Texas Judge Orders Preliminary Injunction Blocking Blacklisting Rule

Submitted by Firm:
Cross, Gunter, Witherspoon & Galchus, P.C.
Firm Contacts:
Abtin Mehdizadegan, J. Bruce Cross, Misty Wilson Borkowski
Article Type:
Legal Update

A Texas judge issued a nationwide preliminary injunction late Monday night blocking the new Fair Pay and Safe Workplaces final rule - also known as the "blacklisting" rule. The new regulations were set to take effect Tuesday, October 25. Judge Marcia A. Crone wrote in the court order that the business groups who sued over the regulations "properly demonstrated immediate and ongoing injury to their members if the rule is allowed to take effect."

Judge Crone also said the regulations "appear to conflict directly with every one of the labor laws they purport to invoke by permitting disqualification based solely upon 'administrative merits determinations' that are nothing more than allegations of fault asserted by agency employees and do not constitute final agency findings of any violation at all."

The new regulations would require companies bidding for a federal contract worth at least $500,000 to disclose any labor law violations committed in the past three years.

Even though the court halted implementation of the reporting requirements, the paycheck fairness provisions, which require contractors to include information regarding overtime pay and exempt status with each paycheck and to provide certain notices to independent contractors, have not been enjoined and are still scheduled to go into effect in connection with solicitations or contract amendments made on or after January 1, 2017.

Employers should continue planning for potential compliance in the event the rule is amended or appealed. Companies should keep in mind that the rule might eventually be enacted when deciding how to handle pending or threatened litigation or other compliance issues.