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Blacklisting Regulation Enjoined

On October 24, hours before the Fair Pay and Safe Workplaces rule (the blacklisting rule) was set to take effect, a federal judge in the Eastern District of Texas granted a preliminary injunction to halt most of the provisions of the rule from going into effect. The Associated Builders and Contractors Southeast Texas Chapter and other associations, who challenge the rule in court, sought the injunction. The one provision that the court left in place was the pay transparency requirement, which will go into effect January 1, 2017.

The rule, which implements a presidential Executive Order and was slated to take effect on October 25 for contracts of $50 million or more and in April 2017 for contracts of $500,000 or more, requires prospective federal contractors and subcontractors to disclose violations of 14 federal labor and employment laws (and their state equivalents) for the last three years in order to be considered for new contracts. The lawsuit alleged that the rule violates the First Amendment, is inconsistent with the 14 federal labor laws listed, and violates the due process rights of contractors.

Judge Marcia A. Crone wrote that the plaintiff “properly demonstrated immediate and ongoing injury to their members if the rule is allowed to take effect,” adding that the public disclosure and disqualification requirements of the rule “are nowhere found in or authorized by the statute” that they are based on. In addition, she said that the rule “appear[s] to conflict directly with every one of the labor laws they purport to invoke by permitting disqualification based solely upon ‘administrative merits determinations’ that are nothing more than allegations of fault asserted by agency employees and do not constitute final agency findings of any violation at all.”

On October 11, CUPA-HR hosted a webinar presented by Maury Baskin, Shareholder at Littler Mendelson P.C. and lead attorney in the lawsuit, to inform members of their responsibilities under the new rule and to help them prepare for the October 25 effective date. Although most of the provisions of the rule are on hold for now, it is likely the government will appeal the judge’s decision. It remains unclear as to whether the Trump administration would revoke the rule and underlying Executive Order.

We will be following this case closely and will be sure to update members if the current situation changes. For now, the paycheck transparency requirements — which require contractors to provide notice to all workers, not just employees, on hours worked, overtime hours, rate of pay, gross pay and itemized additions to or deductions from gross pay on a weekly basis (even if the workers are paid biweekly or semimonthly) — will take effect January 1.

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