OFCCP Affirmative Action Audits on the Horizon

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The OFCCP is about to commence audits of federal contractors to ensure compliance with their affirmative action obligations.

The Office of Federal Contractor Compliance Programs (“OFCCP”) is focusing on the requirement that federal contractors adopt and annually update affirmative action plans. On August 2, 2018, the OFCCP’s Acting Director, Craig Leen, participated in a public discussion during which he reviewed the current compliance process for contractors.   Currently, contractors simply “check the box” to certify compliance with affirmative action obligations in the General Services Administration’s (“GSA’s”) System for Award Management (“SAM”) registration system.  Mr. Leen expressed concern that many contractors checking the box do not actually possess a valid affirmative action plan.

Mr. Leen’s comments were followed-up by a new OFCCP directive on August 24, 2018:  Directive 2018-07.  The subject of that directive is the commencement of an “Affirmative Action Program Verification Initiative.”  OFCCP “is concerned that many federal contractors are not fulfilling their legal duty to develop and maintain AAPs [Affirmative Action Plans] and update them on an annual basis.”  Therefore,  Directive 2018-07 requires OFCCP to develop a comprehensive program to verify that federal contractors are complying with affirmative action obligations on a yearly basis.  That program will include:

• Development of a process whereby contractors would certify on a yearly basis
compliance with AAP requirements.
• Inclusion of a criterion in the neutral scheduling methodology increasing the
likelihood of compliance reviews for contractors that have not certified compliance
with the AAP requirements.
• Compliance checks to verify contractor compliance with AAP requirements.
• Requesting proffer of the AAP by contractors when requesting extensions of time
to provide support data in response to a scheduling letter.
• Development of information technology to collect and facilitate review of AAPs
provided by federal contractors

Directive 2018-07 does not provide a timeline for implementation.  Nevertheless, it is abundantly clear that compliance audits are coming.  Therefore, federal contractors should carefully review their affirmative action plans for compliance, and make sure that those plan are updated annually.

Federal Contractors: OFCCP Issues Directive on Religious Freedom

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The OFCCP issued a directive requiring recognition of religious freedom.

The Office of Federal Contract Compliance Programs (“OFCCP”) has issued a new directive reminding its staff members of their obligation to recognize the religious freedom of federal contractors.  Here’s a link to the new directive:  Directive 2018-3.  Here’s a link the OFCCP press release about the directive:  Press Release.

The directive was issued in response to several recent decisions from the United States Supreme Court on religious freedom, and President Trump’s executive order which “reminded the federal government of its duty to protect religious exercise — and not to impede it.”  Thus, the OFFCP reminded its staff that:

• They “cannot act in a manner that passes judgment upon or presupposes the
illegitimacy ofreligious beliefs and practices” and must “proceed in a manner
neutral toward and tolerant of … religious beliefs.”
• They cannot “condition the availability of [opportunities] upon a recipient’s
willingness to surrender his [ or her] religiously impelled status. ”
• “[A] federal regulation’s restriction on the activities of a for-profit closely held
corporation must comply with [the Religious Freedom Restoration Act].”
• They must permit “faith-based and community organizations, to the fullest
opportunity permitted by law, to compete on a level playing field for …
[Federal] contracts.”
• They must respect the right of “religious people and institutions … to practice
their faith without fear of discrimination or retaliation by the Federal
Government. “

As a practical matter, the new OFCCP directive does not provide much clarity on a key religious issue:  whether government contractors can discriminate against LGBT persons based upon religious beliefs.  Indeed, I previously wrote that President Trump will not rescind President Obama’s Executive Order prohibiting LGBT discrimination:  Trump and LGBT.  For now, government contractors should proceed cautiously if they want take employment actions based upon religious beliefs.

Service Contract Act: Non-Compliance Can Be Costly

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Failure to comply with the Service Contract Act can be expensive for government contractors.

My firm helps government contractors comply with a broad array of regulations imposed by the federal government.  Here is a link to our firm’s new Government Contracts Lawyers web site:  Wilmer & Lee Government Contracts.  Within our government contracts group, I am frequently tasked with assisting government contractors in their efforts to comply with the McNamara-O’Hara Service Contract Act (“SCA”).

The United States Department of Labor (“DOL”) enforces the SCA.  Frequently, the DOL issues press releases when companies agree to pay for violations of the SCA.  Following are a series of press releases issued by DOL this Spring.  Hopefully, they can provide you with some guidance on what not to do in administering an SCA contract.  The title of each release links to the DOL web site.

