United States: Federal Court Temporarily Enjoins Parts Of The Fair Pay And Safe Workplaces Executive Order

Key points

  • A federal district court in Texas issued a preliminary injunction blocking implementation of the labor law disclosure requirements and restrictions on certain predispute arbitration agreements under the Fair Pay and Safe Workplaces Executive Order, but it did not enjoin the new pay notification requirements under the Order.
  • Contractors should prepare for the pay notification requirements that go into effect on January 1, 2017, and determine whether to place on hold their compliance efforts for the other parts of the Order pending the outcome of further court proceedings on the preliminary injunction.

On October 24, 2016, a federal judge in the U.S. District Court for the Eastern District of Texas blocked certain parts of the Fair Pay and Safe Workplaces Executive Order, as well as the Final Rule and Guidance implementing the Order (collectively, the "Order") from taking effect. As we previously reported, the Order, which was slated to take effect on October 25, 2016, requires federal contractors and subcontractors to disclose various labor law violations to the government for contracting officers and the newly created agency labor compliance advisors to assess before awarding contracts. The Order also prohibits certain contractors from utilizing predispute arbitration agreements covering Title VII claims and tort claims for sexual harassment/assault, and it mandates new pay notice requirements.

In response to a lawsuit by industry groups, the court granted a preliminary injunction blocking implementation of the labor law disclosure requirements and arbitration restrictions under the Order, holding that those provisions likely exceeded executive authority and directly conflicted with other federal laws. The court, however, left untouched the new pay notification requirements, holding that there was no showing of irreparable harm from those obligations.

The preliminary injunction order is not a final decision. The government can (and likely will) take an interlocutory appeal of that order to the U.S. Court of Appeals for the Fifth Circuit. If that occurs, the district court has discretion to stay the underlying lawsuit pending appellate review. In either case, the preliminary injunction will remain in place until it is modified or vacated. In the meantime, contractors will have to prepare for the pay notification requirements and determine whether to continue their efforts to plan for compliance with the other parts of the Order.

Background

On October 7, 2016, the Associated Builders and Contractors and the National Association of Security Companies filed a lawsuit challenging the Order in the U.S. District Court for the Eastern District of Texas. The groups sought a preliminary injunction preventing implementation of the Order, a declaratory judgment declaring the Order invalid and a decision vacating the Order. The groups argued, among other claims, that (1) the Order exceeded the executive branch's authority and was pre-empted by federal labor law; (2) the Order unconstitutionally infringed on contractors' First Amendment rights by compelling them to publicly disclose labor violations, including administrative merits determinations, without a due process hearing or final adjudication; (3) the Order violated contractors' due process rights by requiring them to report and defend alleged labor violations without a hearing or being able to contest them; and (4) the arbitration restrictions violated the Federal Arbitration Act. On October 21, 2016, District Judge Marcia Crone held a hearing on the plaintiffs' motion for preliminary injunction.

Decision

The court found that the contractor industry groups had shown that they were entitled to a preliminary injunction temporarily blocking implementation of the labor law disclosure requirements and arbitration restrictions. First, the court found that the executive branch exceeded its authority because Congress had not authorized it to "disqualify government contractors from bidding or performing contracts except under statutorily specified conditions" that were not present here. The court reasoned that by requiring contractors to publicly disclose "mere allegations of labor law violations" and then use that information to disqualify them or require them to enter "premature labor compliance agreements," the executive branch had "departed from Congress's explicit instructions dictating how violations of labor law statutes are to be addressed." The court also found that the Order conflicted with labor law protections already in place, including those under the National Labor Relations Act and "labor laws that already specify debarment procedures" (e.g., the Service Contract Act and Executive Order 11246).

Second, noting the Order's mandate to publicly disclose details of non-final decisions that are subject to appeal, the court found the plaintiffs had a substantial likelihood of success for showing that the Order compelled contractors to "engage in public speech on matters of considerable controversy adversely affecting their public reputations and thereby infringing on the contractors' rights under the First Amendment." In support of its conclusion, the court found that there was no evidence that "disclosure of non-final determinations demonstrate[d] any likelihood of poor performance on government contracts."

Third, the court stated that the Order violated contractors' due process rights by requiring them to report "non-final agency allegations of labor law violations without being entitled to a hearing at which to contest such allegations." This lack of due process, according to the court, could damage a contractor's "business and reputation" based on a decision that may later be rejected. Finally, the court found that the prohibition on predispute arbitration agreements of Title VII and sexual assault/harassment claims violated the Federal Arbitration Act because, unlike similar prohibitions for defense contractors under the Franken Amendment, there was an "absence of any congressional command that would override the requirement that arbitration agreements be enforced in accordance with their terms."

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions