John C. Fox and Candee ChambersThe OFCCP Week in Review (WIR) is a simple, fast and direct summary of relevant happenings in the OFCCP regulatory environment, authored by experts John C. Fox and Candee Chambers. In today’s WIR, we cover:

  • A federal court in Texas issued a nationwide preliminary injunction stopping public disclosure and disqualification requirements contained in the OMB’s Fair Pay & Safe Workplaces Act Final Rule and the U.S. Department of Labor’s Final “Guidance”
  • The Supreme Court of the United States (SCOTUS) has agreed to hear the Virginia transgender bathroom case next year
  • Thomas M. Dowd named as OFCCP’s Acting Director

Monday, October 24, 2016: A Texas Federal Court Issues a Nationwide Preliminary Injunction Stopping the Public Disclosure and Disqualification Requirements Contained in the OMB’s (Far Council’s) Fair Pay and Safe Workplaces Act Final Rule and the U.S. Department of Labor’s Final “Guidance”

The case is Associated Builders and Contractors of Southeast Texas, et al (Plaintiffs) v. Anne Rung, Administrator, Office of Federal Procurement Policy, Office of Management and Budget, et al. (Defendants).  The case is located in the Eastern District of Texas (in Beaumont, TX.).

Remember the Limits of Coverage of the At-issue Rule/Guidance:

If your company/institution/client has “a” covered federal contract or federal subcontract of ONLY $500,000 OR LESS, your company/institution/client is not covered at any rate so you may skip this WIR article. By “a” contract, we mean that one does NOT aggregate multiple federal contracts to determine whether the value of the contract is in excess of the $500,000 coverage threshold. For example, even ten $400,000 federal contracts your company/institution/client signed all on the same day and even with the same federal agency would NOT trigger jurisdiction under the FPSW Rule/Guidance. That just eliminated 80% of you reading this article…BUT consult legal counsel if you are uncertain how to value a “Blanket Purchase Agreement” (“BPA”), also known colloquially as an “open-ended supply contract,” or if you are uncertain how to value a multi-year BPA, or if you are uncertain you know what a “new” contract means (since only “new” federal contracts greater than $500,000 are covered). Subcontractors should specially check with counsel as to the several other special issues which further limit subcontractor coverage.

What’s a “Preliminary Injunction?”

A “preliminary injunction” (“PI”) is a common tool Federal Rule of Civil Procedure 65 provides to allow a federal court to “enjoin” (i.e. stop) some action from happening for a stated period of time. In the case of this litigation involving the Fair Pay and Safe Workplaces Final Rule (“FPSW”), the “PI” is expected to last until the federal District Court in Beaumont (the trial court) either (a) tries the case to conclusion, or (b) if the United States immediately appeals (as expected) to the United States Court of Appeals for the Fifth Circuit (headquartered in New Orleans) and the Fifth Circuit lifts the PI (presumably only after all litigation involving this issue is concluded AND assuming the United States were to prevail).

What was the Court’s Rationale to Enter the PI?

It is just as many legal pundits have been saying. Pretty simple really: The Congress did not give the President authority to promulgate the public labor law violation disclosure requirements and contract disqualification sanctions. Here is exactly what the court said:

“…the public disclosure and disqualification requirements being imposed on federal contractors and subcontractors are nowhere found in or authorized by the statute on which the Executive Order, FAR Rule, and DOL Guidance relies, the Federal Property and Administrative Services Act (“FPASA”), 40 U.S.C. §§ 101 and 121, known as the Procurement Act. During the course of many decades, neither Congress, nor the FAR Council, nor the DOL has deemed it necessary, practicable, or appropriate for government contracting officers to make 12 responsibility determinations based on alleged violations of private sector labor and employment laws. 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.” In those instances where Congress has decided to permit the suspension or debarment of government contractors, it has done so expressly in a select category of labor laws that apply directly to government contracts, and even then only after final adjudications of alleged violations by the DOL, subject to judicial review, with full protection of contractors’ due process rights. See DBA, SCA, Rehabilitation Act, and VEVRAA. Again, in none of these laws did Congress authorize federal agencies to disqualify government contractors from bidding or performing contracts except under the statutorily specified conditions protecting the contractors’ due process rights.” Memorandum and Order Granting Preliminary Injunction at pages 12-13.

This is a lawsuit questioning whether the President has the power to enact these public reporting and contract disqualification sanctions without Congressional authority to do so.

What has Survived the PI?

What has survived the Texas Court’s PI is that portion of the FPSW Final Rule and Guidance which imposed so-called “Paycheck Transparency” requirements on covered federal contractors. Accordingly, the “Pay Transparency” requirements go into effect (absent any further injunctions or withdrawal of the Final Rule) on January 1, 2017. Remember the “Pay Transparency” requirements both imposed specific pay stub information disclosures to employees “working under the contract” AND required further written notifications to your companys’/institutions’/clients’ use of “Independent Contractors.”

Oh What to Do, What to Do?

