DOL Publishes Final Regulation on New Minimum Wage for Certain Federal Contractors

Last week, the Federal Register published the final regulation by the Department of Labor implementing Executive Order 14026, raising on January 30, 2022 the minimum wage applicable to many, but not all, federal contractors to $15/hour with automatic annual increases.   Like other Executive Orders, this only applies to new contracts, renewals and extensions, but agencies have been “strongly encouraged” since April to include this requirement in new contract solicitations, contracts and extensions.  It also only applies to certain types of federal contracts, including McNamara-O'Hara Service Contract Act of 1965 covered contracts, concessions contracts, contracts related to federal property and “a procurement contract or contract-like instrument for services or construction” if those employees are also subject to the Service Contract Act, the Davis-Bacon Act or the Fair Labor Standards Act and only for hours worked on or in connection with a federal contract.   The regulation gradually phases out all tip credits by 2024 and revokes some prior exemptions granted by the prior Administration.  The DOL has also created a new poster to be displayed or distributed by covered employers.

Sections 23.30(d) and 23.40 specifically exclude coverage to certain types of federal contracts and workers: (i) “contracts for the manufacturing or furnishing of materials, supplies, articles, or equipment to the Federal Government, including those that are subject to the Walsh-Healey Public Contracts Act, 41 U.S.C. 6501 et seq.” (ii) grants, (iii) agreements with Indian Tribes, (iv) construction procurement contracts not covered by the Davis-Bacon Act, (v) certain contracts specifically excluded from the Service Contract Act, (vi) with certain exceptions, employees exempt under the FLSA, (vii), FLSA-covered employees who perform less than 20% of their time in connection with (rather than directly for) a covered contract and (viii) contracts resulting from a solicitation issued before January 30, 2022, but entered into on or between January 30, 2022 and March 30, 2022. 

The definition section of the regulation describes the covered “workers” as follows:

any person engaged in performing work on or in connection with a contract covered by the Executive Order, and whose wages under such contract are governed by the Fair Labor Standards Act, the Service Contract Act, or the Davis-Bacon Act, other than individuals employed in a bona fide executive, administrative, or professional capacity, as those terms are defined in 29 CFR part 541, regardless of the contractual relationship alleged to exist between the individual and the employer. The term worker includes workers performing on or in connection with a covered contract whose wages are calculated pursuant to special certificates issued under 29 U.S.C. 214(c), as well as any person working on or in connection with a covered contract and individually registered in a bona fide apprenticeship or training program registered with the U.S. Department of Labor's Employment and Training Administration, Office of Apprenticeship, or with a State Apprenticeship Agency recognized by the Office of Apprenticeship. A worker performs “on” a contract if the worker directly performs the specific services called for by the contract. A worker Start Printed Page 67227 performs “in connection with” a contract if the worker's work activities are necessary to the performance of a contract but are not the specific services called for by the contract.

Except when covered by FAR, applicable federal agencies, contractors and subcontractors are required to include a new clause in their covered contracts:

(b) Flow-down requirement. The contractor and any subcontractors shall include in any covered subcontracts the Executive Order minimum wage contract clause referred to in § 23.110(a) and shall require, as a condition of payment, that the subcontractor include the minimum wage contract clause in any lower-tier subcontracts. The prime contractor and any upper-tier contractor shall be responsible for the compliance by any subcontractor or lower-tier subcontractor with the Executive Order minimum wage requirements, whether or not the contract clause was included in the subcontract.

The new, lengthy clause reads as follows: 

(a) Executive Order 14026. This contract is subject to Executive Order 14026, the Start Printed Page 67234 regulations issued by the Secretary of Labor in 29 CFR part 23 pursuant to the Executive Order, and the following provisions.

(b) Minimum wages. (1) Each worker (as defined in 29 CFR 23.20) engaged in the performance of this contract by the prime contractor or any subcontractor, regardless of any contractual relationship which may be alleged to exist between the contractor and worker, shall be paid not less than the applicable minimum wage under Executive Order 14026.

(2) The minimum wage required to be paid to each worker performing work on or in connection with this contract between January 30, 2022 and December 31, 2022, shall be $15.00 per hour. The minimum wage shall be adjusted each time the Secretary of Labor's annual determination of the applicable minimum wage under section 2(a)(ii) of Executive Order 14026 results in a higher minimum wage. Adjustments to the Executive Order minimum wage under section 2(a)(ii) of Executive Order 14026 will be effective for all workers subject to the Executive Order beginning January 1 of the following year. If appropriate, the contracting officer, or other agency official overseeing this contract shall ensure the contractor is compensated only for the increase in labor costs resulting from the annual inflation increases in the Executive Order 14026 minimum wage beginning on January 1, 2023. The Secretary of Labor will publish annual determinations in the Federal Register no later than 90 days before such new wage is to take effect. The Secretary will also publish the applicable minimum wage on https://alpha.sam.gov/​content/​wage-determinations (or any successor website). The applicable published minimum wage is incorporated by reference into this contract.

(3) The contractor shall pay unconditionally to each worker all wages due free and clear and without subsequent deduction (except as otherwise provided by 29 CFR 23.230), rebate, or kickback on any account. Such payments shall be made no later than one pay period following the end of the regular pay period in which such wages were earned or accrued. A pay period under this Executive Order may not be of any duration longer than semi-monthly.

(4) The prime contractor and any upper-tier subcontractor shall be responsible for the compliance by any subcontractor or lower-tier subcontractor with the Executive Order minimum wage requirements. In the event of any violation of the minimum wage obligation of this clause, the contractor and any subcontractor(s) responsible therefore shall be liable for the unpaid wages.

