On October 24, 2016, the U.S. District Court, Eastern District of Texas preliminarily enjoined the majority of the Department of Labor’s Final Rule implementing President Barack Obama’s Executive Order 13673 that imposed reporting requirements of specified labor law violations on federal government contractors and subcontractors.

The Executive Order provided that contractors and subcontractors for federal contracts with an estimated value exceeding $500,000 must report any labor law violations during the preceding three years of fourteen federal labor law statutes, executive orders or equivalent State laws.  On August 25, 2016, the Department of Labor issued its Final Rule implementing the Executive Order.

The challengers to the Final Rule alleged that the Final Rule, among other things, exceeded the Department of Labor’s Authority, was preempted by other federal labor laws, violated the First Amendment, violated contractors’ due process rights, and was arbitrary and capricious.  The District Court agreed that the plaintiffs were likely to succeed on the merits and issued a preliminary nationwide injunction regarding the Final Rule’s reporting requirements.  However, the District Court upheld the Final Rule’s paycheck transparency requirement.

While a temporary reprieve for federal contractors, we will continue to monitor future legal developments due to the preliminary nature of the injunction.

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