18-630-ATL.  May 8, 2018.  A company based in my hometown of Huntsville, Alabama agreed to pay $95,000 in back wages to 12 employee for failure to pay prevailing wage rates for work performed on a federal contract.  Y-Tech Services, Inc. categorized employees as aircraft workers when they actually performed the duties of sheet metal employees, which required higher rates.

18-625-BOS. May 8, 2018.  This is actually a Davis-Bacon Act case and not an SCA case.  Gilliam Co. LLC of Franklin, Connecticut was debarred from future federal construction contracts.  Gilliam failed to make required fringe-benefit payments — primarily 401(k) contributions.  Gilliam also took payroll deductions from a non-existent vacation fund, failed to pay employees for their last two weeks of work, and submitted falsified payroll records.  The total amount paid to 12 employees was $125,348.

18-0658-SAN.  May 1, 2018.  United States Auto Club, Inc. (“USAC”) provides emergency roadside assistance to the United States Postal Service.  The SCA contract required that employees be paid $20.84 per hour.  USAC subcontracted the work to Norbert’s Towing Service, which only paid employees half that rate.  As a result, USAC owed 29 employees $377,512 in unpaid prevailing wages; $165,116 in required health and welfare benefits; and, $107,367 in overtime.

18-04650-ATL.  March 29, 2018.  Insight Global, LLC worked as a subcontractor for Hewlett Packard on an information technology contract with the U.S. Department of the Navy.  Insight Global erroneously categorized and paid 14 employee as computer operators, when they actually performed the work of personal computer support technicians.  As a result, Insight Global agreed to pay $354,978 in back wages.

OFCCP: TRICARE Moratorium Extended to 2021

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The OFCCP extended a moratorium which excuses TRICARE providers from compliance with affirmative action obligations.

Should TRICARE providers be required to implement affirmative action?  That’s the issue that the United States Department of Labor raised when it issued Directive 2014-01 on March 7, 2014.  Here’s a link to that directive:  DOL Directive 2014-01.  TRICARE is a federal healthcare program that provides benefits to American veterans.  The DOL’s Office of Federal Contract Compliance Programs (“OFCCP”) is responsible for enforcement of the affirmative action obligations imposed upon federal contractors.  Directive 2014-01 effectively imposed a five-year moratorium on requiring TRICARE subcontractors to comply with those obligations.  On May 18, 2018, OFCCP extended that moratorium to May 7, 2021.

Federal laws and regulations require federal contractors and subcontractors to take affirmative steps to ensure equal employment opportunity in their employment processes. When it issued Directive 2014-01, the DOL  recognized a difference of opinion as to who is a covered subcontractor under the law and what obligations the TRICARE subcontractor community has under the law.  Because of that difference of opinion, DOL decided that it would impose the moratorium on enforcement.

The moratorium, however, was set to expire in 2019.  OFCCP’s May 18, 2018 press release extended the moratorium.  Here’s a link to the press release:  May 18, 2018 Press Release.  OFCCP provided the following rationale for extending the affirmative action moratorium:  “Active-duty and retired service members, and their families, too often have difficulty accessing health care. There is evidence suggesting that continued uncertainty regarding the extent to which OFCCP requirements apply to TRICARE providers exacerbates these challenges. With the approaching expiration of the moratorium adding additional uncertainty, this extension will provide OFCCP time to receive feedback from stakeholders, relieve uncertainty, and give OFCCP an opportunity to evaluate and address legislation that may be enacted on this issue.”

 

State Contracts: Alabama Agencies Can’t Be Sued

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Agencies of the State of Alabama are immune from law suits.

If you are an employee of an agency of the State of Alabama, your options are limited if that agency breaches your employment contract.  That’s a lesson that a physician learned the hard way in Ex parte Board of Trustess of Univ. of Ala., No. 1170183, 2018 WL 2276103 (Ala. May 18, 2018).  The State of Alabama and its agencies cannot be sued for violations of Alabama law. They are immune from suit under the provisions of Article I, Section 14 of the Alabama Constitution of 1901.

Article I, Section 14 provides:  “The State of Alabama shall never be made a defendant in any court of law or equity.”  This means that the State is entitled to sovereign immunity from law suits.  If you sue a State agency, your law suit is going to be dismissed.  And, the list of State agencies is immense.  State Universities like Alabama and Auburn are immune.  The Alabama Department of Transportation is immune.  Local boards of education are immune.

