A U.S. District Court Judge in the Eastern District of Texas has ordered a preliminary injunction blocking certain portions of the Fair Pay and Safe Workplaces Final Rule and Guidance (“Final Rule”) from taking effect, as planned, on October 25, 2016. See attached Order, rendered in Associate Builders and Contractors of Southeast Texas, et al. v. Rung, et al., No. 1:16-cv-00425 (E.D. Tex. Oct. 24, 2016). The Order specifically states:
…Defendants are enjoined f[rom] implementing any portion of the FAR Rule or DOL Guidance relating to the new reporting and disclosure requirements regarding labor law violations as described in Executive Order 13673 and implemented in the FAR Rule and DOL Guidance. Further, Defendants are enjoined from enforcing the restriction on arbitration agreements.
The Pay Transparency requirements, which take effect on January 1, 2017, were not enjoined. For our previous communication on the Final Rule, click here.
In its ruling, the court found the plaintiffs, several large construction and security industry groups, demonstrated a likelihood of success on the merits and irreparable harm, warranting injunctive relief on the labor violation disclosure and arbitration provisions.
The construction and security industry groups that filed a lawsuit to block the Fair Pay and Safe Workplaces Executive Order 13673 and related rule argued many things in support of their request for injunctive relief, including that the Final Rule is unconstitutional. Much of the argument considered by the Court centered around how the “labor law violations” to be disclosed consist not only of final adjudications, but of agency letters, citations and notices which, according to the plaintiffs, are based on mere nonadjudicated, unresolved allegations. According to the Court, “The FAR Rule disregards government contractors’ due process rights… by directing contracting officers to consider as potentially disqualifying any violations that have been found by an administrative agency (or court), including those determinations that have not yet been contested in a hearing or judicially reviewed.”
Our team will be tracking this, and will alert you of any changes. In the meantime, if you have questions about this Compliance update, please contact your Relationship Manager or Service Team.