(5) If the commensurate wage rate paid to a worker performing work on or in connection with a covered contract whose wages are calculated pursuant to a special certificate issued under 29 U.S.C. 214(c), whether hourly or piece rate, is less than the Executive Order minimum wage, the contractor must pay the Executive Order minimum wage rate to achieve compliance with the Order. If the commensurate wage due under the certificate is greater than the Executive Order minimum wage, the contractor must pay the worker the greater commensurate wage.

(c) Withholding. The agency head shall upon its own action or upon written request of an authorized representative of the Department of Labor withhold or cause to be withheld from the prime contractor under this or any other Federal contract with the same prime contractor, so much of the accrued payments or advances as may be considered necessary to pay workers the full amount of wages required by Executive Order 14026.

(d) Contract suspension/Contract termination/Contractor debarment. In the event of a failure to pay any worker all or part of the wages due under Executive Order 14026 or 29 CFR part 23, or a failure to comply with any other term or condition of Executive Order 14026 or 29 CFR part 23, the contracting agency may on its own action or after authorization or by direction of the Department of Labor and written notification to the contractor, take action to cause suspension of any further payment, advance or guarantee of funds until such violations have ceased. Additionally, any failure to comply with the requirements of this clause may be grounds for termination of the right to proceed with the contract work. In such event, the Government may enter into other contracts or arrangements for completion of the work, charging the contractor in default with any additional cost. A breach of the contract clause may be grounds for debarment as a contractor and subcontractor as provided in 29 CFR 23.520.

(e) Workers who receive fringe benefits. The contractor may not discharge any part of its minimum wage obligation under Executive Order 14026 by furnishing fringe benefits or, with respect to workers whose wages are governed by the Service Contract Act, the cash equivalent thereof.

(f) Relation to other laws. Nothing herein shall relieve the contractor of any other obligation under Federal, state or local law, or under contract, for the payment of a higher wage to any worker, nor shall a lower prevailing wage under any such Federal, State, or local law, or under contract, entitle a contractor to pay less than $15.00 (or the minimum wage as established each January thereafter) to any worker.

(g) Payroll records. (1) The contractor shall make and maintain for three years records containing the information specified in paragraphs (g)(1)(i) through (vi) of this section for each worker and shall make the records available for inspection and transcription by authorized representatives of the Wage and Hour Division of the U.S. Department of Labor:

(i) Name, address, and social security number;

(ii) The worker's occupation(s) or classification(s);

(iii) The rate or rates of wages paid;

(iv) The number of daily and weekly hours worked by each worker;

(v) Any deductions made; and

(vi) Total wages paid.

(2) The contractor shall also make available a copy of the contract, as applicable, for inspection or transcription by authorized representatives of the Wage and Hour Division.

(3) Failure to make and maintain or to make available such records for inspection and transcription shall be a violation of 29 CFR part 23 and this contract, and in the case of failure to produce such records, the contracting officer, upon direction of an authorized representative of the Department of Labor, or under its own action, shall take such action as may be necessary to cause suspension of any further payment or advance of funds until such time as the violations are discontinued.

(4) The contractor shall permit authorized representatives of the Wage and Hour Division to conduct investigations, including interviewing workers at the worksite during normal working hours.

(5) Nothing in this clause limits or otherwise modifies the contractor's payroll and recordkeeping obligations, if any, under the Davis-Bacon Act, as amended, and its implementing regulations; the Service Contract Act, as amended, and its implementing regulations; the Fair Labor Standards Act, as amended, and its implementing regulations; or any other applicable law.

(h) Flow-down requirement. The contractor (as defined in 29 CFR 23.20) shall insert this clause in all of its covered subcontracts and shall require its subcontractors to include this clause in any covered lower-tier subcontracts. Executive Order 14026 does not apply to subcontracts for the manufacturing or furnishing of materials, supplies, articles, or equipment, and this clause is not required to be inserted in such subcontracts. The prime contractor and any upper-tier subcontractor shall be responsible for the compliance by any subcontractor or lower-tier subcontractor with this contract clause.

(i) Certification of eligibility. (1) By entering into this contract, the contractor (and officials thereof) certifies that neither it (nor he or she) nor any person or firm who has an interest in the contractor's firm is a person or firm ineligible to be awarded Government contracts by virtue of the sanctions imposed pursuant to section 5 of the Service Contract Act, section 3(a) of the Davis-Bacon Act, or 29 CFR 5.12(a)(1).

(2) No part of this contract shall be subcontracted to any person or firm whose name appears on the list of persons or firms ineligible to receive Federal contracts.

(3) The penalty for making false statements is prescribed in the U.S. Criminal Code, 18 U.S.C. 1001.

(j) Tipped employees. In paying wages to a tipped employee as defined in section 3(t) of the Fair Labor Standards Act, 29 U.S.C. 203(t), the contractor may take a partial credit against the wage payment obligation (tip credit) to the extent permitted under section 3(a) of Executive Order 14026. In order to take such a tip credit, the employee must receive an amount of tips at least equal to the amount of the credit taken; where the tipped employee does not receive sufficient tips to equal the amount of the tip credit the contractor must increase the cash wage paid for the workweek so that the amount of cash wage paid and the tips received by the employee equal the applicable minimum wage under Executive Order 14026. To utilize this proviso:

(1) The employer must inform the tipped employee in advance of the use of the tip credit; Start Printed Page 67235

(2) The employer must inform the tipped employee of the amount of cash wage that will be paid and the additional amount by which the employee's wages will be considered increased on account of the tip credit;

(3) The employees must be allowed to retain all tips (individually or through a pooling arrangement and regardless of whether the employer elects to take a credit for tips received); and

(4) The employer must be able to show by records that the tipped employee receives at least the applicable Executive Order minimum wage through the combination of direct wages and tip credit.

