The U.S. Department of Labor announced it has made technical changes to the National Labor Relations Act ("NLRA") rights poster that federal contractors and subcontractors are required to display under Executive Order 13496, “Notification of Employee Rights Under Federal Labor Law.”
On March 30, 2018, the Office of Federal Contract Compliance Programs ("OFCCP") announced the new national hiring benchmark for protected veterans under the Vietnam Era Veterans' Readjustment Assistance Act ("VEVRAA"). The new hiring benchmark is effective March 31, 2018, and lowers the benchmark to 6.4% from the previous benchmark of 6.7%. The hiring benchmark is the percentage of total hires who are protected veterans that a federal contractor should seek to hire during the year.
The revised Regulations of Section 503 of the Rehabilitation Act (which became effective in March 2014) required Federal contractors and subcontractors to invite applicants and employees to self-identify their disability status using an Office of Federal Contract Compliance (OFCCP) prescribed form: (1) at the pre-offer stage of the application process, (2) post-offer after an applicant is offered a position but prior to starting work, and (3) by survey of the workforce every 5 years. The required OFCCP Form is Form CC-305; this form cannot be altered or changed. The original Form CC-305 approved by the Office of Management and Budget (OMB ) expired on 1/31/2017. The OFCCP recently published a notice that the OMB has approved a new Form for another three years. No change was made to the Form except the expiration date. Effective immediately, Federal contractors and subcontractors must either download the renewed form(s) or update their electronic version(s) of the Form to reflect the new expiration date of 1/31/2020. The Form is available in multiple formats and languages and can be obtained from the OFCCP’s website here.
On September 29, the U.S. Department of Labor announced the issuance of its final rule implementing Executive Order 13706, which requires certain Federal contractors to provide at least 56 hours of paid sick leave per year to all employees (both hourly and salaried employees) working on Federal contracts. The final rule was published in the Federal Register on September 30 and applies to new or replacement contracts that result from solicitations issued on or after January 1, 2017 (or are awarded outside the solicitation process on or after January 1, 2017).
Coverage under the final rule is nearly identical to regulations for Executive Order 13658, which requires payment of a higher minimum wage to employees of certain Federal contractors. Coverage applies to four types of contracts (including subcontracts):
Procurement contracts for construction covered by the Davis-Bacon Act (DBA);
Service contracts covered by the McNamara-O’Hara Service Contract Act (SCA);
Concessions contracts, including any concessions contracts excluded from the SCA; and
Contracts in connection with Federal property or lands and related to offering of services for Federal employees, their dependents, or the general public.
As stated in a prior blog post, paid sick leave may be used for employees' own healthcare, care of family members or loved ones, and for purposes resulting from being a victim of domestic violence, sexual assault, stalking, or to assist a family member or loved one who is such a victim. The regulations create a regulatory scheme similar in complexity to the Family and Medical Leave Act, with detailed notice and recordkeeping rules.
The final rule contains a few changes from the proposed rule discussed in our prior blog post. The modifications include:
An option to provide employees with the 56 hours of paid sick leave at the beginning of each year, rather than accruing throughout the year. Under the accrual method, employees would accrue 1 hour for every 30 hours worked on a Federal contract.
The addition of a provision specifying that contractors who grant PTO that meets the requirements in the final rule do not have to provide separate paid sick leave even if the employee uses all of the time for vacation.
A grace period until January 1, 2020, or the termination date of the labor agreement, whichever is sooner, for contractors with a collective bargaining agreement that provides at least 56 hours of paid leave time for health-related reasons.
The ability for contractors to fulfill their obligations jointly with other contractors by utilizing multi-employer plans to provide access to paid sick leave.
Confirmation that a contractor will not have to reinstate accrued sick leave that was paid out to an employee upon separation from employment if the employee returns within 12 months.
Additional information is provided on the Department of Labor’s Wage and Hour Division landing page for the final rule.
As previously reported on this blog, President Obama signed Executive Order 13706 in September 2015, requiring certain federal contractors and subcontractors to provide at least seven paid sick days per year to employees (both hourly and salaried) working on federal contracts. Recently, on February 25, 2016, the United States Department of Labor (DOL) issued a Notice of Proposed Rulemaking (NPRM), setting forth its proposed regulations to implement this executive order. Interested parties can now submit comments on these proposed regulations, but must do so quickly. Comments must be received by the DOL by midnight on March 28, 2016 (although several commentators have already requested that the deadline be extended.)
