Texas courts continue to be the focus of anti-regulation filings as the next election approaches. In August, a U.S. District Court for the Northern District of Texas issued a nationwide injunction barring the enforcement of Department of Education guidance requiring schools to allow transgender students to use bathroom and changing facilities consistent with their gender identity. In September, 21 states and the U.S. Chamber of Commerce filed two lawsuits in the U.S. District Court for the Eastern District of Texas to enjoin the implementation of the new Department of Labor rules on overtime compensation and classification practices under the Fair Labor Standards Act.

Keeping pace in October, hours before the Fair Pay and Safe Workplaces rule was set to take effect last week, the Eastern District issued a preliminary injunction halting its enforcement. The rule, promulgated through a 2014 Executive Order, would require government contractors and subcontractors to disclose mere allegations of labor law violations, including alleged violations before the NLRB, EEOC, OSHA and the OFCCP, when bidding for contracts over certain dollar amounts, with a goal toward disqualifying contractors or requiring that they enter into premature labor compliance agreements in order to obtain or retain federal contracts.

The nationwide injunction—issued by Judge Marcia A. Crone—resulted from a complaint and emergency motion for a temporary restraining order and preliminary injunction filed by three national and local trade associations representing construction industry employers. Judge Crone found that the Executive Branch exceeded its rule making authority in enacting the rule, focusing primarily on the potential disqualification of federal contractors for alleged (rather than proven) violations of federal labor laws. To that issue, Judge Crone wrote:

In a majority of the labor laws cited in the Executive Order (specifically NLRA, FLSA, OSHA, Title VII, ADEA, and ADA), Congress spelled out in precise detail what agency or court would be empowered to find a violation, how such a finding would be determined, and what the penalty or remedy would be. None of these laws provides for debarment or disqualification of contractors for violations of their provisions; none of them provides for such determinations to be made by unqualified agency contracting officers (or ALCAs); and certainly none of these laws provides for any such action to occur based on non-final, unadjudicated, “administrative merits determinations.”

Judge Crone also found merit in the trade associations’ argument that the disclosure requirements will cause contract bidders to “suffer an infringement of their First Amendment rights in the form of ‘compelled speech.’”

While Judge Crone’s decision provides the beginning of what may become a reprieve for federal contractors, an appeal to the Fifth Circuit Court of Appeals is certain. In addition, the injunction does not relieve federal contractors from the requirement to provide wage statements and notice of independent contractor status, a portion of the rule that is now scheduled to go into effect on January 1, 2017.