(k) Antiretaliation. It shall be unlawful for any person to discharge or in any other manner discriminate against any worker because such worker has filed any complaint or instituted or caused to be instituted any proceeding under or related to Executive Order 14026 or 29 CFR part 23, or has testified or is about to testify in any such proceeding.

(l) Disputes concerning labor standards. Disputes related to the application of Executive Order 14026 to this contract shall not be subject to the general disputes clause of the contract. Such disputes shall be resolved in accordance with the procedures of the Department of Labor set forth in 29 CFR part 23. Disputes within the meaning of this contract clause include disputes between the contractor (or any of its subcontractors) and the contracting agency, the U.S. Department of Labor, or the workers or their representatives.

(m) Notice. The contractor must notify all workers performing work on or in connection with a covered contract of the applicable minimum wage rate under the Executive Order. With respect to service employees on contracts covered by the Service Contract Act and laborers and mechanics on contracts covered by the Davis-Bacon Act, the contractor may meet this requirement by posting, in a prominent and accessible place at the worksite, the applicable wage determination under those statutes. With respect to workers performing work on or in connection with a covered contract whose wages are governed by the FLSA, the contractor must post a notice provided by the Department of Labor in a prominent and accessible place at the worksite so it may be readily seen by workers. Contractors that customarily post notices to workers electronically may post the notice electronically provided such electronic posting is displayed prominently on any website that is maintained by the contractor, whether external or internal, and customarily used for notices to workers about terms and conditions of employment.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Defense Act Sneaks Ban-The-Box Legislation onto Federal Contractors

Just before its holiday break, Congress surprisingly passed the Fair Chance Act with the National Defense Authorization Act on December 20, 2019, and it will become effective on December 20, 2021 [two years after its effective date].  Section 1123 of the NDAA created new 41 U.S.C. §4714, which will prohibit federal contractors from seeking criminal background histories until after a conditional job offer has been extended, except where the applicant will have access to classified, law enforcement or national security information,  when "consideration of criminal history record information prior to a conditional offer with respect to the position is otherwise required by law," or when the job is exempted by regulations to be issued by the GSA prior April 21, 2021.  However, the FCA only applies to jobs which perform work related to the federal contract at issue (as opposed to the contractor’s other employees).   This is becoming a common occurrence to use the Defense Authorization Act to sneak in controversial employment laws.  

In particular, under §4714(a)(1)(B), the contracting executive federal agency:

shall require, as a condition of receiving a Federal contract and receiving payments under such contract that the contractor may not verbally, or through written form, request the disclosure of criminal history record information regarding an applicant for a position related to work under such contract before the contractor extends a conditional offer to the applicant.

At present, this legislation raises more questions than it answers.  When is a criminal background check required “by law”?  Federal law?  State law (which the EEOC has never recognized as relevant in a discrimination analysis)? By common law (i.e., the law of negligent hiring)?  Why is access to cash, financial information, children or disabled adults not similarly protected when a run-of-the-mile criminal is more likely to seek cash or deviance than national security information?  Granted, the FCA directs the GSA in preparing the governing regulations to "giv[e] due consideration to positions that involve interaction with minors, access to sensitive information, or managing financial transactions."    How will this interact with the ADA’s similar requirement that medical information cannot be requested until a conditional job offer has been extended?  What jobs will be considered as “related to the work” of the federal contract?   Hopefully, these and other questions will be addressed with the implementing regulations or remedied by subsequent legislation.    

The complete §4714 will read as follows:

SEC. 1123. PROHIBITION ON CRIMINAL HISTORY INQUIRIES BY CONTRACTORS PRIOR TO CONDITIONAL OFFER. (a) CIVILIAN AGENCY CONTRACTS.— (1) IN GENERAL.—Chapter 47 of title 41, United States Code, is amended by adding at the end the following new section: ‘‘§4714. Prohibition on criminal history inquiries by contractors prior to conditional offer 

(a) LIMITATION ON CRIMINAL HISTORY INQUIRIES.— ‘‘(1) IN GENERAL.—Except as provided in paragraphs (2) and (3), an executive agency— 

(A) may not require that an individual or sole proprietor who submits a bid for a contract to disclose criminal history record information regarding that individual or sole proprietor before determining the apparent awardee; and

(B) shall require, as a condition of receiving a Federal contract and receiving payments under such contract that the contractor may not verbally, or through written form, request the disclosure of criminal history record information regarding an applicant for a position related to work under such contract before the contractor extends a conditional offer to the applicant. 

(2) OTHERWISE REQUIRED BY LAW.—The prohibition under paragraph (1) does not apply with respect to a contract if consideration of criminal history record information prior to a conditional offer with respect to the position is otherwise required by law. 

(3) EXCEPTION FOR CERTAIN POSITIONS.— 

(A) IN GENERAL.—The prohibition under paragraph (1) does not apply with respect to— ‘‘(i) a contract that requires an individual hired under the contract to access classified information or to have sensitive law enforcement or national security duties; or ‘‘(ii) a position that the Administrator of General Services identifies under the regulations issued under subparagraph (B). 

(B) REGULATIONS.— 

(i) ISSUANCE.—Not later than 16 months after the date of enactment of the Fair Chance to Compete for Jobs Act of 2019, the Administrator of General Services, in consultation with the Secretary of Defense, shall issue regulations identifying additional positions with respect to which the prohibition under paragraph (1) shall not apply, giving due consideration to positions that involve interaction with minors, access to sensitive information, or managing financial transactions. 

(ii) COMPLIANCE WITH CIVIL RIGHTS LAWS.—The regulations issued under clause (i) shall— ‘‘(I) be consistent with, and in no way supersede, restrict, or limit the application of title VII of the Civil Rights Act of 1964 (42 U.S.C. 2000e et seq.) or other relevant Federal civil rights laws; and ‘‘(II) ensure that all hiring activities conducted pursuant to the regulations are conducted in a manner consistent with relevant Federal civil rights laws. 

