A Smarter Approach to Federal Regulation: Fair Pay and Safe Workplaces

1. Internal Discussion Draft: Do Not Cite, Quote or Distribute A Smarter Approach to Federal Regulation “Fair Pay and Safe Workplaces” June 2015

2. America Needs Regulatory Improvement Now 6% Share of major regulations issued by independent regulatoryagencies that received full cost-benefit analysis between 2002and 2013. 41st U.S. rank out of 189 countries in terms of ease ofconstruction permitting. 48% Percentage of Americans who think there is “too much regulation,” up from 28 percent in 2002.

3. A Smarter Approach Can Deliver Increased Benefits at Lower Cost “Regulations can help ensure that businesses retain the capacity to innovate and simultaneously promote the health and welfare of our employees, customers and communities. But overlapping, conflicting and poorly executed regulations can—and do—impose substantial costs on the U.S. economy, sometimes with only theoretical benefits.” - Andrew N. Liveris, Chairman and CEO of The Dow Chemical Company, and Chair of the Business Roundtable Committee on Smart Regulation

4. The Burden of Regulation on Productive Economic Activity Internal Discussion Draft: Do Not Cite, Quote or Distribute • The regulatory process creates uncertainty that undermines investment, growth and job creation. If companies do not know what regulators will do, they understandably are reluctant to undertake costly investment. Likewise, agencies often take too long to give permission for regulated parties to act — in part because they are focused on broad rulemaking objectives. • Regulating is easier than complying with regulations. Mandates are easy to promulgate but often difficult to achieve, particularly when they are confusing or poorly drafted. Some regulations are “technology forcing,” meaning that they can be met only by solutions that do not yet exist. • Moreover, the volume and complexity of regulations can make for a bureaucratic nightmare, especially as different agencies with overlapping jurisdiction all regulate the same subject matter. • Business works when companies can experiment and try new things. Agencies, however, often impose rigid one-size-fits-all requirements that cut off promising opportunities, or they impose overly prescriptive rules that prevent better solutions. • Resources spent complying with poorly designed regulations are by definition not spent on developing the products of tomorrow. • Regulations are expensive. Every year, federal agencies issue thousands of new regulations, imposing a cumulative cost of more than $1.7 trillion annually, according to a study sponsored by the Small Business Administration. Individual rules can impose costs of hundreds of millions of dollars — or even billions of dollars — on regulated parties. • In addition, if U.S. companies face costs that foreign competitors do not, then it is harder for them to successfully sell products. Agencies, however, are often unaware of the effect that regulations have on competitiveness. A Cost Challenge An Investment Challenge An Innovation Challenge A Compliance Challenge 2 3 1 4

5. Internal Discussion Draft: Do Not Cite, Quote or Distribute A Smarter Approach to Fair Pay and Safe Workplaces

6. New Rules Are Not Needed and Would Threaten Federal Projects • Department of Labor (DOL) guidance and proposed Fair Acquisition Regulatory Council (FAR) rules to implement the “Fair Pay and Safe Workplaces” Executive Order (EO 13673) would require onerous and redundant reporting of labor law violations by prospective federal contractors; prohibit certain pre-dispute arbitration agreements; and establish additional wage and hour reports. • Existing Rules Protect Employees and the Workplace: DOL and federal agencies already have sufficient authority under current FAR rules to deal with federal contractors that have violated labor laws. • Unnecessary and Costly Compliance Burden: Employers would face burdensome new recordkeeping and reporting requirements. An initial estimate of the economic impact on contractors and their suppliers and subcontractors shows that the annual cost for implementation would far exceed $100M, making this an economically significant regulatory action. (HR Policy Association) • Redundant Data Collection: In many instances, the Executive Order would request contractors provide data the Administration already has, or should be able to obtain from its own databases. • Unfairly Pressures Employers to Settle Meritless Claims: By making contract decisions contingent on labor violations, the Executive Order encourages unions and plaintiffs’ attorneys to pressure employers to settle meritless claims. • Increases Unnecessary Litigation: The prohibition on pre-dispute agreements for certain violations where federal contracts are for $1M or more would increase the chances of costly litigation that would cause delays. More appropriate legal channels would settle the disputes and eliminate these delays.

7. New Rules Add Up to Big Costs – With Little to Gain • $100 Million Plus • Initial estimate of the economic impact the implementation of this Executive Order would have on employers. (HR Policy Association) • Less than 0.5% • Percentage of the nearly 100,000 charges the Equal Employment Opportunity Commission (EEOC) receives each year that eventually become lawsuits. (HR Policy Association) • More than Doubled • Number of federal suspensions and debarments from FY 2009 to FY 2013 (Government Accountability Office), showing that existing rules work.

8. Internal Discussion Draft: Do Not Cite, Quote or Distribute RECOMMENDATIONS

9. Help Federal Contractors Deliver for the Government and Taxpayers Internal Discussion Draft: Do Not Cite, Quote or Distribute • Withdraw the proposed rule. • Implement existing regulations to ensure compliance with federal and state labor laws.