Benchslap for Blacklisting Rule

By John Alan Doran

Yesterday a federal court put a temporary hold on the Obama Administration’s so-called Blacklisting Rule. Associated Builders v. Rung. In a previous blog we described in detail the Administration’s Executive Order and proposed rules. The Rule created onerous reporting requirements, imposed punishment including debarment on alleged violators, and prohibited pre-dispute arbitration agreements for federal contractors.

In this case, the court found that the employer association had shown a substantial likelihood of success on the merits because: (a) Congress chose not to debar employers from federal contracts for violations of the NLRA, anti-discrimination laws, and related federal employment statutes, and the Blacklisting Rule explicitly conflicts with these remedial schemes. (b) The Rule likely violates the First Amendment by forcing contractors to “publicly condemn” themselves by admitting to violations that are only alleged by the NLRB, the EEOC or other agencies. (c) Citing cases where, after years of litigation, the courts have found the agencies’ accusations completely unfounded, the court also noted that punishing contractors simply because they are the subject of NLRB or DOL proceedings violates basic notions of due process.  (d) As icing on the cake, the court held that the Rule is arbitrary and capricious, and violates the Federal Arbitration Act. The court did not enjoin, however, the so-called “pay transparency” provision of the Rule, which requires contractors to give employees certain information related to pay.

With one minor exception, this court has issued an epic benchslap to the Administration and its attempts to enact legislation without going through Congress. This is a repeating theme with respect to this Administration’s view of Executive Power, and the courts’ decided disagreement with that view.