(b) COMPLAINT PROCEDURES.—The Administrator of General Services shall establish and publish procedures under which an applicant for a position with a Federal contractor may submit to the Administrator a complaint, or any other information, relating to compliance by the contractor with subsection (a)(1)(B). 

(c) ACTION FOR VIOLATIONS OF PROHIBITION ON CRIMINAL HISTORY INQUIRIES.— ‘‘(1) FIRST VIOLATION.—If the head of an executive agency determines that a contractor has violated subsection (a)(1)(B), such head shall— ‘‘(A) notify the contractor; ‘‘(B) provide 30 days after such notification for the contractor to appeal the determination; and ‘‘(C) issue a written warning to the contractor that includes a description of the violation and the additional remedies that may apply for subsequent violations.

‘‘(2) SUBSEQUENT VIOLATION.—If the head of an executive agency determines that a contractor that was subject to paragraph (1) has committed a subsequent violation of subsection (a)(1)(B), such head shall notify the contractor, shall provide 30 days after such notification for the contractor to appeal the determination, and, in consultation with the relevant Federal agencies, may take actions, depending on the severity of the infraction and the contractor’s history of violations, including— ‘‘(A) providing written guidance to the contractor that the contractor’s eligibility for contracts requires compliance with this section; ‘‘(B) requiring that the contractor respond within 30 days affirming that the contractor is taking steps to comply with this section; and ‘‘(C) suspending payment under the contract for which the applicant was being considered until the contractor demonstrates compliance with this section. 

(d) DEFINITIONS.—In this section: 

(1) CONDITIONAL OFFER.—The term ‘conditional offer’ means an offer of employment for a position related to work under a contract that is conditioned upon the results of a criminal history inquiry. 

(2) CRIMINAL HISTORY RECORD INFORMATION.—The term ‘criminal history record information’ has the meaning given that term in section 9201 of title 5.

(2) CLERICAL AMENDMENT.—The table of sections for chapter 47 of title 41, United States Code, is amended by adding at the end the following new item: ‘‘4714. Prohibition on criminal history inquiries by contractors prior to conditional offer.’’

(3) EFFECTIVE DATE.—Section 4714 of title 41, United States Code, as added by paragraph (1), shall apply with respect to contracts awarded pursuant to solicitations issued after the effective date described in section 1122(b)(2) of this subtitle.  [That section, in turn, provided:

 (2) EFFECTIVE DATE.—Section 9202 of title 5, United States Code (as added by this subtitle), shall take effect on the date that is 2 years after the date of enactment of this subtitle. 

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

EEOC Proposes to Revise EEO-1 to Include Data on Annual Pay and Hours Worked

On Friday, the EEOC announced that it planned to revise the EEO-1 form to include burdensome requirements to annually collect and report pay and hours worked by all employees.  Its proposal was published in today’s Federal Register.  Currently, the EEO-1 must be filed before September 30 every year by employers with over 100 employees and contractors/subcontractors with 50 or more employees (and contracts over $50,000).   The forms identify how many employees (by gender and ethnicity) are employed in certain job classifications.  The new requirements would take effect in September 2017 and would require the employer to complete two pages (instead of just one).  One page would identify the number of employees (again by job classification, gender and ethnicity), but would also break them out by twelve identical pay bands in each job classification.   The second page is identical, except that instead of indicating the number of employees, the employer would need to research and insert the number of hours collectively worked by all of the employees in that pay band by job classification, gender and ethnicity.  The EEOC believes that it needs the number of hours to account for part-time and temporary employees.  The form is not requesting information about time in job, seniority, prior experience or education, etc. (which all obviously impact the amount paid).

The EEOC is not proposing to expand the EEO-1 reporting obligations beyond those employers currently required to file them.  The forms will also remain confidential (although by creating such a document, they will become discoverable in all agency investigations and civil litigation).

There are twelve identical pay bands for each job classification (of between $19,239 and $208,000+).  The information is to reflect annual “salaries” based on total W-2 wages earned during the prior twelve months from any work week between July 1 and September 30.  The pay bands are compressed at the low end (i.e., approximately $5,000) and wider at the top end (of over approximately $40,000).  Even though the forms explicitly specify “salary” to be reported, the EEOC actually wants total W-2 compensation and all earned income, including “wages, salaries, fees, commissions, tips, taxable fringe benefits, and elective deferrals” as well as “supplemental pay components such as overtime pay, shift differentials, and nonproduction bonuses (e.g., year-end bonuses, hiring and referral bonuses, and profit-sharing cash bonuses).”  It also wants this information when it wants it and not when employers would typically be generating this information for W-4 forms in January.  However, the EEOC does not expect this to be burdensome and encourages employers to use quarterly payroll reports.

The EEOC is also seeking feedback from employers about how to account for exempt employees for whom employers are not required to track working hours.  It is not proposing that employers be required to track those hours.  It is considering simply requiring employers to estimate 40 hours/week (or 2080/year) for exempt employees.

The EEOC reports that all but three employers nationwide already submit their EEO-1 reports electronically, and therefore, is making electronic submission of the new information mandatory for the new form in 2017 (unless the employer requests an exemption).

The EEOC hopes to analyze this data and to focus its investigations on those employers with statistically anomalous compensation practices:

Analysis of W-2 Pay Data

Statistical tests will be used as an initial check of the W-2 data to be collected on the EEO-1, specifically, statistical significance tests that do not rely on an assumption of a normal distribution. The Pilot Study recommended several statistical techniques to test within-job categories and then suggested further examining companies and establishments with low probabilities that the differences between examined groups, such as men and women, occurred by chance. The Pilot Study also noted that the issue of calibrating error rates (power vs. significance level) needed to be addressed to detect discrimination without suffering too many false positives. This process would include recognition of how sample sizes may influence results and also of judicial precedents regarding definitions of statistical probabilities.

