On October 24, 2016, U.S. District Court Judge Marcia Crone of the Eastern District of Texas granted a nationwide preliminary injunction enjoining implementation of the Fair Pay and Safe Workplaces regulations. In addition to enjoining implementation of the reporting obligations, the court also enjoined enforcement of the pre-dispute arbitration ban on Title VII claims.
The court granted a preliminary injunction finding that the reporting provisions appeared to:
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exceed the statutory authority under the Procurement Act and other laws;
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require “compelled speech” and, on that basis, violate the First Amendment;
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violate federal contractors’ due process rights; and
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violate the Administrative Procedures Act because they are arbitrary and capricious.
The court also determined that the arbitration ban appeared to violate the Federal Arbitration Act, which generally requires that courts enforce agreements to arbitrate.
The injunction is on a nationwide basis and there will be more proceedings before the court renders a final decision. The government has not commented but we expect that the government will follow a path similar to how the Department of Labor has proceeded after receiving a similar unfavorable preliminary injunction on the persuader rule. In that matter, the preliminary injunction was issued on June 27, 2016 and the court has not scheduled the permanent injunction hearing. In the meantime, DOL has been honoring the nationwide injunction and has not taken any actions to seek compliance or enforce the persuader rule. Similarly, we expect that DOL will not take further actions on the FPSW regulations and it may be some time before the matter winds its way through the judicial system.
