FY 2013 Budget Request its In year 2013 budget request, DOL has asked Congress for $237.7 million and 1,839 fulltime equivalent employees (FTEs) for the Wage & Hour Division (the DOL division responsible for enforcing the FLSA). request is an increase of year 2012. $10.7 million and 80 FTEs over Compared to 2008, this represents an increase of $62 million and 631 FTEs. Consistent with its punitive “gotcha” approach toward employers, DOL proposes to partially fund its increase by cutting $2 million and 12 FTEs from its employer compliance assistance programs. Another $2.5 million and 21 FTEs would be transferred from the budget for DOL’s Women’s Bureau.
Increasing the Minimum Wage for Federal Contractors
President Biden’s Executive Order 14026 (EO 14026) increases the minimum hourly wage that federal contractors must pay their workers from $10.50 to $15. The The Misclassification Initiative largest DOL portion of thepublished requested increase a final rule implementing for fiscal year 2013 – $4 million and 35 new investigators – will support DOL’s enforcement the EO 14026, which is aimed to promote “misclassification initiative” which targets the following industries which DOL believes often theasgovernment’s procurement interests in misclassify employees independent contractors: • Construction • economy Janitorial and efficiency by contracting with Health • CareHome Care • Child TheENFORCERS sources that adequately compensate their • andTransportation Warehousing Priorities of the U.S. Department of Labor in 2012. • andMeatProcessing Poultry • workers. Landscaping Of course, it will also result in taxpayers paying almost 50% more for certain types of services.
: Government Contracts Labor & Employment Developments – Part 1 By Ta MMy D. M CCUTCHen
By RICHARD ARNHOLT
While we are still in the first half of 2022, it has already been a busy year in terms of labor and employment developments for government contractors. For any companies doing work for the federal government, whether as prime contractors or as subcontractors, it can be challenging to keep up with the perpetually changing requirements, particularly when the changes occur this quickly. These rapid-fire changes have introduced some onerous requirements with potentially very significant impacts. Just in the past few months, President Biden has issued Executive Orders (EOs) that: (1) Directs an almost 50% increase in the minimum wage government contractors must pay their employees under a number of types of contracts. (2) Mandates the use of union labor on large federal construction projects. (3) Reinstitutes the requirement that federal contractors offer the right of first refusal to qualified service personnel who worked on predecessor contracts. In addition, in February 2022 the Office of Federal Contractor Compliance Programs (OFCCP) at the Department of Labor (DOL) has rolled out its new on-line certification tool that contractors are now required to use to certify compliance with affirmative action requirements. In Part 1 of this series, we will examine the increased minimum wage directive and the use of union labor on federal construction projects. Part 2 coming next month will cover the non-displacement of qualified workers and the new OFCCP “Contractor Portal.” 36
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Contracts Covered by the EO 14026
Importantly, this new minimum wage only applies to new contracts entered into on or after January 30, 2022. A contract is still “new” if it is (1) an extension of an existing contract, (2) a renewal of an existing contract, or (3) an exercised option on an existing contract. The regulations call for additional wage increases starting January 1, 2023, and annually thereafter. Covered contracts under the EO 14026 include the following types of agreements: • Procurement contracts for construction covered by the Davis-Bacon Act (DBA). • Service contracts under the Service Contract Act (SCA). • Concession contracts with the federal government. • Contracts related to federal land and offering of services to the general public, federal employees, and their dependents. Exclusions from the EO 14026
The final rule also sets forth a number of categories of contracts and other instruments that are not subject to the minimum wage requirements. Specifically, the following are not subject to the $15 minimum wage requirement: • Contracts that result from a solicitation issued prior to January 30, 2022, that are entered into on or between January 30, 2022 and March 30, 2022. • Grants. • Contracts with and grants to Indian Tribes. • Contracts for construction and services (except for those expressly covered by EO 14026), that are excluded from DBA or SCA coverage.
• Contracts for the manufacturing or furnishing of materials, supplies, articles, or equipment to the federal government. Workers Covered by the EO 14026
EO 14026 generally applies to the following categories of employees working on or in connection with a covered contract: (1) employees entitled to the Fair Labor Standards Act minimum wage (but not any employee who would be considered an exempt executive, administrative or professional employee); (2) service employees entitled to prevailing wages under the SCA; and (3) laborers and mechanics entitled to prevailing wages under the DBA. Important Tips for Federal Contractors
Several lawsuits have already been filed directly challenging the implementation of EO14026. However, until these and any subsequent legal challenges are fully resolved, to avoid any potential penalties, contractors must comply with the minimum wage increase and review their contracts to determine whether the new minimum wage applies to their employees.
Union Labor Now Mandatory for Large Federal Construction Projects On February 4, 2022, President Biden issued the Executive Order on Use of Project Labor Agreements for Federal Construction Projects (EO 14063). EO 14063 mandates that contractors and subcontractors working on federal construction projects valued at $35 million or more must enter into an agreement with a union to establish the rules applicable to labor relations on that project – a “project labor agreement” (PLA). EO 14063 mirrors an EO issued by President Obama, EO 13502, on February 6, 2009, including having the same title and much of the same language. The main difference between them is that President Obama’s EO encouraged rather than mandated that agencies require contractors enter into PLAs. What Do Contractors Have to Do?
EO 14063 requires that contractors and subcontractors agree to enter into a PLA as part of the award of a federal contract in connection with a federal construction contract valued at $35 million or more. But it is not enough for the contractor and the union to negotiate their own terms. Instead, EO 14063 includes a number of very specific requirements.