 The EEOC and OFCCP plan to develop a software tool that will allow their investigators to conduct an initial analysis by looking at W-2 pay distribution within a single firm or establishment, and by comparing the firm's or establishment's data to aggregate industry or metropolitan-area data. This application would highlight statistics of interest.

Finally, the EEOC is seeking public comments from the private sector about these planned changes to the EEO-1 form:

1. Evaluate whether the proposed collection of information is necessary for the proper performance of the Commission's functions, including whether the information will have practical utility;

2. Improve the accuracy of the Commission's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;

3. Enhance the quality, utility, and clarity of the information to be collected; and

4. Minimize the burden of the collection of information on those who are required to respond, including the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submission of responses.

 

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can be changed or amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

EO 13706 Mandates Paid Leave for Federal Contractor Employees in 2017

On Labor Day, President Obama issued Executive Order 13706 (which was published in the Federal Register a few days later) mandating that federal contractors provide paid leave to employees.  Regulations are to be published by the end of the September 2016 and will apply to contractors and subcontractors who receive new federal contracts in 2017.  While employees may accrue one hour of paid leave for every 30 worked (up to 56 hours per year), they may carry over those accrued hours year to year and may reinstate their leave bank upon being rehired within 12 months, but may not be paid out on termination for their accrued leave.   While the leave is entitled “sick” leave, it is actually much broader: the paid leave may cover their own illness, that of their parents, spouses, children and those “or any other individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship,” and may also use it for diagnostic or preventive medical care, and “domestic violence, sexual assault, or stalking” if the employee needs time off from work in order to seek counseling, relocation, legal action, or assistance from a victim services organization.

The EO prohibits covered employers from taking certain actions:

·        Employees cannot be required to recruit their own replacement;

·        Limiting the amount of paid leave that may be accrued to less than 56 hours per year;

·        Take credits against prevailing wage obligations for this paid leave;

·        Disclosing information from certifications about the employee’s need for medical, family or domestic violence/stalking leave unless required by law or with the employee’s consent; and

·        Discriminating against or interfering with an employee’s right to take paid leave, in asserting paid leave rights or assisting another employee asserting rights under this EO.

Employers will not be required to pay the employee for accrued paid leave upon termination, but is permitted to do so.   The employer’s existing sick leave policy may satisfy the obligations of this EO if it meets all of its terms, applies to all employees, and exceeds any applicable requirements of the Davis-Bacon and Service Contract Acts.  The EO says nothing about any qualifications periods that may be imposed on employees before they may begin accruing paid leave.

The EO does not apply to federal grants or independent agencies (which are only strongly encouraged to comply).

Like the FMLA, employees will have certain obligations:

·        Must make an oral or written request for leave “that includes the expected duration of the leave and is made at least 7 calendar days in advance where the need for the leave is foreseeable, and in other cases as soon as is practicable.”

·        Must provide written certification within 30 days of the employer’s request if the absence is greater than 3 consecutive days.  This certification may be about medical causes or domestic violence/stalking and need only convey the “minimum necessary information” to confirm the reason for the leave.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can be changed or amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

 

President Obama Issues Executive Order Barring Large Federal Contractors from Using Certain Pre-Dispute Arbitration Agreements and Requiring Reporting of Employment and Labor Violations

This morning, President Obama signed a new Executive Order which applies only to federal contractors with contracts in excess of $500,000.   Where the value of the goods or services being procured are expected to exceed $500,000, the contractor will be required to disclose any arbitration, court or agency awards, judgments or determinations concerning violations of, for instance, the FMLA, E.O. 11246 (aka affirmative actions requirements for women and minorities), the NLRA, the FLSA, OSHA, the FMLA, the Rehabilitation Act, Title VII, the ADA, the ADEA, Vietnam Era Veterans Readjustment Act and equivalent state laws.  These contractors will be required to update this information every six months and require their subcontractors to do likewise.  The DOL has been tasked with developing regulations about defining and creating consequences for repeated and serious violations.  

In addition, where the value of goods or services being procured exceeds $1M, the contractor is prohibited from using pre-dispute arbitration agreements with employees or contractors to govern disputes arising under Title VII or concerning or “any tort related to or arising out of sexual assault or harassment.” This requirement will not apply to collective bargaining agreements, pre-existing agreements, or where the employer provides commercially available off-the-shelf items.

Finally, the Executive Order requires the provision of pay stub information to the contractors with contracts in excess of $500,000:

Paycheck Transparency.  (a)  Agencies shall ensure that, for contracts subject to section 2 of this order, provisions in solicitations and clauses in contracts shall provide that, in each pay period, contractors provide all individuals performing work under the contract for whom they are required to maintain wage records under the Fair Labor Standards Act; 40 U.S.C. chapter 31, subchapter IV (also known as the Davis-Bacon Act); 41 U.S.C. chapter 67 (also known as the Service Contract Act); or equivalent State laws, with a document with information concerning that individual's hours worked, overtime hours, pay, and any additions made to or deductions made from pay.  Agencies shall also require that contractors incorporate this same requirement into subcontracts covered by section 2 of this order.  The document provided to individuals exempt from the overtime compensation requirements of the Fair Labor Standards Act need not include a record of hours worked if the contractor informs the individuals of their overtime exempt status.  These requirements shall be deemed to be fulfilled if the contractor is complying with State or local requirements that the Secretary of Labor has determined are substantially similar to those required by this subsection.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