First, the basics. Contractors will be required to allow paid sick time to be used not only for an employee’s own illness or medical appointments (including preventative care), but also for the illness and medical appointments of a family member (defined quite broadly) or for absences related to domestic violence, sexual assault or stalking. The leave cannot be tracked in increments greater than one (1) hour. While unused time must be carried over into a new calendar year, the contractors will be permitted to cap accrual of new time until the employee’s time drops below 56 hours.
Compliance with Executive Order 13706 will not be as easy as confirming your existing paid time off policies include seven sick days and cover the right types of absences. The proposed regulations create a regulatory scheme similar in complexity to the Family and Medical Leave Act (FMLA), with detailed notice and recordkeeping rules. For example:
Contractors must notify employees in writing of the amount of paid sick leave they have accrued no less than monthly, as well as each time they request sick leave, and each time they request the information (but no more than once a week), and again upon separation.
Contractors may only require medical certification or documentation for absences of three or more days. Significantly, the employee has up to 30 days after the first day of the absence to provide the documentation. During those 30 days, the contractor must treat the request for paid leave as valid. If the contractor does not receive the documentation, or if it is insufficient, the contractor may retroactively deny the employee’s request for use of paid sick leave, and may deduct any sums paid, but only if those deductions are lawful under state wage payment laws. (Given the intricacy of New York’s wage payment law and its restrictions on deductions, the practical impact may be that New York employers rarely, if ever, seek to recoup this pay.)
An employee may make a request for paid sick leave orally or in writing, and must make the request seven days in advance if possible. If advance notice is not possible, the employee need only make the request when he or she becomes aware of the need for leave or the next business day.
If the contractor approves the use of paid sick leave, it can do so orally as long as it also provides a written statement of how much leave is available. If the contractor denies the use of paid sick leave, however, it must do so in writing with an explanation of the denial. If the denial is based on insufficient documentation, the employee must be given an opportunity to submit a new, corrected request.
The contractor’s response to the employee’s request must be made “as soon as is practicable.” Notably, the proposed regulations state that in many instances, the contractor should be able to respond to a request “immediately or within a few hours.”
Contractors need only apply the paid sick time off policy to employees actually working on the covered contract, and only for the hours they are working on the covered contract. However, if the contractor intends to make such a distinction, it must keep records reflecting when the employee is and is not working on the covered contract.
At the completion of a covered contract, a prime contractor must provide to the contracting officer a certified list of all employees entitled to paid sick leave under the Executive Order at any time during the twelve months preceding the end of the contract, the date each employee separated if prior to the completion of the contract, and the amount of paid sick leave each employee had available for use.
Finally, contractors must keep records of the following available for inspection by the DOL:
Name, address, Social Security number, and occupation for each employee;
Wage rates, hours worked, deductions made, and total wages each pay period;
Copies of notifications to employees of the amount of paid sick leave accrued;
Copies of employee leave requests, and if requests are not made in writing, other records reflecting those oral requests;
Dates and amounts of paid sick time used;
Copies of written denials of requests;
Copies of certifications and other documentation provided by employees;
Any other records showing tracking or calculations of accrual and time used;
Copies of any certified list of employees' unused paid sick leave provided to or received from a contracting officer; and
The relevant covered contract.
Similar to the FMLA, contractors are prohibited from interfering with an employee’s use of leave or discriminating against an employee for requesting or using leave. There is no private right of action, but employees may file complaints with the DOL. The DOL may order penalties, including back pay, reinstatement and liquidated damages, and debarment.
Given the impact of this proposed regulatory scheme, contractors should consider submitting comments on how this will impact their business and/or how the rules should be modified or clarified to the DOL before the March 28, 2016 deadline. Comments can be easily submitted online by clicking "Submit a Formal Comment” on this page.
