BEAUMONT – Associated Builders and Contractors of Southeast Texas, Associated Builders and Contractors, Inc. and National Association of Security Companies won a preliminary injunction against portions of a presidential executive order that requires federal contracting officers to determine whether labor and employment law violations should keep contractors from winning government contracts.
The plaintiffs filed a complaint and request for injunction against the heads of several government offices in the U.S. District Court for the Eastern District of Texas.
The plaintiffs said the executive order was issued by President Barack Obama on July 31, 2014 and amended on Aug. 23, 2016.
The order will be enforced by the Federal Acquisition Regulatory (FAR) Council and the United States Department of Labor (DOL) under FAR’s “Federal Acquisition Regulation, Fair Pay and Safe Workplaces” rule and the DOL’s “Guidance for Executive Order 13673, ‘Fair Pay and Safe Workplaces,’” which were scheduled to take effect on Oct. 23.
The court issued a preliminary injunction against the executive order, the FAR rule and the DOL guidance on Oct. 24.
Specifically, the court said the injunction covers the parts of the order, FAR rule and DOL guidance that impose new reporting requirements regarding labor law violations on government contractors and subcontractors and that prohibit specified pre-dispute arbitration agreements and torts based on sexual assault or harassment.
“The executive order, FAR rule and DOL guidance are unprecedented in their exercise of executive authority over matters previously controlled by Congress,” the complaint said.
Specifically, the plaintiffs said the order, FAR rule and DOL guidance force prospective and existing contractors to publicly disclose and declare whether they have been found to have violated any of 14 federal labor or employment laws, “even though such violations have not been finally adjudicated by any court and even if the claimed violations are still being contested or have been settled without a hearing and without any finding of an actual violation of any law.”
Based on these disclosures, the plaintiffs said the order, rule and guidance will require federal contracting officers for the first time to determine whether the alleged violations should disqualify contractors from being awarded or continuing to perform government contracts.
“A cumbersome and burdensome new regulatory regime is being created to implement this misguided executive policy, which again exceeds the executive’s authority and violates the rights of government contractors, at considerable cost and with no benefits to taxpayers,” according to the complaint.
The plaintiffs alleged that the order, rule and guidance are illegal and must be vacated, and that they violate the First Amendment to the U.S. Constitution by compelling speech related to controversial matters on the part of government contractors.
Also, the complaint alleges that the new regulatory regime further violates the due process rights of government contractors by exposing them to disqualification from government contracts without a hearing for alleged violations, “contrary to the intent of Congress and in an arbitrary and capricious manner.”
Finally, the plaintiffs allege the executive order and FAR rule prohibit government contractors from entering into legal arbitration agreements with their employees and “impose arbitrary and burdensome paycheck transparency requirements on government contractors, again without statutory authorization.”
The court ruled that the plaintiffs did not prove a likelihood of success in connection with the paycheck transparency requirements, so that part of the order, rule and guidance are not covered by the injunction.