Texas Lawsuit Challenges Constitutionality of “Fair Pay and Safe Workplaces” Regulations
On October 7, 2016, trade groups filed a lawsuit in federal court to block implementation of the “Fair Pay and Safe Workplaces” regulations. The Associated Builders and Contractors and the National Association of Security Corporations sued on behalf of their government contract members in the United States District Court for the Eastern District of Texas, listing six counts challenging the constitutionality of the Fair Pay and Safe Workplaces rules and seeking injunctive and declaratory relief to prevent implementation of the regulations. The trade groups allege that the Fair Pay and Safe Workplaces regulations: (i) exceed government procurement authority; (ii) infringe on contractors’ due process rights; (iii) violate the Federal Arbitration Act and other laws by prohibiting contractors from entering into otherwise lawful arbitration agreements with employees; (iv) coerce speech in violation of the First Amendment; (v) are preempted by federal labor and employment laws; and (vi) are “arbitrary and capricious” under the Administrative Procedures Act.
The Fair Pay and Safe Workplaces rules require federal contractors and subcontractors to publicly disclose violations under fourteen federal labor and employment laws, and state-law equivalents, when applying for contracts. Reportable violations include administrative merits determinations, civil judgements, and arbitral awards or decisions. The reporting obligations include various types of administrative determinations which may not have reached final decisions. In this respect, the proposed rule may implicate contractors’ due process rights, by allowing contracting officers to make decisions based on alleged violations which have not yet been fully adjudicated. The regulations establish penalties for serious labor violations, including termination of existing contracts, rejection of contract options, implementation of new compliance agreements, or referral to agency officials for suspension or debarment. The Final Rule implementing the Fair Pay and Safe Workplaces regulations was released in August and goes into effect on October 25, 2016, beginning with prime contracts valued at $50 million or more.
By Kristin Tisdelle - Associate at Smith Pachter McWhorter PLC
Associated Builders & Contractors of S.E. Texas v. Rung, E.D. Tex., No. 1:16-cv-00425:
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