As we reported in a previous blog post, the Office of Federal Contract Compliance Programs (“OFCCP”) Final Rule implementing Executive Order 13665 (titled Non-Retaliation for Disclosure of Compensation Information) took effect on January 11, 2016. This Executive Order amended Executive Order 11246 by prohibiting Federal contractors from discharging or discriminating against employees or applicants who inquire about, discuss, or disclose their own compensation or the compensation of another employee or applicant. The new Rule applies to Federal contractors who enter into or modify existing covered Federal contracts greater than $10,000, on or after January 11, 2016. The new Rule also requires Federal contractors to: (1) revise the “equal opportunity clause” to include the new non-discrimination provision in contracts, subcontracts, and purchase orders; (2) incorporate an OFCCP-prescribed non-discrimination provision into existing employee manuals and handbooks; and (3) disseminate the non-discrimination provisions to employees and job applicants. The OFCCP has created two versions of the mandatory non-discrimination provision:
One formatted with the OFCCP’s logo and contact information to be posted electronically or printed and posted on an employer’s premises.
A second version which includes only the required language. At a minimum, Federal contractors must use this prescribed language.
With the Final Rule already in effect, contractors should ensure their policies are in compliance with the non-discrimination provisions, make sure the OFCCP non-discrimination provision is included in handbooks or manuals and disseminated to employees and applicants, and ensure their “equal opportunity clause” in contracts, subcontracts and purchase orders is in compliance.
The Office of Federal Contract Compliance Programs ("OFCCP") issued its Final Rule last week implementing Executive Order 13665 (entitled Non-Retaliation for Disclosure of Compensation Information). Executive Order 13665 amends Executive Order 11246 by prohibiting federal contractors from discharging or discriminating against employees or applicants who inquire about, discuss, or disclose their own compensation or the compensation of another employee or applicant.
The Final Rule was published in the Federal Register on September 11, 2015, and goes into effect on January 11, 2016. The Final Rule affects covered federal contractors who enter into or modify existing covered federal contracts greater than $10,000, on or after January 11, 2016, and includes employees and job applicants who work for, or apply to work for, a company that has a covered contract with the Federal Government.
The Final Rule implements Executive Order 13665 by:
Revising the “equal opportunity clause” to include the new nondiscrimination provision, which is required in all qualifying federal contracts, federally assisted construction contracts, subcontracts, and purchase orders;
Requiring federal contractors to incorporate an OFCCP-prescribed nondiscrimination provision into existing employee manuals and handbooks; and
Requiring federal contractors to disseminate the nondiscrimination provisions to employees and job applicants.
The Final Rule also provides federal contractors with two defenses to allegations of discrimination based upon discussing or disclosing compensation information. First, a federal contractor may pursue any defense that is not based on a rule, policy, practice, agreement, or other instrument that prohibits employees or applicants from discussing or disclosing their compensation or the compensation of other employees. For example, the contractor can demonstrate that an employee was discharged or disciplined for a violation of a consistently and uniformly applied company policy, and that the policy does not prohibit the discussion or disclosure of compensation information. Second, if an employee has access to the compensation information of other employees or applicants as part of the employee's essential job functions and discloses such information to individuals who do not have access to such information, the discipline or discharge of the employee will not be deemed to be discriminatory, unless the disclosure: (1) was in response to a formal complaint or charge; (2) was in furtherance of an investigation, proceeding, hearing, or action; or (3) was consistent with the contractor's legal duty to furnish information.
OFCCP’s website includes a page containing more information and documents pertinent to the Final Rule, including the prescribed nondiscrimination provision language for handbooks/manuals, the supplement to the “EEO is the Law” Poster, and some Frequently Asked Questions.
The Final Rule prohibits contractors from having policies that prohibit or restrict employees or applicants from discussing or disclosing compensation information. Therefore, federal contractors should review their policies and procedures to ensure that they are consistent with the Final Rule. In addition, all managers should be trained so that they do not make any comments or take any actions that could be considered discriminatory based on an employee's discussion or disclosure of compensation information.
President Obama signed an Executive Order on September 7, 2015, requiring that Federal contractors provide at least seven days of paid sick leave per year to employees working on Federal contracts and subcontracts that are solicited or awarded on or after January 1, 2017. According to a White House Fact Sheet summarizing and explaining the rationale behind the Executive Order, an estimated 44 million private sector workers (approximately 40%) do not have access to paid sick leave. Along with issuing the Executive Order, President Obama also urged Congress to pass the Healthy Families Act, which would require all businesses with 15 or more employees to offer up to seven days of paid sick leave annually.