June Ends with a Bang with DOL Moving to Amend FMLA Regulations and Three Supreme Court Employment Decisions

The end of June is traditionally a busy week for legal observers since many of the Supreme Court’s most contentious employment decisions are issued before it recesses for the year.  This year was no exception.  However, there were also a number of regulatory matters raised by the Department of Labor which were equally – and maybe more – noteworthy.  First, the DOL has proposed to amend the FMLA regulation defining spouse to require employers in states where same-sex marriage is not recognized – like Ohio -- to provide FMLA leave to employees who were legally married in another state.  Second, the DOL proposed regulations to increase the minimum wage for certain employees of certain federal contractors beginning in 2015.  Next, a unanimous Supreme Court held that the Senate – not the President – gets to decide when it is in recess.  Therefore, Presidential appointments to the NLRB made during brief adjournments were not constitutional.  In addition, a divided Supreme Court found that the First Amendment rights of de factor independent contractors trumped the government’s interest in giving them union rights and requiring them to subsidize through fair share fees the political lobbying activities of unions to which the workers objected.  Finally, a divided Supreme Court found that closely held corporations can assert statutory and First Amendment rights to object to contraceptive coverage mandated by ObamaCare regulations and the government failed to show that less restrictive means existed to achieve its aims.

FMLA Rights of Domestic Partners.  On June 20, the Department of Labor announced that it would be proposing to change the regulatory definition of “spouse” in the Family and Medical Leave Act to include individuals who were legally married  in one country (like Argentina) or state, like Massachusetts, even though they currently reside in a state, like Ohio, which does not recognize that marriage.  Currently, FMLA rights only extend to individuals whose marriage is legal in the state where the employee resides.  The Act itself provides in § 2611(13) that “[t]he term “spouse” means a husband or wife, as the case may be.”    The current regulatory definition provides that: “Spouse means a husband or wife as defined or recognized under State law for purposes of marriage in the State where the employee resides, including common law marriage in States where it is recognized.” Under the proposed rule – which was published in the Federal Register last week on June 27 – same sex and common law marriages will be included in the definition of “spouse” based on the place of celebration instead of the place of residence. The DOL also revised other regulations to replace “husband and wife” with “spouse” and “mother and father” with “parent.”   The DOL will consider comments on the proposed changes which are received before August 11.   The expansion of the rule will affect spousal leave (to care for an ill/injured spouse or during a qualified exigency military leave), child care leave (to care for ill step-children even if the employee is “does not stand in loco parentis” to that child) and parental leave (to care for an employee’s step-parent in a same sex marriage).

The new definition at §825.102 and §825.122 will read as follows:

Spouse, as defined in the statute, means a husband or wife. For purposes of this definition, husband or wife refers to the other person with whom an individual entered into marriage as defined or recognized under State law for purposes of marriage in the State in which the marriage was entered into or, in the case of a marriage entered into outside of any State, if the marriage is valid in the place where entered into and could have been entered into in at least one State. This definition includes an individual in a same-sex or common law marriage that either (1) was entered into in a State that recognizes such marriages or, (2) if entered into outside of any State, is valid in the place where entered into and could have been entered into in at least one State.

NLRB Recess Appointments.  Last week, a unanimous Supreme Court affirmed the D.C. District and Court of Appeals in finding that President Obama exceeded his authority in appointing three NLRB members during a three day adjournment.   NLRB v. Noel Canning, No.12-1281 (2014).  Under the Constitution, NLRB members must be confirmed by the Senate, although the President has the right under the Constitution to temporarily appoint members when the Senate is in “recess.”  In this case, President Obama appointed three members when the Senate was on a three –day adjournment and not on a self-declared recess.  An employer which lost a case at the NLRB challenged the appointment of the three adjournment-appointed members and, thus, the Board’s quorum to conduct business and make decisions.  The Court ultimately held that Congress is presumptively in recess or in business when it  says it is and the President does not get to decide that for Congress by declaring a three day adjournment to be a recess.   The recess appointments clause was not meant as a routine alternative for the President to avoid Senate confirmation.  In addition, the Court indicated that adjournments of less than 10 days would presumptively not be recesses so that the President could avoid Senate confirmation.   Accordingly, all of the decisions made by those appointed NLRB members are invalid and, if still pending in the legal process, likely will not be enforced by the Courts.  However, there is a legal quorum on the NLRB a present and it has indicated that it intends to act quickly to reconsider (and probably reconfirm) these challenged decisions.

Public Union/First Amendment Rights for Independent Contractors.  On Monday, a divided Supreme Court limited the ability of public unions in Illinois’ to encourage unionization of home healthcare workers (who had traditionally been considered independent contractors) by precluding the unions’ ability to collect “fair share fees” from the home healthcare workers who object under the First Amendment to joining and financially supporting a union.   Harris v. Quinn, No. 11-681 (2014).   The State of Illinois had declared the Personal Assistant (home healthcare workers) to be “employees” of the state by virtue of the fact that the state paid them with Medicaid funds even though they were hired, trained, supervised and fired by individual citizens receiving Medicaid assistance.   As described by the Court’s syllabus, “[o]ther than compensating PAs, the State’s involvement in employ­ment matters is minimal. Its employer status was created by execu­tive order, and later codified by the legislature, solely to permit PAs to join a labor union and engage in collective bargaining under Illi­nois’ Public Labor Relations Act (PLRA).”   The healthcare workers do not receive other state government employee benefits and are not protected by, for instance, sovereign immunity.  Because the home healthcare workers were only partial government employees, there was little service that the union was providing them in exchange for union dues or a fair share fee (to preclude free riders) since Medicaid dictated a uniform rate of pay and the employing citizens governed virtually all other terms and conditions of employment.   Accordingly, the Court refused to extend prior Court decisions to these de facto independent contractors and, instead, applied the traditional First Amendment legal analysis to the propriety of requiring these individuals to pay a fee to a union which they did not join or support.   The Court’s majority concluded that there was no compelling government interest which could not be achieved by less restrictive means that would override the workers’ First Amendment rights.