FIRST: You will probably do NOTHING now to start rigging corporate systems to report the data needed to bid federal contracts in the future should the Associated Builder’s challenge to the reporting and review/sanctions provisions of the FPSW’s Rule/Guidance ultimately fail. Even on an expedited basis (were that to occur), the litigation will likely stall implementation of the Rule/Guidance for at least two years from now. Here’s what lies ahead, at least:

  1. the parties need time to brief the case to the Fifth Circuit Court of Appeals,
  2. the Court needs time to schedule a hearing and then
  3. write a decision, and then
  4. the losing party will need time to seek “hearing en banc” (before the full bench of the Fifth Circuit and not just a 3-judge panel, if the full Fifth Circuit Bench were to agree…which it likely would do given the importance of this case and the important “power limitation of the Executive Branch” issues on which this case turns), and then
  5. allow that process to either go forward, or not, and then
  6. the losing party before the Fifth Circuit will inevitably seek review to the United States Supreme Court, and then
  7. that process has to run to final,  and then
  8. any resulting remand orders will then have to be addressed…and on and on and on…

SECOND: You will probably be wise to wait to see what happens in the Presidential election on November 8 and even in the Senate races. If Mr. Trump is elected, you can bet he will immediately pull back and WITHDRAW the entire FPSWs Rule/Guidance since it is only an Executive Order of the President and not a statute belonging to the Congress, and the FPSWs Rule/Guidance was/is the number one target of concern to business groups in America. If Mrs. Clinton is elected, but the Democrats do NOT win control of the Senate, the Republicans will continue their current strategy of “throwing sand in the gears of the federal agencies” devised to seek to contain President Obama aggressive federal agency social agenda. Specifically, as to the FPSWs Rule/Guidance, the current House and Senate Appropriations Committees have already refused to provide monies the federal agencies need to implement the reporting and review/sanctions components of the FPSWs Rule/Guidance and the substantial monies the federal contracting agencies say they need to upgrade computer systems to receive the reported data and to hire the hundreds of ALCAs (Agency Labor Compliance Advisors) to make the Rule/Guidance operate in each contracting agency. You can’t drive even a go-cart without gas in the fuel tank. Republicans learned this “kill it through the budget” strategy from Democrat Jimmy Carter who was a master at removing controversial public policy issues from public confrontation and debate by merely choosing to quietly defund or limit the monies to federal programs and agencies he disfavored.

THIRD: If Mrs. Clinton is elected President, regardless of what happens in the Senatorial races, you will undoubtedly want to immediately turn your attention to first understanding and then turning on new payroll and reporting systems to comply with the two new “Pay Transparency” requirements which will become effective January 1, 2017. Again, the Texas PI does NOT stop these Pay Transparency components of the FPSWs Rule/Guidance. Only a President Trump can do that, if elected, and then only on or after January 20, 2017.

Friday, October 28, 2016: SCOTUS Agreed to Hear the Virginia Transgender Bathroom Case Next Year

The case is Gloucester County (Virginia) School Board v. Gavin Grimm, Supreme Court of the United States (SCOTUS) Docket # 16-273.

NOTE: This is not the bathroom case pending in North Carolina the United States has brought against the state’s recent (HB 2) statute requiring those who use state bathrooms use the bathroom associated with the gender identified on their birth certificate. Nor is this the bathroom case involving the challenge of 11 states and 2 school districts in a federal courtroom in Texas to the US Department of Education’s threat to terminate federal grant funding of those state public schools subject to Title IX of the 1964 Civil Rights Act which follow the birth certificate rule. Both of these other bathroom suits have garnered massive publicity which has overshadowed the Virginia case even while it has been percolating through the lower federal courts for a longer period of time than the North Carolina or Texas lawsuits.

The Two Legal Issues the SCOTUS has Agreed to Hear and Decide in the Virginia Bathroom Case are:

  1. “Whether courts should extend deference to an unpublished agency letter that, among other things, does not carry the force of law and was adopted in the context of the very dispute in which deference is sought;” and
  2. “Whether, with or without deference to the agency, the Department of Education’s specific interpretation of Title IX and 34 C.F.R. § 106.33, which provides that a funding recipient providing sex-separated facilities must “generally treat transgender students consistent with their gender identity,” should be given effect.”

The Core Background Facts are:

  • Gavin Grimm is currently a 17 year-old high school senior at Gloucester (public) High School in Gloucester (“GLAU” “STIR”) County, Virginia (near Norfolk, across the York River from Yorktown (yes, the scene of the famous Revolutionary War battle) on a peninsula bordered on the east by the Chesapeake Bay)
  • Gavin Grimm was born a biological female, but currently identifies as a male. Gavin came out to his parents at the end of his freshman year in high school. During the summer after his freshman year, Gavin began conversion therapy, including hormone treatments, began to dress as a male, legally changed his name and began to use the “Boy’s” bathroom during his sophomore year at Gloucester High School. There is no public ‘locker room” or public “shower” access issue in this case.
  • Initially Gavin’s school allowed that use but the Gloucester County School Board soon thereafter intervened and forbade Gavin to do so. Currently Gavin uses a “single-use” bathroom in the high school’s nurse’s office or another single-use bathroom the high school has recently built.