The Executive Order applies to the following types of contracts or contract-like instruments: (1) procurement contracts for services or construction; (2) contracts for services covered by the Service Contract Act; (3) contracts for concessions; and (4) contracts entered into in connection with Federal property or lands and related to offering services for Federal employees, their dependents, or the general public. All Federal contracts falling within one of these categories will be subject to the Executive Order if the solicitation for the contract is issued on or after January 1, 2017, or if the contract is awarded outside the solicitation process on or after January 1, 2017.
The Executive Order requires covered Federal contracts and subcontracts to contain a clause “specifying, as a condition of payment, that all employees, in the performance of the contract or any subcontract thereunder, shall earn not less than 1 hour of paid sick leave for every 30 hours worked." The Executive Order also provides that a contractor may not cap the total annual accrual of paid sick leave at less than 56 hours (seven days). Paid sick leave earned under the Executive Order may be used by an employee for an absence resulting from: (1) physical or mental illness, injury, or medical condition; (2) obtaining diagnosis, care, or preventive care from a health care provider; (3) caring for family members, domestic partners, and other individuals whose close association with the employee is the equivalent of a family relationship; and (4) domestic violence, sexual assault, or stalking. The use of paid sick leave cannot be made contingent upon the employee finding a replacement.
Accrued unused sick leave earned under the Executive Order must be carried over from one year to the next. In addition, although Federal contractors are not required to pay employees for accrued unused sick leave upon separation from employment, Federal contractors are required to reinstate any accrued unused sick leave that an employee had upon separation from employment if that employee is rehired within 12 months.
The paid sick leave required by the Executive Order is in addition to a Federal contractor's obligations under the Service Contract Act and the Davis-Bacon Act. Federal contractors may not receive credit toward their prevailing wage or fringe benefit obligations for any paid sick leave provided in satisfaction of the requirements of the Executive Order.
The Secretary of Labor has been directed to issue regulations by September 30, 2016, to carry out the terms of the Executive Order.
In early December, the U.S. Department of Labor's Office of Federal Contract Compliance Programs ("OFCCP") announced the issuance of its final rule implementing Executive Order 13672, which amends Executive Order 11246 by prohibiting Federal contractors from discriminating against employees or applicants based on their sexual orientation or gender identity. The final rule was published in the Federal Register on December 9, 2014, and will become effective April 8, 2015.
The OFCCP did not release a notice of proposed rulemaking. According to an OFCCP FAQ: “President Obama’s Executive Order was very clear about the steps the Department of Labor was required to take, and left no discretion regarding how to proceed. In such cases, principles of administrative law allow an agency to publish final rules without prior notice and comment when the agency only makes a required change to conform a regulation to the enabling authority, and does not have any discretion in doing so.”
The regulations will apply to employers that enter into or modify Federal contracts on or after April 8, 2015. Contractors will need to revise the equal employment opportunity clause in new or modified subcontracts or purchase orders, “ensuring that applicants and employees are treated without regard to their sexual orientation and gender identity, and by updating the equal opportunity language used in job solicitations and posting updated notices.” OFCCP and EEOC are working together to update the EEO is the Law Poster; Federal contractors should continue to use the existing poster until a new one is finalized.
Executive Order 13672 and the new final rule are in addition to the pre-existing prohibition on gender identity discrimination, which is a form of sex discrimination in violation of Executive Order 11246. OFCCP memorialized this in an Agency Directive dated August 19, 2014.
The regulations also make a change to the visa reporting provision. Contractors that are unable to obtain a visa for an employee and believe that it is because of the employee’s sexual orientation or gender identity will be required to report it to the OFCCP and the State Department.
The final rule does not require contractors to: (1) make changes to Affirmative Action Plans; (2) collect data or set placement goals on the sexual orientation or gender identity of applicants or employees; or (3) solicit voluntary self-identification of applicants’ or employees’ sexual orientation or gender identity. In addition, there is no change to the current religious exemption.
The Department of Labor’s Wage and Hour Division has published on its website a list of frequently asked questions and President Obama's Press Secretary has published a fact sheet about Executive Order 13672.
On October 1, the U.S. Department of Labor announced the issuance of its final rule implementing Executive Order 13658, which establishes a minimum wage requirement for certain federal contractors. The final rule was published in the Federal Register today, October 7.
