Executive orders and federal contractors: What you need to know now

Transcription

1 Executive orders and federal contractors: What you need to know now 1

2 3 Agenda Background & Status Executive Order (Minimum Wages) Presidential Memo (Pay Equality) Executive Order (Non-retaliation) Executive Order (Affirmative Action) Executive Order (Fair Pay and Safe Workplaces) Summary Q&A

3 4 Background During 2014, President Obama issued 4 Executive orders and 1 Presidential Memo which impact contractors DoL compliance activities and reporting and federal contract compliance Focus on implementing social initiatives that Congress did not enact Executive Order (Minimum Wage, February 2014) Presidential Memo (Advancing Pay Equality through Compensation Data Collection, April 2014) Executive Order (Non-retaliation for Disclosure of Compensation Data, April 2014) Executive Order (Affirmative Action, July 2014) Executive Order (Fair Pay & Safe Workplaces, July 2014) More are expected in 2015!

4 5 Name Requirement Issue Date Executive Order (Minimum Wage) Presidential Memo (Advancing Pay Equality through Compensation Data Collection) Executive Order (Nonretaliation for Disclosure of Compensation Data) Executive Order (Affirmative Action) Executive Order (Fair Pay & Safe Workplaces) Establishes new federal contractor minimum wage Requires submission of compensation data by job category Prohibits penalization of employees for disclosure of pay data Bans discrimination of lesbian, gay, bisexual & transgendered employees Collect & Submit data related to employment law violations February 2014 April 2014 April 2014 July 2014 July 2014 Applies To SCA & DBA employees and those who support an SCA or DBA contract > 20% of time 50 employees and a contract or subcontract >$50,000 Contractors covered by EO 11246; contracts> $10,000 Contractors covered by EO Contractors bidding on contracts >$500,000 Status Implemented effective 1/1/15. DoL rule published 10/7/14; FAR interim rule published 12/15/14. NPRM issued 8/8/14. Comment period closed 1/5/15 NPRM issued 9/17/14.Comment period closed 12/16/14 DoL final rule released 12/3/14; Implementation effective 4/8/15. Interim FAR rule issued 4/10/15. Pending proposed rule; expected phased implementation beginning FY 16. Joint OMB/DoL 3/5/15 memo on appointing Labor Compliance Advisors.

5 7 Minimum Wage for Federal Contractors (EO 13658) Establishes a minimum wage for federal contractors ($10.10 per hour for 2015) Applies to (1) new contracts issued after January 1, 2015 and (2) bilateral modifications of existing contracts where remaining duration exceeds 6 months Covered contracts include Service Contract Act (SCA) and Davis Bacon Act (DBA) contracts

6 8 Minimum Wage for Federal Contractors (EO 13658) Covered employees include: Service Contract Act Employees Davis Bacon Act Employees Employees who spend >20% of their time in connection with a covered SCA or DBA contract In other words, intentionally intended to cover indirect employees 20% factor is calculated on a week by week basis Does not expand SCA or DBA H&W requirements to these indirect employees Estimated to affect more than 200,000 employees nationwide

7 9 Minimum Wage for Federal Contractors (EO 13658) What does it mean for contractors? Contractors must ensure that all covered employees, on covered contracts, are paid in excess of $10.10 per hour Requires a careful review of all new contracts & RFPs Due to procedural requirements surrounding the preparation of Wage Determinations (WDs), WDs will continue to reflect wage rates less than $10.10 per hour Affected labor categories will be identified with a highlight, intended to identify the impact of this new regulation Does not relieve contractors from compensating employees at any higher wage rate set by either a WD or by state or local law Does not relieve contractors of separately paying H&W benefits where required

8 10 Minimum Wage for Federal Contractors (EO 13658) What does it mean for contractors? Contractors must identify all employees who support a covered contract in excess of 20% of their time At least three challenges Identifying potentially covered employees Determining if the employee spent more than 20% of their time in a given week in support of a covered contract Tracking time since most indirect employees do not track their time by contract. Lack of records could present a compliance problem (and an enforcement opportunity)

9 11 Minimum Wage for Federal Contractors (EO 13658) What does it mean for contractors? Annually, contractors may request price adjustments for contracts affected by changes in the minimum wage based upon the Consumer Price Index for Urban Wage Earners and Clerical workers DoL notification of increase to be published 90 days before the 1/1 effective date Adjustments must be prepared on a contract by contract basis including GSA contracts Price adjustments are not phased all contractors must submit at the same time Will likely overwhelm contracting officers in geographies most affected by the minimum Unprocessed price adjustment requests do not relieve the contractor of paying increases in minimum wage Potentially requires contractors to submit TWO price adjustment requests per year per covered contract

