Contractors will have more forms to fill out, and possibly some explaining to do, when the recently issued Executive Order on Fair Pay and Safe Workplaces is fully implemented in 2016. The Executive Order requires offerors to disclose whether they have been found to have violated, within the past 3 years, any of 14 different labor laws.

Covered laws include:  Fair Labor Standards Act, Occupation Safety and Health Act, Davis Bacon Act, Service Contract Act, Americans with Disabilities Act, and a host of others. Violations of equivalent state laws must also be reported.

An offeror with violations will be provided an opportunity to disclose steps it has taken to correct the violations or improve compliance. The procuring contractor officer will take this into account in determining the offeror’s responsibility.  The contractor will need to update its disclosure every six months.

Agencies are also required to ensure that contractors (and their subcontractors) provide their employees with “paycheck transparency,” providing a document to each employee that shows the hours worked, overtime hours, pay, and any additions or deductions made. Contractors must also state in writing if an individual is considered an independent contractor and not an employee.

These requirements apply to contracts and subcontracts valued at $500,000 or more. GSA is charged with developing a single website for contractors to use in meeting these new reporting requirements.

For contracts (and subcontracts) valued at $1 million or more, contractors may not require that their employees arbitrate claims relating to Civil Rights violations, sexual assault, or harassment. (Once such a claim has arisen, the parties can mutually agree to arbitrate the claim.)  This restriction, however, does not apply to employees who are covered by a Collective Bargaining Agreement.

The Executive Order is effective now, but the reporting requirement is not expected to begin until 2016, after the development of FAR regulations and clauses. Since the disclosure form has a 3-year look back period, violations that occurred in 2013 would be subject to the reporting requirement.

Contractors need only report adjudicated labor law violations:  a civil judgment, arbitral award, or administrative merits determination that the contractor violated a covered labor law. Settlements of alleged labor law violations are not reported. The Executive Order thus places further pressure on contractors to settle such claims rather than risk a reportable violation.

Retaliating against an employee for reporting safety violations, the U.S. Postal Service asserted baseless terrorism charges against him. As a result, the employee was dismissed from his job, arrested, detained, harassed, criminally charged with committing acts of terrorism, and subjected to an extended campaign of public disparagement. That sounds like the exaggerated ranting of a would-be whistleblower seeking to cash in on a big pay day. But it’s not. These are the allegations made by the U.S. Department of Labor in a lawsuit it filed against its sister agency, the U.S. Postal Service, in an action filed in the U.S. District Court for the Eastern District of Missouri, Eastern Division, Case No. 4:14-cv-1233.

Continue Reading U.S. Postal Service plays the terrorist card against whistleblower

The line between “white collar crime” and “street crime” is often blurred as prosecutors and investigators deploy all of the tools at their disposal against white collar and regulatory offenses. Principal among these tools is the search warrant. While the execution of a lawfully-obtained search warrant cannot be stopped, a company’s reaction to the search and to the agents conducting it can have a significant impact on the course of a government investigation. A well-executed response may yield intelligence about the nature and scope of the investigation and may limit the amount of information the government obtains.

In this post, we present an overview of the search warrant process and offer some basic guidelines that may be used in preparing for and responding to a search warrant.

Understanding the element of surprise

Government investigators correctly see search warrants as their one chance to use the element of surprise. They make every effort to use it effectively. Long before a warrant is served, agents spend weeks or months on pre-search surveillance. They serve warrants simultaneously at all of a company’s offices. They conduct interviews of key executives at their residences early in the morning before attorneys are available. They use whistleblowers present during the execution of the warrant wired to record employee conversations of the employees. They interview employees on site before company attorneys can inform them of their rights or contact the lead prosecutor. They engage in surveillance of key individuals after the search is executed. They even search nearby dumpsters for evidence. Several weeks later, they may issue a grand jury subpoena requiring the company to produce email and text messages sent during and after the search.

Investigators have the process down to a science, while the company at the center of the investigation likely will be going through it for the first time. Preparation and training on the process will help level the playing field. Here are the five basic elements that should be addressed in an action plan for responding to a search warrant.

