relations Board in 1972, in November 2010 to temporarily fill the NLRB’s vacant general counsel position. Solomon worked as acting general counsel until 2013, after Obama tried and failed — twice — to get Senate blessing for a permanent appointment.
But Solomon made the most of his temporary role as the NLRB’s top investigator and prosecutor of unfair labor practice cases.
Among the reported “thousands of complaints” overseen by Solomon was one that ended with an ethics violation and another that critics say created a new standard of government overreach that imperils jobs and investment.
Both erupted in April 2011, just five months after Solomon took the post.
An inspector general report said Solomon’s ownership of Walmart stock during a case involving the retail giant’s social media policy posed a conflict of interest and violated the NLRB’s ethics code. The report blamed internal NLRB failures, but did not pursue charges. In a letter from his lawyers, Solomon denied intentional wrongdoing and the matter was essentially dropped.
Then there was Boeing.
Solomon issued a complaint against the aircraft manufacturer for plans to build a new plant in South Carolina and transfer work to the right-to-work state from its unionized assembly plant in Seattle. The Machinists Union accused Boeing of retaliating against prior employee strikes in Seattle. The company vigorously denied the accusation, and pointed out that there had been no job losses in Washington.
Facing massive criticism, Solomon withdrew the complaint eight months later when the union ratified a new contract. Boeing now operates a facility in North Charleston, S.C. But the case ignited a national firestorm over the relatively unchecked power of political appointees to pressure businesses to adopt pro-union policies.
RELATED: Lawsuit filed over federal “blacklisting” rule
An extensive investigation launched by House Republicans after Solomon filed the complaint resulted in a scathing staff report from the House Oversight and Government Reform Committee. The report detailed the NLRB’s shift toward “a politicized pro-union bias under the Obama Administration.”
Despite this backlash, the president pushed the first of his two nominations for Solomon as permanent general counsel in 2011. The pick drew praise from the likes of Gregory Junemann, president of the 85,000-member International Federation of Professional and Technical Engineers, who called Solomon’s selection a “stellar nomination.”
Republican senators were less enamored and refused to consider the nomination, urging the president to give up on Solomon.
“Mr. Solomon claimed the authority to determine where and how a private company is permitted to do business,” wrote Sen. Orrin Hatch, R-Utah. “In fact, in light of his recent actions, including the Boeing Complaint, it’s hard to conceive of a worse choice for acting General Counsel.”
Undeterred, Obama resubmitted Solomon’s nomination in 2013, only to later withdraw it and nominate eventual General Counsel Richard Griffin.
To top everything off, Solomon’s original appointment to the NLRB may have been illegal from day one.
A U.S. appeals court unanimously struck down a 2014 decision against SW General, an Arizona ambulance company, because Solomon’s appointment violated the Federal Vacancies Reform Act of 1998. The act says an appointee is not allowed to serve — even temporarily — while they are nominees. (The U.S. Supreme Court will hear the case Nov. 7.)
In the meantime, Solomon has moved on to his $181,000-a-year job at the Department of Labor, where he is tasked with enforcing a rule that makes the Boeing complaint look harmless by comparison.
As blacklisting czar, Solomon can suspend or reject work for virtually any of the 24,000 federal contractors based on the flimsiest of labor-related accusations.
Semmens points out that the NRTW was briefly involved in the Boeing case on behalf of some workers in South Carolina. He says if the blacklisting rule had been in effect at the time, the complaint could have meant disaster for Boeing, a company with more than $16 billion in federal contracts.
“No judge had found guilt and certainly the NLRB hasn’t ruled on it, let alone the courts that oversee the NLRB and frequently overturn their rulings. But under the blacklisting regulation, simply having that complaint filed could trigger all those Boeing contracts to be at risk,” Semmens explained.
The rule itself is bad enough, say critics. Handing Solomon that much power only adds to the danger.
“It shows if a union wants to file this, can say to a company, ‘Our buddy Lafe Solomon who is very friendly with organized labor is going to issue this complaint. We can put all your contracts at risk unless you give us what we want,’” he said.
“Solomon has been kind of a one-man wrecking ball in labor relations,” said Fred Wszolek, a longtime labor watchdog and marketing specialist. “Now, all big labor wants to do is bully businesses into hiring more unions so they come up with this bizarre rule that if you’ve ever been mean to a union employee you have to report yourself to a federal commissar.”
That’s what you might expect Wszolek to conclude. He has spent years writing extensively and speaking out against the rising tide of government-aided unionism.
But even labor advocates admit the underlying strategy is to boost unions, not promote fair pay or safe workplaces.
Work Rights Press, a pro-union labor law publisher, explained in its August 2016 newsletter the blacklisting executive order “gives unions unprecedented new leverage against companies and institutions that contract with the federal government,” and unless courts intervene “unions should be able to significantly increase their bargaining power by the simple expedient of filing meritorious charges with the NLRB, OSHA, the EEOC, or the DOL.”
In the meantime, Semmens said Solomon and his blacklist rule are part of a larger effort by the Obama administration to give their political allies what they want.
“Especially unions who may be trying to organize a workplace,” Semmens said. “Workers may not necessarily want them there, but the unions go, ‘hey, if you give us card check, we won’t push this thing that could put all your federal contracts at risk.’ In other words, ‘hand over your workers for forced unionization, and we won’t try and get our buddies at the DOL to blacklist you.’

Market Update

1 DOW 20,656.58
-4.72 (-0.02%)    
2 S&P 2,345.96
-2.49 (-0.11%)    
3 NASDAQ 5,817.69
-3.95 (-0.07%)    
4 MDU 27.10
-0.08 (-0.29%)    
5 SWC 17.41
+0.08 (0.46%)    
6 EBMT 20.15
+0.15 (0.75%)    
7 FIBK 38.85
+0.30 (0.78%)    
8 GBCI 32.71
+0.12 (0.37%)