 

First Amendment Rights of Small Businesses.  On Monday, a divided Supreme Court held that closely-held corporations could exercise First Amendment and statutory rights as “persons.”   Burwell v. Hobby Lobby Stores, Inc.¸ No. 13-354 (2014).  The Court noted that it had previously recognized these rights when raised by non-profit corporations and by for-profit sole proprietorships.  Therefore, when the owners of these businesses objected to being required to pay for methods of contraception which interfered with fertilized eggs, they had standing to raise the claims. The Court noted that it would be impractical for a publicly held corporation to assert similar claims.  On the merits, the Court found that the government had failed to demonstrate the existence of a compelling interest to justify its regulations that could not be addressed with less restrictive measures. 

Minimum Wage for Federal Contractors. In February, President Obama issued Executive Order 13658 requiring federal contractors to increase the minimum wage paid to certain employees to $10.10/hour beginning with contracts issued in 2015. That amount will be tied to the Consumer Price Index and may be adjusted going forward.   This month, the Department of Labor issued proposed regulations to implement this Executive Order.   Importantly, not all federal contractors or hourly employees are covered.  The EO covers mostly those employees covered by the Service Contract Act, Davis-Bacon and work in federal park concessions.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

USCIS Again Delays Mandatory E-Verify Implementation For Federal Contractors Until June 30, 2009

As summarized here on December 9, 2008, January 12, 2009 and February 3, 2009, the federal government published its final regulation in November which will require many federal contractors and subcontractors to begin using the e-verify program to confirm the employment eligibility of many existing and newly-hired employees as federal service and construction contracts and solicitations are issued or amended. However, although the implementation date was initially scheduled to be January 15, 2009 and was pushed back to February 20, 2009 and then to May 20, last week it was once against postponed – this time until June 30, 2009. In other words, federal agencies have been directed to postpone the insertion of a new clause into procurement contracts and solicitations requiring contractors and subcontractors to enroll and utilize the e-verify program. This regulation implements Executive Order 12989 which was amended in June 2008.

The USCIC website now provides, among other things, that “This new rule requires federal contractors to agree, through language inserted into their federal contracts, to use E-Verify to confirm the employment eligibility of all persons hired during a contract term, and to confirm the employment eligibility of federal contractors’ current employees who perform contract services for the federal government within the United States. Federal contracts awarded and solicitations issued after May 21, 2009 will include a clause committing government contractors to use E-Verify. The same clause will also be required in subcontracts over $3,000 for services or construction. Contracts exempt from this rule include those that are for less than $100,000 and those that are for commercially available off-the-shelf items. Companies awarded a contract with the federal government will be required to enroll in E-Verify within 30 days of the contract award date. They will also need to begin using the E-Verify system to confirm that all of their new hires and their employees directly working on federal contracts are authorized to legally work in the United States.”

Additional details about the e-verify requirements and exemptions are included in the December 9 posting [Many Federal Contractors and Subcontractors Required to Use E-verify Program After January 15, 2009. ]

Contractors remain free to utilize the e-verify system before the June 30 implementation date.

Insomniacs can read the UCSIS announcement at http://www.uscis.gov/portal/site/uscis/menuitem.eb1d4c2a3e5b9ac89243c6a7543f6d1a/?vgnextoid=534bbd181e09d110VgnVCM1000004718190aRCRD&vgnextchannel=534bbd181e09d110VgnVCM1000004718190aRCRD

USCIS Again Delays Mandatory E-Verify Implementation For Federal Contractors Until May 21, 2009

As summarized here on December 9, 2008 and January 12, 2009, the federal government published its final regulation in November which will require many federal contractors and subcontractors to begin using the e-verify program to confirm the employment eligibility of many existing and newly-hired employees as federal service and construction contracts and solicitations are issued or amended. However, although the initial implementation date was scheduled to be January 15, 2009 and was pushed back to February 20, 2009, it has once against been postponed until May 21, 2009. In other words, federal agencies have been directed to postpone the insertion of a new clause into procurement contracts and solicitations requiring contractors and subcontractors to enroll and utilize the e-verify program. This regulation implements Executive Order 12989 which was amended in June 2008.

The USCIC website now provides, among other things, that “This new rule requires federal contractors to agree, through language inserted into their federal contracts, to use E-Verify to confirm the employment eligibility of all persons hired during a contract term, and to confirm the employment eligibility of federal contractors’ current employees who perform contract services for the federal government within the United States. Federal contracts awarded and solicitations issued after May 21, 2009 will include a clause committing government contractors to use E-Verify. The same clause will also be required in subcontracts over $3,000 for services or construction. Contracts exempt from this rule include those that are for less than $100,000 and those that are for commercially available off-the-shelf items. Companies awarded a contract with the federal government will be required to enroll in E-Verify within 30 days of the contract award date. They will also need to begin using the E-Verify system to confirm that all of their new hires and their employees directly working on federal contracts are authorized to legally work in the United States.”

Additional details about the e-verify requirements and exemptions are included in the December 9 posting [Many Federal Contractors and Subcontractors Required to Use E-verify Program After January 15, 2009].

Contractors remain free to utilize the e-verify system and USCIS points out that more than 100,000 employers have registered for the program. In response to the Chamber’s protests about e-verify, USCIS contends that e-verify is not mandatory because employers are not mandated to become federal contractors.

