Court Blocks New Contractor Accountability Rules

Federal contractors with serious, repeated, willful, or pervasive violations of worker safety and fair treatment laws can breathe a sigh of relief.

On Monday, a federal judge in Texas issued a preliminary injunction blocking President Obama from implementing most of his Fair Pay and Safe Workplaces executive order (which includes new regulations and guidance from the Department of Labor).

The 2014 executive order, which was supposed to go into effect on Tuesday, requires companies bidding on federal contracts to disclose violations of federal and state labor laws from the previous three years. Agencies would evaluate this information as part of the mandatory pre-award screening called a responsibility determination, and information about violations would be publicly posted on the Federal Awardee Performance and Integrity Information System (FAPIIS) website. The executive order also prohibits contractors from forcing employees to submit discrimination and sexual assault and harassment claims to arbitration, and requires contractors to provide employees with the information they need to verify the accuracy of their paychecks.

Judge Marcia Crone temporarily enjoined implementation of the violation disclosure and arbitration provisions, finding they would harm the statutory and constitutional rights of companies seeking to do business with the federal government. The fact that federal law authorizes the executive branch to provide “overall direction” and stewardship of procurement policies and to “promote economy, efficiency, and effectiveness in the procurement of property and services” did not factor into her ruling.

Judge Crone declined to enjoin enforcement of the paycheck transparency provision, which will go into effect in January next year. Further legal proceedings will determine whether the ban on implementation should be permanent. The White House immediately issued a memorandum instructing the agencies to comply with the injunction.

We are disappointed with this turn of events, but not surprised. As we recently blogged, opposition to the executive order has been especially fierce. Industry groups picked a business-friendly court to hear their challenge. At the same time, their allies in Congress are doing all they can to nullify or weaken the regulations, denying funds for implementation and carving out exemptions for Defense Department and other agency contractors.

In the meantime, some 28 million federal contract workers will soon have a better shot at “fair pay,” even though their guarantee of “safe workplaces” is currently on hold. It might not seem like much, but in light of other recent contracting reforms implemented through executive order—such as protection from sexual orientation discrimination and paid sick leave—it is at least another step in the right direction.