On October 30, 2024, the District Court for the Southern District of Texas preliminarily enjoined the Department of Labor (“DOL”), the Secretary of Labor, the Office of Federal Contract Compliance Programs (“OFCCP”), and the presiding Administrative Law Judge (“ALJ”) from proceeding with an administrative case against ABM Industry Groups, LLC.  In issuing its ruling, the court found the plaintiff contractor had a substantial likelihood of success on the merits on its claim that OFCCP’s administrative enforcement proceeding system violates Article II of the United States Constitution.

The ruling comes in a case filed on September 9, 2024, challenging OFCCP’s administrative enforcement proceeding system as unconstitutional, alleging that it (i) violates the contractor’s jury trial rights under the Seventh Amendment, and (ii) violates Article II by “unconstitutionally protect[ing]” ALJs with “two layers of good-cause removal restrictions.”

The OFCCP had initiated administrative enforcement proceedings against the plaintiff contractor.  The plaintiff contractor promptly filed a motion to preliminarily enjoin the administrative proceedings against it on the constitutional grounds raised in its complaint.  The motion relied upon the Supreme Court’s recent decision in SEC v. Jarkesy, a case in which the Supreme Court held that under the Seventh Amendment right to a jury trial, the Securities and Exchange Commission (“SEC”) cannot seek enforcement of civil penalties before an ALJ but must instead file enforcement actions in federal court.

In issuing the preliminary injunction, the court ruled (in part) that “Plaintiff is likely to succeed on the merits of its claim that DOL ALJ Fort is unconstitutionally protected by two layers of good-cause removal restrictions,” reasoning that DOL ALJs “exercise the same executive functions as SEC ALJs”  at issue in SEC v. Jarkesy. The Court’s ruling was based on the fact that DOL ALJs can only be removed for “good cause” by the Merit Systems Protection Board, whose members themselves may only be removed by the President for “good cause.” The court reasoned that this two-layer system of for-cause removal unconstitutionally insulates DOL ALJs from removal by the President.

We will continue to monitor this case and report any developments here.