This is an update to the Alert that we issued on September 15, 2016, regarding the issuance of the final rules that would generally require federal contractors to disclose certain labor law violations and worker wage information.
Late on October 24, 2016, the United States District Court for the Eastern District of Texas issued a nationwide injunction preliminarily blocking several aspects of Executive Order 13673, also known as the Fair Pay and Safe Workplaces Executive Order, and its corresponding regulations (collectively, the “Executive Order”). The Executive Order requires federal contractors and subcontractors to disclose violations of enumerated labor laws, provide workers with certain paycheck information, and prohibit certain pre-dispute arbitration agreements. As we previously reported, the Executive Order’s provisions regarding disclosure of labor law violations were set to become effective on October 25, 2016.
Pursuant to the injunction, however, the federal government is temporarily prohibited from enforcing the Executive Order’s labor law violation disclosure requirements and restrictions on the availability of arbitration. While the injunction appears to be a victory for industry participants, current and prospective contractors would be wise to continue their preparation efforts to comply with all aspects of the Executive Order, given that the injunction is only a temporary block. Whether the injunction will ultimately become permanent depends on a number of variables, including the potential for an appeal or other external agency action.
Contractors should also resist the urge to suspend compliance efforts, because the injunction does not prohibit the enforcement of the paycheck transparency provisions of the Executive Order. Under these provisions, certain federal contracts must include language requiring federal contractors to disclose employment status and certain pay information to workers. Because the paycheck transparency provisions fall outside the scope of the injunction, they are still set to become effective on January 1, 2017.
The injunction comes just two weeks after the Associated Builders and Contractors, Inc., the Associated Builders and Contractors of Southeast Texas, and the National Association of Security Companies first petitioned the Court for relief from the Executive Order. The action names the Secretary of Defense, along with administrators for the Office of Federal Procurement Policy, Office of Management and Budget, U.S. General Services Administration, National Aeronautics and Space Administration, and the Department of Labor as defendants.