Apparently, Dr. Paul F. Castellanos was unfamiliar with the immunity enjoyed by the University of Alabama.  He possessed a written employment contract with the University of Alabama Health Services Foundation.  After he was terminated from employment, he sued the Foundation, the University of Alabama Board of Trustees, and several individuals.  Dr. Castellanos’s employment contract contained an arbitration provision.  All defendants except the Board of Trustees asked a circuit judge to compel arbitration.  But, the Board of Trustees asked the judge to dismiss on the basis of sovereign immunity.  The judge declined to dismiss, but instead ordered the Board of Trustee to go to arbitration.

The Alabama Supreme Court held that the circuit judge committed error.  Immunity prevented the judge from exercising any power whatsoever over the Trustees.  As a result, the judge’s only option was to dismiss the Board.

Alabama employers are also businesses.  They should be aware that contracts with the State of Alabama, and its agencies, can be difficult.  If the agency breaches a contract, a business has a few options.  Limited lawsuits are permitted directly against the agency director (as opposed to the agency itself).  Also, the State provides a limited remedy through the Alabama Board of Adjustment.  Before taking any legal action against a State agency, carefully consider the impact of sovereign immunity.

Federal Contractors: Blacklisting Rules Enjoined

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A preliminary injunction saves federal contractors from the “blacklisting rules.”

Yesterday, federal contractors received a reprieve from one of President Obama’s executive orders.  Late on October 24, 2016, a federal judge in the Eastern District of Texas granted a preliminary injunction halting implementation of certain provisions of the Fair Pay and Safe Workplaces Executive Order (E.O. 13637) and the Final Rule implementing that order.  The injunction applies nationwide and blocks two key provisions of the Final Rule which affected government contractors: (1) disclosure and disqualification requirements; and, (2) a prohibition on pre-dispute arbitration agreements.

The preliminary injunction blocks the portions of E.O. 13637 and its Final Rule, which are also known as “blacklisting rules.”  Those rules require federal contractors to disclose adverse findings and decisions related to their compliance with federal and state labor and employment laws.  The blacklisting rules also allow federal agencies to deny contracts to employers who are deemed to lack a satisfactory record of integrity and business ethics based on such disclosures.  The blacklisting rules were supposed to take effect on October 25, 2016.

E.O. 13637 and its Final Rule also prohibit certain federal contractors from requiring pre-dispute arbitration agreements from its employees for disputes under Title VII of the Civil Rights Act of 1964, or claims arising out of or related to sexual harassment.  The injunction also blocked those arbitration restrictions.

Importantly, the federal judge did not issue an injunction related to “paycheck transparency” provisions of E.O. 13637 and its Final Rule.  Those provisions will go into effect for solicitations or contract amendments made on or after January 1, 2017. Under the “paycheck transparency” provisions, covered contractors and subcontractors must provide wage statements to covered workers.  Those statements must give workers information concerning hours worked, overtime hours, pay, and any additions to or deductions made from pay.

Federal Contractors: Minimum Wage Increases to $10.20

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The minimum wage for employees of federal contractors will increase on January 1, 2017

The minimum wage for employees of many federal contractors will increase to $10.20 per hour effective January 1, 2017.  President Obama’s Executive Order 13658 established a minimum wage for contractors working under four major categories of federal contracts:

  1. Procurement contracts for construction covered by the Davis-Bacon Act (DBA);
  2. Service contracts covered by the Service Contract Act (SCA);
  3. Concessions contracts, including any concessions contract excluded from the SCA by the Department of Labor’s regulations at 29 CFR 4.133(b); and
  4.  Contracts in connection with Federal property or lands and related to offering services for Federal employees, their dependents, or the general public.

Effective January 1, 2015, the minimum wage was set at $10.10 per hour, and that wage has seen five cent increases over the last two years.  On September 20, 2016, the United States Department of Labor announced the increase for 2017.  The notice of wage increase and an updated workers’ rights poster can be found here:  Minimum Wage Increase

 

EEOC Weighs In On Transgender Bathrooms

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bathrooms

The United States Equal Employment Opportunity Commission (“EEOC”) has issued a Fact Sheet on Bathroom Access for Transgender Employees.  It can be found here: Fact Sheet On Bathroom Access for Transgender Employees

The EEOC’s Fact Sheet seems to be a response to laws recently passed by States and even local governments.  Among other things, those laws restrict the ability of transgender people to use restrooms consistent with their gender identity.  Thus, the EEOC plainly warns that “state law is not a defense” to a transgender discrimination claim under Title VII of the Civil Rights Act of 1964.

