Beware the Landmines: New and Coming Labor and Employment Laws

Construction and Procurement Law News, Q4 2015

Client Alert

From 2014 to 2016 there has been an explosion of labor & employment “laws” through Executive Orders, new regulations and proposed regulations. Some of the requirements apply to all employers, while those issued by Presidential Executive Order and related regulations apply to federal government contractors and sub- contractors. In this article, we provide, in summary fashion, an update on the status of the 2014-2016 laws and regulations.

1. Minimum wage for federal government contractors and subcontractors: Executive Order 13658 was effective January 1, 2015 and raised the hourly minimum wage to $10.10 for workers on federal construction and service contracts, with a cost of living adjustment procedure put in place for future years. It has already been announced that the new minimum wage for January 1, 2016 will be $10.15.

2. Non-retaliation for pay disclosure: Executive Order 13665 was one of the proposals by President Obama to break the “glass ceiling” based on race and gender. Employees, applicants, and supervisors (a broader category than covered under existing law under the National Labor Relations Act) are protected to talk about their pay and benefits with each other, unless dealing with pay and benefits is one of the “essential job functions” of the employee, such as a payroll department employee.

3. Summary “Equal Pay” reports on employee compensation: Regulations were proposed in 2014 with comments taken through January 5, 2015, but no regulations have issued at this time. Federal contractors and subcontractors will be required to submit an annual “Equal Pay Report” to the Office of Federal Contract Compliance (OFCCP) generally based on the race, ethnic, and gender provisions under the EEO-1 report. This is the second “glass ceiling” initiative by Presidential order.

4. Sexual orientation and gender identity is now protected: Under Executive Order 13672, effective April 8, 2015, government contractors and subcontractors are now subject to non-discrimination based on an applicant’s or employee’s sexual orientation and gender identity. Government contractors should already have new wording in their non-discrimination policy language. Similar enforcement positions are being taken generally against all employers as publicly stated by the OFCCP and Equal Employment Opportunity Commission (EEOC). Considerable litigation is expected by employers who are not government contractors because the position taken by the federal agencies arguably conflicts with legislative history when the 1964 Civil Rights Act was passed by Congress.

5. Section 503 of the Rehabilitation Act of 1973: For government contractors, another new rule prohibits discrimination against disabled employees, and notably establishes a nationwide 7% utilization goal for qualified individuals with disabilities. Detailed reports and remedial action plans are required if a contractor fails to meet the goal.

6. The veterans employment annual report: This new report became effective as a final rule in 2014, creating a new federal veterans employment report (VET-4212) to provide the government with more information about contractors’ employment of veterans beginning with annual reports filed in 2015. The rule uses a “benchmark” rather than “utilization goals” as under the Section 503 regulations, require additional data collection and record keeping. Applicants must be invited to self-identify as veterans, but the rule does not establish required actions for contractors who fail to meet the benchmark.

7. The Labor Day surprise gift: On Labor Day 2015,the President signed an Executive Order requiring federal government contractors and subcontractors to begin providing their workers paid sick leave beginning January 1, 2017. At least one paid hour of sick leave will be required for every 30 hours worked or approximately 70 annual hours of paid sick leave for a 40 hour employee. The paid time may be used to care for the employee’s self, family member or “another loved one.” The sick leave mandate also covers absences resulting from domestic violence, sexual assault, or stalking. Note, the new paid sick leave requirements will be in addition to Davis Bacon or Service Contract Act paid leave benefit provisions.

8. Salaried exempt employees under the federal Fair Labor Standards Act (FLSA): As most of you know, the controversial proposed regulations were issued by the Department of Labor in a rather broad open-ended form during 2015. A new record may have been set on the number of millions of comments that were received by the government on this broad law of general application, which may increase the salary (over $50,000) and duties test (possibly 51% of all work time on executive, professional or high level administrative duties) for an employee to be exempt from overtime pay. The best educated guess based on Dept. of Labor statements, the number of comments, timing during an election year, and the President’s stated intent to leave his mark on this law, is that the final regulations will likely be issued in the second or third quarter of 2016.

If you or your company has not completed a federal compliance audit recently and performs substantial work in the federal arena, please contact your lawyer or a member of the CPPG to discuss.