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🗞️ Five Presidents, Five Reversals: DOL Ends Contractor Worker Protections

The U.S. Department of Labor rescinded regulations requiring federal contractors to offer qualified employees a right of first refusal when service contracts change hands, eliminating worker displacement protections that had been established under the Biden administration.

onthelaborfront

23 Dec 2025 — 4 min read

On December 22, 2025, the Department of Labor formally rescinded 29 CFR Part 9, which had implemented Executive Order 14055's nondisplacement requirements for federal service contractors. The original rule, finalized in December 2023, required contractors and subcontractors on covered federal service contracts (generally those exceeding $250,000 under the Service Contract Act) to offer service employees from predecessor contracts a right of first refusal of employment when contracts transitioned to new contractors.

The rescission stems from President Trump's Executive Order 14148, "Initial Rescissions of Harmful Executive Orders and Actions," issued on January 20, 2025, which revoked Biden's Executive Order 14055 along with 77 other executive orders. The Trump administration characterized the predecessor orders as "harmful" and part of "deeply unpopular, inflationary, illegal, and radical practices."

Executive Order 14055, signed by President Biden in November 2021, had been designed to promote economy and efficiency in federal procurement by preventing the displacement of experienced workers during contract transitions. The order built upon President Obama's similar Executive Order 13495 from 2009, which President Trump had previously rescinded in 2019. This pattern represents nearly three decades of political oscillation on nondisplacement requirements, dating back to President Clinton's 1994 order for maintenance workers on public buildings, which President George W. Bush revoked in 2001.

Under the now-rescinded regulations, successor contractors were required to offer employment to qualified service employees from predecessor contracts within at least 10 business days, determine staffing needs independently based on efficiency requirements, and recognize existing unions and collective bargaining agreements. The rule included exceptions for contracts below the simplified acquisition threshold, situations where predecessor employees would continue working for the outgoing contractor, and cases where agencies determined the requirements would not advance procurement interests or would substantially reduce competition.

Notably, the Department of Labor indicated that the Federal Acquisition Regulatory (FAR) Council never incorporated Executive Order 14055's requirements into the Federal Acquisition Regulation before the rescission. Since the executive order specified it would apply only to solicitations issued after FAR implementation, the DOL stated it was "unaware of any solicitations that incorporated the provisions" of either the executive order or the implementing regulations. This means the nondisplacement protections were effectively never enforced despite the rule taking effect on February 12, 2024.

The rescission provides federal contractors significantly more flexibility in workforce decisions during contract transitions. Contractors are no longer required to offer positions to predecessor employees before hiring new workers, recognize existing unions on successor contracts, or comply with the various notice and documentation requirements outlined in 29 CFR Part 9. This change particularly affects contractors bidding on or performing service contracts for facility maintenance, food services, security, administrative support, and other services covered by the Service Contract Act.

Labor organizations and worker advocacy groups have expressed concern that the rescission eliminates job security for skilled federal contractor employees and could enable contractors to use the threat of job loss to discourage union organizing. The Economic Policy Institute noted that "federal contractors can now use the threat of losing a federal contract as a tactic to discourage workers' organizing efforts." In contrast, contractor industry groups had previously opposed the rule, with the Associated Builders and Contractors arguing that it conflicted with the Service Contract Act and that neither the President nor DOL had authority to override the SCA's provisions.

The rescission is part of a broader Trump administration effort to roll back labor protections, including executive orders that stripped collective bargaining rights from approximately one million federal employees at agencies deemed to have "national security" responsibilities. The House of Representatives passed bipartisan legislation in December 2025 to overturn those broader collective bargaining restrictions, though the nondisplacement rescission for contractors remains in effect.

The DOL estimates that up to 442,761 contractors registered in the System for Award Management could be affected by the rescission, though actual regulatory familiarization costs are expected to be minimal since the rule was never implemented in federal contracts. The department calculated approximately $8.01 million in undiscounted regulatory familiarization costs but noted these represent costs avoided rather than savings realized, since contractors never incurred the original compliance costs.

Key Points

Rescission Effective: The DOL rescinded 29 CFR Part 9 effective December 22, 2025, eliminating nondisplacement protections for federal service contract workers
Never Implemented: The FAR Council never incorporated the requirements into federal contracts, so the rule effectively never took effect despite being finalized in December 2023
Political Football: Nondisplacement requirements have been repeatedly instituted and revoked across five presidential administrations since 1994
Contractor Flexibility: Federal contractors now have full discretion in hiring decisions during contract transitions without obligations to predecessor employees
Union Impact: New contractors are no longer required to recognize existing unions or collective bargaining agreements from predecessor contracts
Affected Workers: The rule would have covered service employees on contracts exceeding $250,000 under the Service Contract Act, including facility maintenance, food services, security, and administrative support workers
No Job Security: Skilled federal contractor employees no longer have systematic protections against displacement when contracts change hands
Cost Impact: DOL estimates minimal familiarization costs since the rule was never implemented in practice
Broader Context: The rescission is part of Executive Order 14148, which revoked 78 Biden-era executive orders on January 20, 2025