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Oles Morrison

Implementation of the Fair Pay and Safe Workplaces Final Rule Temporarily Halted by a Federal Court

By on October 26, 2016 | Posted in Labor

logo-titleStarting October 25th many new federal government contract solicitations were to contain the clauses required under the Fair Pay and Safe Workplaces Final Rule based on the Executive Order put in place by the Obama administration.  These clauses would impose significant new compliance and reporting obligations on federal contractors (and eventually on subcontractors). The stated goal is to ensure that companies contracting with the Federal Government understand and comply with labor laws.

However, contractors can breathe a bit easier (for now). On October 24th, the U.S. District Court for the Eastern District of Texas granted a preliminary injunction temporarily stopping the majority of the final rule from going in to effect. In accordance with the preliminary injunction, federal contractors will not be required, at this time, to report labor law violations with their bids and proposals on federal contract solicitations. The court also enjoined the government from enforcing the requirement regarding contractor arbitration agreements with employees covering disputes arising out of Title VII of the Civil Rights Act or from torts related to sexual assault or harassment. The court did not bar implementation of the paycheck transparency requirement scheduled to take effect on January 1, 2017.

The reporting requirements in the final rule have been described as having the potential of “blacklisting” companies from award of government contracts due to the many burdens imposed by compliance with the 14 applicable labor laws. These burdens are the reason for the pending litigation in Texas.  Since the final rule is now in litigation, government contractors may be able to put off preparations for compliance if the injunction remains in place, and therefore should closely monitor this case to see if the injunction is lifted while the litigation proceeds.  However, contractors should not assume that the this injunction will remain in place forever.  While this case is pending, it would be wise for contractors to proactively review labor law violations that have had in the past year in order to be prepared in the event the injunction is lifted.  Most importantly, contractors have to consider whether any violations are “willful,” “serious,” “pervasive” or “repeated.”  Contractors need to identify any such violations early so that they may provide evidence of mitigating factors and remedial actions the company has taken since the violation.