10 13 Advancing Pay Equality through Compensation Data Collection (Presidential Memo) Supplements EEO-1 report with summary information on compensation Consistent with W-2 reporting Broken down by sex, race, ethnicity and job category Includes hours and number of employees Will allow OFCCP to direct enforcement resources OFCCP expects regulations to deter non-compliances

11 14 Advancing Pay Equality through Compensation Data Collection (Presidential Memo) What does it mean for contractors? Report compiles summary data which could trigger reviews and audits due to its lack of specificity Report aggregates exempt and non-exempt labor categories. Provide hours worked and number of employees DoL anticipates the report will be a critical tool in eradicating pay disparities Will be used to identify bad actors and direct enforcement activity

12 15 Advancing Pay Equality through Compensation Data Collection (Presidential Memo) What does it mean for contractors? OFCCP s plan to compare contractor data by industry will likely result in increased audit activity Summary data does not allow explanation or description of the many differences in employee labor classifications Does not take into account variances in length of service and meritorious performance Contractors should be prepared to maintain significant documentation detailing pay practices, including information justifying employee labor classifications and salary differences

13 16 Non-retaliation (EO 13665) Amends the Equal Opportunity Clause of Executive Order Prohibits contractors and subcontractors from discharging, or otherwise discriminating against, employees or applicants who inquire about, discuss, or disclose their compensation or the compensation of other employees or applicants. Excludes employees or applicants who make the disclosure based on information obtained when performing essential job functions. Belief is that pay secrecy leads to disparity of pay

14 17 Non-retaliation (EO 13665) What does it mean to contractors? Requires that Federal contractors incorporate the nondiscrimination provision into their existing employee manuals or handbooks. Contractors must disseminate the nondiscrimination provision to employees and to job applicants. Comment period expired 12/16/14 OFCCP requested comment related to requiring contractors with manager training programs or meetings to include a regular review of the nondiscrimination provision

15 18 Affirmative Action (EO 13672) Interim FAR rule issued 4/10/15 Applies to solicitations and modifications issued on or after this date Clarifies that EO includes protection from discrimination related to gender identity or sexual orientation Previous language race, color, religion, sex and national origin Does not redefine these terms but relies upon DOL OFCCP definitions

16 19 Affirmative Action (EO 13672) What does it mean to contractors? Does not significantly change reporting requirements for contractors Unlike other categories covered by EO 11246, the Final Rule does not require contractors to collect any information about applicants or employees sexual orientation or gender identity or perform data analytics Contractors are not prohibited from doing so BUT they need to be aware of state and local laws which may prohibit doing so Information gathered may not be used to discriminate against contractors Could present logistical issues for contractors Contractors must carefully consider issues such as bathroom facility access

17 21 Fair Pay and Safe Workplaces (EO 13673) Requires that contractors report data on violations of 14 covered statutes and equivalent state laws Report in conjunction with proposals in excess of $500,000 (and semiannually after contract award) Report covers the prior 3 years Includes subcontractors Contracting officers must then make a determination that contractor is responsible If not determined responsible, contractor may be restricted from award

18 22 Fair Pay and Safe Workplaces (EO 13673) Requires each agency to designate a Labor Compliance Advisor to assist agencies with evaluating contractor compliance Advisors will have authority to monitor contractor compliance and enforce labor law compliance They will strongly influence the evaluation of a contractor as a willful violator or responsible contractor

19 23 Fair Pay and Safe Workplaces (EO 13673) Much ambiguity exists for contractors Secretary of Labor has yet to define key terms, including equivalent state laws and provide guidelines as to what types of violations will impact a contractor s responsibility Requirement to be implemented in phases but no definition or schedule yet exists Contractor certification requirements are unclear. Could a reporting error trigger a false claim? How would reporting errors by a subcontractor be handled?

20 24 Fair Pay and Safe Workplaces (EO 13673) What does it mean for contractors? Contractors should be prepared to compile a large amount of data from multiple geographies Where local offices routinely handle labor compliance issues, reporting and/or corporate oversight may need to be enhanced Enhanced scrutiny of subcontractors during bid & proposal process Increased ongoing oversight of subcontractor compliance

21 25 Fair Pay and Safe Workplaces (EO 13673) This executive order is complex and wide-sweeping Remember no proposed rule has been issued (as of 4/17/15) Contractors have the opportunity and should actively engage in the rulemaking process As yet undefined details will significantly affect the impact of this rule on contractors

22 26 Summary New Executive Orders and Presidential Memos significantly impact contractor compliance and reporting requirements Contractors must immediately adopt minimum wage requirements and expansion of affirmative action requirements Pay employees appropriately including identification of indirect employees who spend >20% of their time supporting SCA & DBA contracts Ensure the LBGT individuals are not discriminated against and have equal access, (e.g., appropriate bathroom facilities) Prepare for impending implementation of Fair Pay and Compensation Data orders Understand data requirements and evaluate systems to determine if changes need to be made Consider if process changes or additional internal controls are required