The court preliminarily blocks the Fair Pay and Safe Workplaces’ (FPSW’s) disclosure requirements and arbitration restrictions, providing some relief for federal contractors.
On October 24, the US District Court for the Eastern District of Texas preliminarily enjoined several onerous and controversial aspects of Executive Order 13673, Fair Pay and Safe Workplaces (the Order). The injunction applies nationwide. The enjoined Order and the related Federal Acquisition Regulatory Council final rule (FAR Rule) and the US Department of Labor final guidance (DOL Guidance) collectively have three primary components, which impose extensive and burdensome requirements on covered federal contractors:
Our prior LawFlash regarding the Order, FAR Rule, and DOL Guidance discusses these components in detail.
View our checklist that summarizes the substance, scope, effective date, and status of these components.
The court’s injunction indefinitely blocks the reporting obligations and arbitration prohibition but leaves in place the paycheck transparency requirements. The reporting obligations were scheduled to take effect October 25, 2016, for new contracts valued at $50 million or more, with later effective dates for smaller contracts and subcontracts. The arbitration prohibition was also scheduled to take effect on October 25, 2016. The paycheck transparency requirements, which remain in place, take effect January 1, 2017.
The lawsuit, brought by certain state and national trade associations, contends (among other arguments) that
Ruling in the plaintiffs’ favor, the court concluded that they were likely to prevail on each of these five arguments.
At this stage, the injunction is temporary, with no fixed end date. Additional litigation is expected, particularly briefing and a hearing regarding whether to permanently block the reporting obligations and arbitration prohibition, which the court has not yet scheduled. A permanent injunction decision is not likely for many months, if not years, down the road. Government appeals are also expected.
Federal contractors should monitor this matter as it makes its way through the courts. Although the reporting obligations and arbitration prohibition may still take effect at some point in the future, federal contractors have a reprieve and may preserve some compliance resources for now. Federal contractors should, however, review any future solicitations to ensure that they do not include the reporting obligations and arbitration prohibition clauses and object to any solicitations that contain these clauses while the injunction is in effect. In addition, federal contractors should continue to monitor contracts for Defense Federal Acquisition Regulation Supplement Clause 252.222-7006, Restrictions on the Use of Mandatory Arbitration Agreements, which implements the Franken Amendment and independently imposes the prohibition on predispute arbitration agreements on US Department of Defense contractors through contracts in excess of $1 million for other than commercial items.
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:
 Read the court’s decision as well as the US Office of Federal Procurement Policy’s memorandum informing federal agencies of the court’s decision and the injunction.
 The Order also requires reporting regarding a 15th category of violations—violations of state law equivalents of the 14 federal labor laws. The only state law equivalents implemented in the FAR Rule and DOL Guidance are Occupational Safety and Health Administration–approved state plans.