Other than providing a warning to governmental entities, the Fact Sheet basically provides a summary of the EEOC’s previous rulings on transgender discrimination, which hold:

 

  • denying an employee equal access to a common restroom corresponding to the employee’s gender identity is sex discrimination;
  • an employer cannot condition this right on the employee undergoing or providing proof of surgery or any other medical procedure; and,
  • an employer cannot avoid the requirement to provide equal access to a common restroom by restricting a transgender employee to a single-user restroom instead (though the employer can make a single-user restroom available to all employees who might choose to use it).

In addition to the EEOC’s Fact Sheet, President Obama’s Executive Order 13672 prohibits transgender discrimination by federal contractors.  The Department of Labor’s Fact Sheet interpreting that order provides:

Under the Final Rule, contractors must ensure that their restroom access policies and procedures do not discriminate based on the sexual orientation or gender identity of an applicant or employee. In keeping with the federal government’s existing legal position on this issue, contractors must allow employees and applicants to use restrooms consistent with their gender identity.

That fact sheet can be found here:  DOL Fact Sheet on LGBT Discrimination

 

I previously discussed LGBT issues here:  EMERGING LGBT ISSUES IN THE WORKPLACE.  The EEOC is clearly looking to enforce Title VII to prohibit discrimination on the basis of gender identity or sexual orientation.  At this point, the best advice for employers is to ensure that transgender employees are provided equal access to restrooms consistent with their gender identity.

 

Federal Contractor Minimum Wage:  Complying With President Obama’s Executive Order

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A gavel and a name plate with the engraving Minimum Wage

Effective January 1, 2016, many federal contractors are required to pay their employees a minimum wage of $10.15 per hour.  This requirement applies to:  (1) Contracts/replacement contracts that result from solicitations issued on or after January 1, 2015; (2) Modifications of existing contracts which have more than 6 months remaining on their term; and, (3) Service Contract Act and Davis Bacon Act Contracts.  The minimum wage requirements are the result of President Obama’s Executive Order 13658.

Importantly, the Executive Order also requires notification of employees.  The Department of Labor has issued a revised “EEOC is the Law” poster, which can be found here:  Poster

Finally, the minimum wage requirements must be flowed-down to subcontractors, which can be accomplished with the addition of the following language to the subcontract:  “Executive Order 13658 – Establishing a Minimum Wage for Contractors, and its implementing regulations, including the applicable contract clause, are incorporated by reference into this contract as if fully set forth in this contract. FAR Clause 52.222-55, Minimum Wages Under Executive Order 13658 (Dec 2014) (Executive Order 13658).”

Take some time to review your contracts and make sure you comply with Executive Order 13568.

Government Contractors Need to Get Ready for New FAR Confidentiality Rules

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The Federal Acquisition Regulatory Council (“FAR”) has issued a proposed rule which prohibits government contractors from using confidentiality agreements to restrict employees or subcontractors from reporting fraud, waste or abuse to government officials.  That rule can be found here:  FAR Confidentiality Rule.  The Proposed Rule will apply to contracts, including existing contracts, funded by appropriations for Fiscal Year 2015 or subsequent fiscal years.

The proposed rule imposes four obligations on government contractors.

 1. Prospective contractors must include the following affirmative representation of compliance with the rule when the contractor responds to an agency request for bids:

By submission of its offer, the Offeror represents that it does not require employees or subcontractors of such entity seeking to report waste, fraud, or abuse to sign or comply with internal confidentiality agreements or statements prohibiting or otherwise restricting such employees or subcontractors from lawfully reporting such waste, fraud, or abuse to a designated investigative or law enforcement representative of a Federal department or agency authorized to receive such information.

2.  Any contract covered by the Proposed Rule must contain the following clause:

The Contractor shall not require employees or subcontractors of such entity seeking to report waste, fraud, or abuse to sign or comply with internal confidentiality agreements or statements prohibiting or otherwise restricting such employees or subcontractors from lawfully reporting such waste, fraud, or abuse to a designated investigative or law enforcement representative of a Federal department or agency authorized to receive such information.

3. Contractors must notify employees that internal confidentiality agreements covered by the Proposed Rule are no longer effective.

4. Contractors must flow-down the requirements of the proposed rule to subcontractors.

            Interested parties have until March 22, 2016 to submit comments on the proposed rule.  If you are interested, here’s a link with directions on the procedure for comments: Comments