As we stated in a prior blog post, Executive Order 13658 requires that certain types of new federal contracts and subcontracts contain a clause specifying that the minimum wage to be paid to workers must be at least $10.10 per hour beginning January 1, 2015. The new $10.10 minimum wage will also apply to disabled employees who are currently working under a special certificate issued by the Secretary of Labor permitting payment of less than the minimum wage.
The final rule defines "new contract" as a contract that results from a solicitation issued on or after January 1, 2015, or a contract that is awarded outside the solicitation process on or after January 1, 2015. A contract that was entered into prior to January 1, 2015 will constitute a "new contract" if, through bilateral negotiation, on or after January 1, 2015: (1) the contract is renewed; (2) the contract is extended (unless the extension is made pursuant to a term in the existing contract providing for a short-term limited extension; or (3) the contract is amended pursuant to a modification that is outside the scope of the existing contract.
The final rule also clarifies, to some degree, the types of federal contracts and subcontracts covered by the Executive Order. The following types of contracts and subcontracts are covered: (1) procurement contracts for construction covered by the Davis-Bacon Act; (2) contracts for services covered by the Service Contract Act; (3) contracts for concessions, including any concessions contract excluded from coverage under the Service Contract Act; and (4) contracts entered into in connection with federal property or lands and related to offering services for federal employees, their dependents, or the general public. Grants, within the meaning of the Federal Grant and Cooperative Agreement Act, are expressly excluded from coverage.
Beginning January 1, 2016, and annually thereafter, the minimum wage for federal contractors will be increased by the Secretary of Labor based on the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers, and rounded to the nearest multiple of five cents. The Secretary of Labor is required to publish the new minimum wage at least 90 days before the new minimum wage is scheduled to take effect.
For tipped employees, the hourly cash wage paid by a federal contractor must be at least $4.90 beginning on January 1, 2015. In each subsequent year, the federal contractor minimum wage for tipped employees will be increased by 95 cents until it equals 70 percent of the federal contractor minimum wage in effect for non-tipped employees. If an employee’s tips, when added to the hourly wage, do not add up to the federal contractor minimum wage for non-tipped employees, the federal contractor will be required to supplement the employee’s hourly wage to make up the difference.
The final rule also provides an investigation and enforcement procedure with respect to alleged violations of Executive Order 13658. The potential remedies and sanctions that could be imposed include: (1) requiring payment of back wages owed; (2) withholding of amounts due to the contractor under the federal contract to the extent necessary to satisfy the contractor's wage obligations; and (3) debarment for a period of up to three years.
The Department of Labor's Wage and Hour Division has published on its web site a list of frequently asked questions and a fact sheet about Executive Order 13658.
On August 6, 2014, the Office of Federal Contract Compliance Programs (“OFCCP”) issued a proposed rule requiring covered Federal contractors and subcontractors with more than 100 employees to submit an annual Equal Pay Report on employee compensation. Prior to this proposed rule, President Obama signed a Presidential Memorandum on April 8, 2014, instructing the Secretary of Labor to propose a rule within 120 days to collect compensation data from Federal contractors and subcontractors.
The Equal Pay Report applies to contractors and first-tier subcontractors who are required to file EEO-1 Reports, have more than 100 employees, and have a Federal contract, subcontract, or purchase order worth $50,000 or more that covers a period of at least 30 days. The Report requires contractors to submit:
Total number of workers within a specific EEO-1 job category by race, ethnicity, and sex;
Total W-2 wages, defined as the total individual W-2 wages for all workers in the job category by race, ethnicity, and sex; and
Total hours worked, defined as the number of hours worked by all employees in the job category by race, ethnicity, and sex.
According to the OFCCP, this data will allow the OFCCP to direct its enforcement resources towards Federal contractors whose summary data suggests potential pay violations. However, according to a Fact Sheet and FAQs published by OFCCP, the Equal Pay Report will not collect individual pay data or additional factors that may affect pay.
The OFCCP is proposing a reporting window of January 1 to March 31. The data would be based on W-2 earnings for the prior calendar year for all employees included in the contractor’s EEO-1 report for that year.
The OFCCP plans to develop a web-based portal for reporting and maintaining compensation information that conforms to applicable IT security standards. The OFCCP has indicated it intends to protect the confidentiality of the data to the maximum extent permitted under the Freedom of Information Act.