The Court Rulings:

  • The ACLU sued on Gavin’s behalf in federal District Court claiming the School Board unlawfully discriminated against him in violation of either or both Title IX and/or the Equal Protection Clause of the 14th Gavin lost.
  • The United States Court of Appeals for the Fourth Circuit (Richmond, Virginia) reversed and ruled in favor of Gavin Grimm April 19, 2016. “Because we conclude the district court did not accord appropriate deference to the relevant Department of Education regulations, we reverse its dismissal of G.G.’s Title IX claim.”
    • NOTE: Please take special notice of the word “deference” in the Court of Appeals’ decision and in the two legal issues (noted above) the SCOTUS has agreed to decide.
  • On August 3, 2016, so as to maintain the status quo while the SCOTUS was considering whether to hear the case, five Justices of the SCOTUS (including Justice Breyer) issued a stay of the Fourth Circuit’s mandate (technical legal order) which allowed Gavin Grimm to use the restroom reserved for the sex of persons with which he identified (in this case the “Boy’s” bathroom). The stay will remain in effect until SCOTUS decides the case now that SCOTUS has agreed to hear and decide the case. The stay requires that Gavin must return to using the “Girl’s” bathroom or the single-use bathroom at Gloucester High School for the remainder of his senior year there.

The Legal Issues:

  • We should now get rulings on whether:
  • Title IX (at least) protects “gender identity” as a form of “sex” discrimination Title IX makes unlawful (any such decision would be important by analogy to Title VII); and
  • Courts must give so-called “Chevron deference” to federal agency interpretations (like the US Department of Education’s Title IX regulations) of the statutes the agencies prosecute. In 1984, SCOTUS created a two-part legal test in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. causing federal courts to generally accept and apply the interpretations of federal agencies unless their interpretations of the Congressional statutes they were interpreting were clearly wrong:

First, always, is the question whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress. If, however, the court determines Congress has not directly addressed the precise question at issue, the court does not simply impose its own construction on the statute . . . Rather, if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency’s answer is based on a permissible construction of the statute.” Chevron U.S.A. v. NRDC, 467 U.S. 837, 842-43 (1984).

Note: This arcane Administrative Law issue of “deference” to federal agency interpretations (a favorite issue of John Fox), will decide this controversial public policy case involving transgender bathroom access. The deference issue was THE favorite issue of now deceased Justice Antonin Scalia. Justice Scalia had been hankering to bring this very issue to the Court for the last several years of his life since he felt the federal courts were increasingly being handcuffed to defer to and enforce federal agency interpretations straying far from the original Congressional intent and thus placing too much power in the hands of the Executive Branch. See most recently Justice Scalia’s 2015 longing for this issue noted in his concurring opinion in Perez v. Mortgage Bankers. So, Justice Scalia’s wish has now come true.

But, What’s Next?

If the Gloucester School Board case ends in a 4-4 tie, the Fourth Circuit’s injunction stopping the School Board’s “birth certificate” rule will then be the rule of the case since a SCOTUS tie would leave intact the lower court decision (allowing Gavin to use the “Boy’s” bathroom). However, depending on what happens on November 8 in the Presidential election, and which political party controls the Senate after the November 8 Senatorial elections, and what the legal thinking of the 9th Supreme Court Justice to be appointed and confirmed by the Senate might be (and the timing of that confirmation), the odds on the outcome of the Gloucester School Board case are far too complicated for even the bookies in Vegas to currently handicap. As President Obama famously told Republican law makers on the heels of his 2009 election win and setting the White House and The Congress on a constant collision course: “Elections have consequences,” and, in case there was any doubt, “I won.”

Friday, October 28: Thomas M. Dowd, Currently the Deputy Director for the Labor Department’s Office of Federal Contract Compliance Programs (OFCCP), has been Named the Agency’s Acting Director

Tom Dowd, a career DOL employee, will assume the role of OFCCP’s acting director on November 7th upon Pat Shiu’s departure from the agency on November 6th as we reported last week in our WIR.

Dowd has many years of experience within the DOL, including 17 years with the Employment and Training Administration, many of which included leadership positions as career deputy assistant secretary and regional administrator in the mid-Atlantic region. During his role as deputy director of the OFCCP, he also served as acting director of the agency’s division of program operations and division of management and administrative programs since 2011.

The individual appointed as Secretary of Labor by the incoming president will name a permanent Director of the OFCCP sometime during 2017.


THIS COLUMN IS MEANT TO ASSIST IN A GENERAL UNDERSTANDING OF THE CURRENT LAW AND PRACTICE RELATING TO OFCCP. IT IS NOT TO BE REGARDED AS LEGAL ADVICE. COMPANIES OR INDIVIDUALS WITH PARTICULAR QUESTIONS SHOULD SEEK ADVICE OF COUNSEL.

Reminder: If you have specific OFCCP compliance questions and/or concerns or wish to offer suggestions about future topics for the OFCCP Week In Review, please contact your membership representative at (866) 268-6206 (for DirectEmployers Association Members), or email Candee at candee@directemployers.org with your ideas.

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John C. Fox
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