A blizzard of activity from the Obama Administration is making 2015 the year of the government contractor. While some changes are not overly onerous, some will require substantial operational changes by contractors. Many staffing companies will have to contend with these new requirements placed upon their government-contractor clients. Here are some highlights.
Audit request changes. In October 2014, the Office of Federal Contract Compliance Programs (OFCCP) made significant changes to its audit scheduling letters, including what data must be submitted. These changes attempt to incorporate the new requirements for the disability and veterans regulations and became effective in 2014. Contractors must submit data relating to employment activity (applicants, hires, promotions and terminations) by individual race/ethnicity rather than by minority status. Contractors must also submit their internal evaluations of their outreach efforts to attract qualified individuals with disabilities and a utilization analysis of each job group to determine whether the contractor meets the 7% goal. Similar data is required for contractors’ efforts to attract veterans.
Contractors are also required to submit compensation data at an individual level rather than the previously required group level. The data must include base salary and/or wage rate and hours worked for all employees, as well as data on other compensation (e.g., bonuses, incentives, commissions, merit increases and overtime) for each employee.
Minimum wage. Obama raised the minimum wage for federal contractors’ employees to $10.10 per hour, and $4.90 per hour for tipped employees, beginning Jan. 1, with annual cost-of-living increases beginning Jan. 1, 2016.
This executive order only covers: a procurement contract or subcontract for construction covered by the Davis-Bacon Act (DBA); a contract or subcontract for services covered by the Service Contract Act (SCA); a contract or subcontract for concessions, including any concessions contract excluded from coverage under the SCA by Department of Labor regulations at 29 CFR § 4.133(b); and a contract or subcontract entered into the federal government in connection with federal property or lands and related to offering services for federal employees, their dependents, or the general public. Additionally, workers’ wages under these contracts must be governed by the Fair Labor Standards Act (FLSA), DBA, or SCA. Thus, employees who are exempt under the FLSA (e.g., executives) are not covered by this order.
The regulations also exclude from their requirements FLSA-covered workers performing “in connection with” covered contracts less than 20% of their work hours in a given workweek. This exclusion does not apply to workers “performing on” a covered contract whose wages are governed by the FLSA, SCA or DBA. A worker will be considered to be performing on a covered contract if he or she is directly engaged in the performance of specified contract services or construction. For example, all laborers and mechanics working on the construction of a public building will be regarded as performing on a covered contract, and thus entitled to the new minimum wage.
For a contractor to exclude employees, it must maintain records showing the hours worked by those employees, or provide other proof showing the hours were not worked in connection with the covered contract.
Expanded discrimination protections. Obama added sexual orientation and gender identity to the list of prohibited discrimination. Effective in April, the rule applies to all contracts or subcontracts entered into after that date. Contractors covered by the new rule must ensure that agreements, job solicitations and postings contain appropriate references to the new prohibited forms of discrimination.
Equal pay report. Under proposed regulations promulgated last summer, federal contractors would be required to submit to the OFCCP a report detailing by ethnicity and gender: the total number of workers within a specific EEO-1 job category; the total individual W-2 wages for all workers in the job cate- gory; and the number of hours worked by all employees in the job category. Final regulations are expected later this year.
