Judge Grants Preliminary Injunction Blocking Implementation of Fair Pay and Safe Workplaces Rule

On October 24, 2016, Judge Marcia A. Crone issued a
nationwide preliminary
in Associated Builders and
Contractors of Southeast Texas v. Rung
(E.D. Texas, No 1:16-CV-425) blocking
the implementation of the Fair Pay and Safe Workplaces final rule. Specifically,
the injunction blocks the implementation of the rule’s requirements that contractors
self-disclose labor law “violations” and that they eliminate provisions in
their arbitration agreements restricting lawsuits for Title VII or sexual
assault allegations. The injunction does not, however, affect the Executive
Order’s “paycheck transparency” requirements, which will take effect on January
1, 2017.

For federal contractors, the injunction was granted in the
nick of time-just one day before the self-disclosure and arbitration
requirements were scheduled to take effect.

The preliminary injunction will last until a final decision
is reached in the case, although the government will likely ask the judge to
reconsider her decision and ultimately appeal to the federal Court of Appeals
for the Fifth Circuit and possibly the U.S. Supreme Court. If the injunction is
upheld, it remains to be seen whether the government will attempt to revise and
significantly reduce the rule to address the legal and constitutional shortcomings
identified in the court’s ruling.

Finding that the plaintiff contractors demonstrated both a
“substantial likelihood of success on the merits of their case” and risk of irreparable
injury, the court heaped derision on the Executive Order, final rule, and DOL
guidance as having:

  • Imposed “complex, cumbersome, and costly
    requirements . . . which hamper efficiency without quantifiable benefits;”
  • Violated contractors’ First Amendment rights by
    forcing them to “publicly condemn” themselves for allegations that may
    ultimately have no merit;
  • Violated contractors’ due process rights by
    forcing them to report and defend against non-final agency allegations without
    a hearing; and
  • Violated the Federal Arbitration Act.

The court repudiated the new class of reportable
“administrative merits determinations” as “nothing more than allegations of
fault asserted by agency employees and [which] do not constitute final agency
findings of any violation at all.”

The court’s injunction is the latest by a Texas federal district
court barring the implementation of a controversial labor regulation. In June,
the Northern District of Texas blocked the DOL’s “persuader rule.” A challenge
to the DOL’s new overtime regulations is currently pending in the Eastern
District of Texas.

If you have any further questions, please contact your FortneyScott attorney, or e-mail us at info@fortneyscott.com