Insomniacs can read the UCSIS announcement at http://www.uscis.gov/portal/site/uscis/menuitem.eb1d4c2a3e5b9ac89243c6a7543f6d1a/?vgnextoid=534bbd181e09d110VgnVCM1000004718190aRCRD&vgnextchannel=534bbd181e09d110VgnVCM1000004718190aRCRD.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

USCIS Agrees with Chamber of Commerce to Delay Mandatory E-Verify Implementation For Federal Contractors Until February 20, 2009

As summarized here on December 9, 2008, the federal government published its final regulation in November which will require many federal contractors and subcontractors to begin using the e-verify program to confirm the employment eligibility of many existing and newly-hired employees as federal service and construction contracts and solicitations are issued or amended after January 15, 2009 (i.e., this Friday). In other words, federal agencies have been directed to insert a new clause into procurement contracts and solicitations requiring contractors and subcontractors to enroll and utilize the e-verify program. This regulation implements Executive Order 12989 which was amended in June 2008.

The U.S. Chamber of Commerce filed a federal lawsuit in December 2008 seeking to invalidate the new federal regulation. In the meantime, on Friday, January 9, 2009, the Chamber of Commerce announced that USCIS had agreed in the interim to delay mandatory implementation of the e-verify system for federal contractors until February 20, 2009. (This information is similarly, but less overtly, confirmed on the USCIS website). Contractors remain free to utilize the e-verify system and USCIS points out that more than 100,000 employers have registered for the program. In response to the Chamber’s protests about e-verify, USCIS contends that e-verify is not mandatory because employers are not mandated to become federal contractors.

Insomniacs can read the Chamber’s full press release at http://www.uschamber.com/press/releases/2009/january/090109_everify.htm and confirm USCIS’s agreement to the postponement at http://www.uscis.gov/portal/site/uscis/menuitem.eb1d4c2a3e5b9ac89243c6a7543f6d1a/?vgnextoid=75bce2e261405110VgnVCM1000004718190aRCRD&vgnextchannel=75bce2e261405110VgnVCM1000004718190aRCRD.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Many Federal Contractors and Subcontractors Required to Use E-verify Program After January 15, 2009.

[Be advised that this summary was updated on January 12, 2009]

Last month, the federal government published its final regulation which will require many federal contractors and subcontractors to begin using the e-verify program to confirm the employment eligibility of many existing and newly-hired employees as federal service and construction contracts and solicitations are issued or amended after January 15, 2009. In other words, federal agencies are directed to insert a new clause into procurement contracts and solicitations requiring contractors and subcontractors to enroll and utilize the e-verify program. This regulation implements Executive Order 12989 which was amended in June 2008. E-verify was formally known Basic Pilot/Employment Eligibility Verification Program and is operated by the Department of Homeland Security and the U.S. Citizenship and Immigration Service in partnership with the Social Security Administration. “Information on registration for and use of the e-verify program can be obtained via the internet at the Department of Homeland Security web site: http://www.dhs.gov/e-verify.”

Not All Contracts Affected. The clause need not be included in all federal contracts (and does not include, for example, commercially off-the-shelf goods, contracts which do not exceed the simplified acquisition threshold, are only for work outside the United States, are for performance periods of less than 120 days, etc.). Department Heads may waive the e-verify requirements.

Employees Necessarily Affected. If the contractor is affected, all new hires and those current employees (hired after November 6, 1986) who are assigned to the subject federal contract are required to be checked with the e-verify program. However, contractors have the option of verifying the employment eligibility of all existing employees (hired after November 6, 1986) instead of merely those assigned to the contract in case there is difficulty determining which employees are performing such work. In that event, the verification should be implemented within 180 calendar days of enrollment in the e-verify program or of when notification is given to the e-verify operations of the decision to exercise this option.

Not All Employees Necessarily Affected. Instead of verifying the employment eligibility of all new employees, certain employers (i.e., colleges, state and local governments, etc.) may elect to only verify the employment eligibility of new and current employees who are assigned to the federal contract. Contractors are also not required to verify the employment eligibility of current employees (i) who hold an active security clearance of confidential, secret or top secret, (ii) who have been issued HSPD-12 credentials by the Department of Homeland Security; or (iii) whose work normally performs support work (such as indirect or overhead functions) and does not perform any substantial duties applicable to the contract.

Duties. If they have not already enrolled in e-verify, affected employers are required to enroll “as a Federal Contractor in the E-Verify program within 30 calendar days of the contract award . . . Within 90 calendar days of enrollment in the E-Verify program, [the employer must] begin to use E-Verify to initiate verification of employment eligibility of all new hires . . . . who are working in the United States, whether or not assigned to the contract, within 3 business days after the date of hire . . . . For each employee assigned to the contract, [the employer must] initiate verification within 90 calendar days after date of enrollment or within 30 calendar days of the employee’s assignment to the contract, whichever date is later.”

Employers who already enrolled in e-verify at least 90 days before when the contract is awarded must “initiate verification of all new hires . . . . who are working in the United States, whether or not assigned to the contract, within 3 business days after the date of hire. Employers who have not been enrolled in e-verify for at least 90 days before the contract is awarded, must begin using the program within that 90 day period.

Insomniacs can read the full executive order at http://www.whitehouse.gov/news/releases/2008/06/20080609-2.html or read more about the e-verify program from the USCIS website at http://www.uscis.gov/portal/site/uscis/menuitem.eb1d4c2a3e5b9ac89243c6a7543f6d1a/?vgnextoid=75bce2e261405110VgnVCM1000004718190aRCRD&vgnextchannel=75bce2e261405110VgnVCM1000004718190aRCRD. The final regulation can be reviewed at 73 Fed. Reg. 67651 (11/14/08) or http://edocket.access.gpo.gov/2008/pdf/E8-26904.pdf.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.