Continue Reading A five-part action plan for responding to a federal search warrant

President Obama signed an Executive Order raising the minimum wage for employees of federal contractors on February 12, 2014. Our earlier entry on the issue discusses how a higher minimum wage will affect current contractors. It looks like more waiting will be required before the true impact will be known.

The Executive Order calls for the Secretary of Labor and the FAR Council to draft regulations and contract provisions implementing the new minimum wage and to publish them later this year. But the Executive Order also includes some useful guidance.

Here are the key takeaways—

Continue Reading Obama’s Executive Order on the new federal contractor minimum wage

As part of the Obama Administration’s push to raise the minimum wage, the President announced during his State of the Union speech that he intends to issue an Executive Order raising the minimum wage for workers on federal contracts to $10.10 per hour. We’ll wait for the Executive Order itself before offering specific guidance on its requirements, but it’s not too early for contractors to begin thinking about how this might impact their business. Here are a few things to consider—

1.  The new minimum wage could apply to some current contracts.

The Obama Administration has asserted that the wage increase will apply only to new federal contracts—i.e., those awarded after the effective date of the Order. But the regulations implementing the prevailing wage requirements could mean that the $10.10 minimum will also apply to some current contracts.

The McNamara-O’Hara Service Contract Act requires contractors and subcontractors performing service contracts to pay their workers not less than the locally prevailing wage or the amount paid by the predecessor contractor under a collective bargaining agreement. The Department of Labor prepares wage determinations establishing the minimum wages and fringe benefits based on surveys of local prevailing wages or existing collectively bargaining agreements.

FAR provisions implementing the Service Contract Act contemplate that the prevailing wages may change during the course of a service contract. Under FAR 22.1007, the contracting officer is required to obtain and incorporate a new wage determination for modifications that extend the term of an existing contract or make a change in the scope of work “whereby labor requirements are affected significantly.” FAR 22.1007(b). A new wage determination is also required on the annual or biennial anniversary date of multi-year service contracts. FAR 22.1007(c). Depending on how the Executive Order implementing the new minimum wage is worded, the wage determination applicable to contract modifications or to multi-year service contracts could require current contractors to pay the new $10.10 minimum wage.

Continue Reading How current federal contractors are affected by the new $10.10 minimum wage

New OFCCP rules amending the nondiscrimination and affirmative action provisions of the Vietnam Era Veterans Readjustment and Assistance Act and Section 503 of the Rehabilitation Act are expected to be effective March 24, 2014. OFCCP has published a set of forms that are to be used in implementing the new rules, which are available in this client alert from Husch Blackwell’s OFCCP compliance team.

As we have discussed in several earlier posts, the new rules represent an aggressive move by OFCCP. They impose significant new recordkeeping obligations on federal contractors and subcontractors. They set high placement goals and hiring benchmarks for veterans and individuals with disabilities. They authorize OFCCP to obtain more contractor information during compliance reviews.

One of the key issues with the new rules is that they require federal contractors and subcontractors to ask job applicants and current employees whether they are individuals with disabilities. Such questioning is normally prohibited by the Americans with Disabilities Act.  Needless to say, there has been a lot of opposition to the new OFCCP rules.

Continue Reading OFCCP’s new hiring policies under attack

Under the OFCCP’s final rule announced on August 27, 2013, federal contractors and subcontractors that meet the applicability criteria will be required to meet new goals for hiring protected veterans and individuals with disabilities. For veterans, the new “benchmark” is based on the percentage of veterans in the civilian labor force (currently 8 percent) or another figure that reflects the contractor’s unique hiring circumstances. 78 Fed. Reg. 58613 (Sept. 24, 2013) [pdf].  For individuals with disabilities [pdf], the “placement goal” is 7 percent, measured by job groups. 78 Fed. Reg. 58681 (Sept. 24, 2013) [pdf].

