Hunton Employment & Labor Perspectives

As previously discussed in a prior blog, ABM Industry Groups (“ABM”) previously filed a lawsuit challenging the constitutionality of OFCCP’s civil enforcement processes. On October 30, 2024, Judge Sim Lake of the U.S. District Court for the Southern District of Texas issued a preliminary injunction, halting the Office of Federal Contract Compliance Programs (“OFCCP”) from proceeding with its administrative action against ABM Industry Groups.

The lawsuit challenged the OFCCP’s administrative action against ABM in which OFCCP claimed that ABM breached its contract with the federal government by allegedly discriminating against White and Black applicants for cleaning jobs. In its lawsuit against the OFCCP, ABM argued that the OFCCP administrative proceeding violated its Seventh Amendment right to a jury trial, and that the two layers of good-cause removal restrictions preventing removal of Department of Labor Administrative Law Judges (“DOL ALJs”) violated Article II of the Constitution.

In granting the preliminary injunction, the Court focused solely on the Article II removal restriction argument. Relying on the Fifth Circuit’s decision in Securities and Exchange Commission v. Jarkesy, the Court determined that DOL ALJs are “Officers of the United States” that cannot be insulated by two layers of good-cause removal protections. Further, the Court determined that being subject to a proceeding before an improperly insulated DOL ALJ is a legal harm “separate from any substantive action” taken by that ALJ. For these reasons, Judge Lake found that ABM had a likelihood of success on the merits of its Article II claim and, therefore, granted ABM’s request for a preliminary injunction.

This decision could alter the landscape of future OFCCP compliance actions by altering the status of DOL ALJs. Because the Seventh Amendment argument has yet to be decided in the ABM case, federal contractors should continue to follow the case. Contractors should discuss these developments with counsel to evaluate their positions in any ongoing or upcoming audits.