Government Contracts

State Contracts: Alabama Agencies Can’t Be Sued

Robert C. Lockwood
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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

Robert C. Lockwood
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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

Robert C. Lockwood
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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

Robert C. Lockwood
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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

Robert C. Lockwood
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A gavel and a name plate with the engraving Minimum Wage
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

Robert C. Lockwood
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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