In addition to requiring contractors to implement and keep records reflecting their compliance with the new percentage benchmarks and goals, here are some key features of the new rule:

  • Flowdown of the Equal Opportunity clause. The precise language and appearance of contract clauses that impose the affirmative action requirements on subcontractors are specified.
  • Job listing requirements. Contractors will be required to state specifically that they are equal opportunity employers of protected veterans and individuals with disabilities.
  • Invitation to self-identify. Job applicants must be given an opportunity to self-identify as a protected veteran or as an individual with disabilities before they are given an offer of employment. OFCCP intends to publish a form for use by contractors in making this inquiry. All employees must be given an opportunity to self-identify as an individual with disabilities within a year after the rule is effective and thereafter at least every five years.
  • Data collection. Contractors will be required to document and update quantitative data on the number of veterans and individuals with disabilities that apply for jobs and the number that are hired.
  • OFCCP access to records. Contractors are required to allow OFCCP broader access to records needed to verify their compliance. Records would have to be provided on-site or off-site and in any format that OFCCP requests.

The new requirements are expected to go into effect in March 2014. Contractors with a written affirmative action plan in place on the effective date of the new rules will have until the date of their next affirmative action plan year to implement the goal-setting and self-identification requirements.

For more information on the final rule and the specific requirements imposed on federal contractors and subcontractors, Hush Blackwell’s client update is available here. Background on OFCCP’s initiatives for individuals with disabilities is available in these earlier blog entries:

OFCCP’S push for a 7% disabled workforce (Dec. 27, 2011)

Morbid obesity as a disability under the ADA (Oct. 3, 2011)

Section 827 of the 2013 National Defense Authorization Act [pdf] permanently enhances whistleblower protections for employees of DoD and NASA contractors and sub-contractors. Section 828 establishes a“pilot program” to provide enhanced whistleblower protections for employees of civilian

Alarmagency contractors and subcontractors for the next four years. In plain English, here is a look at what the enhanced whistleblower protections are:

  • Subcontractor employees are covered by the whistleblower protections. Existing law had extended whistleblower protections only to prime contractor employees.
  • Internal disclosures of non-compliance are protected. Existing law protected whistleblowers only when they made “external disclosures” to government officials.
  • Allegations of “abuse of authority” are included in the list of protected disclosures.
  • Contract clauses limiting whistleblower rights are unenforceable.
  • Individuals who prevail on whistleblower claims may recover their reasonable attorney’s fees and costs.

These amendments are not “new” whistleblower protections, as much as they are an expansion of the whistleblower protections adopted in the American Recovery and Reinvestment Act of 2009, Public Law No. 111-5 (Feb. 17, 2009) [pdf], also known as “the Stimulus.” The ARRA whistleblower protections appeared in section 1553.

Audio from McClain Bryant’s interview with Francis Rose is available here [mp3].

Project Labor Agreements have become increasingly common on federal government construction projects, especially since the issuance of Executive Order 13502 [pdf] and the implementing regulations (FAR Subpart 22.5). These rules encourage the use of PLAs in connection with all “large-scale construction projects,” defined as a “project where the total cost to the Federal Government is $25 million or more.” Opposition to these rules focused on the potential for discriminatory impact on non-union contractors and employees. Implementation has not been without controversy either, with contentious litigation focusing on the discriminatory impact of PLAs on government projects.

Given the background, it is not surprising that we are seeing new legislation to provide federal agencies with more flexibility in the use of PLAs. See Government Neutrality in Contracting Act (H.R. 436 and S. 109) (introduced January 29, 2013). Proponents of the legislation cite to studies indicating that government-mandated PLAs increase the cost of construction projects between 12 percent and 18 percent.

Similar bills were introduced last year and did not make it out of committee.  We will see what happens in the current Congress.

The Department of Labor has announced that new regulations addressing Nondisplacement of Qualified Workers Under Service Contracts will go into effect on January 18, 2013. (See 77 Fed. Reg. 75780 (Dec. 21, 2012) [pdf].) DOL issued the final regulations in August 2012 after receiving comments on proposed rules published in June. Our comments on the impact of the proposed rules appear here.

The DOL’s action means that all Service Contract Act contracts over the simplified acquisition threshold awarded on or after January 18, 2013 will include a contract clause requiring prime contractors and subcontractors to make good faith offers of employment to SCA-covered employees employed under the predecessor contract.

Here are some of the highlights of the new regulations and the new contract clause:

Continue Reading New regulations on nondisplacement of qualified workers under Service Contracts