Comments regarding the proposed rule must be submitted by November 6, 2014.
On July 31, 2014, President Obama signed the "Fair Pay and Safe Workplaces" Executive Order, which requires bidders on federal procurement contracts for goods and services (including construction) in excess of $500,000 to disclose labor law violations that have occurred within the three-year period immediately preceding the bid. In addition, the Executive Order requires federal contractors to provide individuals who perform work under the federal contract with information regarding hours worked, overtime hours, pay, and any additions made to or deductions made from pay. The Executive Order also prohibits federal contractors with contracts in excess of $1,000,000 from entering into mandatory pre-dispute arbitration agreements with their employees or independent contractors to resolve complaints under Title VII of the Civil Rights Act ("Title VII") or tort claims arising out of alleged sexual assault or harassment.
For procurement contracts for goods and services, including construction, where the estimated value of the supplies acquired and services required exceeds $500,000, each bidder must disclose whether there has been any administrative merits determination, arbitral award or decision, or civil judgment against the bidder within the preceding three-year period for violations of any of the following labor laws and Executive Orders:
the Fair Labor Standards Act;
the Occupational Safety and Health Act;
the Migrant and Seasonal Agricultural Worker Protection Act;
the National Labor Relations Act;
the Davis-Bacon Act;
the Service Contract Act;
Executive Order 11246 (Equal Employment Opportunity)
Section 503 of the Rehabilitation Act;
the Vietnam Era Veterans' Readjustment Assistance Act;
the Family and Medical Leave Act;
the Americans with Disabilities Act;
the Age Discrimination in Employment Act;
Executive Order 13658 (Minimum Wage for Federal Contractors); and
equivalent state laws.
A bidder's disclosure of labor law violations will not necessarily automatically disqualify the bidder from receiving the federal contract, but the information will be considered in determining whether the bidder is a responsible source that has a satisfactory record of integrity and business ethics. Federal contractors are also obligated to require prospective subcontractors to disclose labor law violations within the preceding three-year period, and are required to consider the information obtained in awarding subcontracts. During the performance of a federal contract, each federal contractor subject to the Executive Order is required to update its own labor law violation disclosure and to obtain an updated labor law violation disclosure from each subcontractor every six months.
Federal contractors who are awarded procurement contracts for goods and services (including construction) in excess of $500,000 are also required to provide each individual performing work under the contract with a document containing information regarding the individual's hours worked, overtime hours, pay, and any additions made to or deductions made from pay. Employees who are exempt from the overtime compensation requirements of the Fair Labor Standards Act need not be given information regarding their hours worked. Compliance with any state or local requirements that the Secretary of Labor has determined are "substantially similar" to the requirements of the Executive Order (such as, presumably, the requirements of the Wage Theft Prevention Act) will be deemed compliance with the terms of the Executive Order. If a federal contractor is treating an individual performing work under the federal contract or subcontract as an independent contractor, the federal contractor must provide the individual with a document informing the individual of this status.
Finally, the Executive Order provides that for all contracts where the estimated value of the supplies acquired and services required exceeds $1,000,000, federal contractors and subcontractors must agree that the decision to arbitrate claims under Title VII or tort claims arising out of alleged sexual assault or harassment may only be made with the voluntary consent of employees or independent contractors after the dispute arises. Thus, federal contractors and subcontractors may not enter into mandatory arbitration agreements with employees or independent contractors to resolve Title VII claims or sexual assault/harassment tort claims before a dispute actually arises. This prohibition does not apply to employees who are covered by a collective bargaining agreement, nor does it apply to employees or independent contractors who entered into a valid arbitration agreement prior to the contractor or subcontractor bidding on a contract covered by the Executive Order.
The Executive Order directs the Federal Acquisition Regulatory ("FAR") Council (in consultation with the Department of Labor and the Office of Management and Budget) to amend the Federal Acquisition Regulation to identify considerations for determining whether serious, willful, or pervasive violations of the labor laws demonstrate a lack of integrity or business ethics. In addition, the Secretary of Labor is directed to develop guidance and processes to implement the provisions of the Executive Order. The Executive Order will apply to all solicitations for contracts as set forth in any final rule issued by the FAR Council.