The Service Contract Act seems to be getting attention lately.  The proposed regulations implementing the President’s Executive Order 13658 raising the minimum wage for federal contractor employees would extend the minimum wage to (among others) “service employees” working on federal government contracts covered by the Service Contract Act (SCA).  The SCA applies to federal contracts for services worth more than $2,500 and requires contractors to pay “service employees” working on the contract a prevailing local wage and fringe benefits.  DOL issues wage determinations setting the required wages and benefits based on rates prevailing for each class of service employee in the locality where a contract is to be performed.  The proposed regulations would require the prevailing wage to be a minimum of $10.10 per hour.

As explained in a recent DOL letter, last summer DOL raised the prevailing wage and added fringe benefits for fast food workers on federal service contracts, including those working on military bases.  At the request of the Navy, DOL then lowered the amount of the fringe benefit from $3.81 to $.92 per hour this spring.

Characterizing it as a “unilateral” change, the Senators seek “an explanation of how these shifts in policy regarding the calculation of ‘Fast Food Industry’ wage determinations under the Service Contract Act came about, whether military families were consulted in this decision, and whether fast food restaurants can expect additional increases in the future.”

The foregoing may be just a taste of the type of challenge the President’s minimum wage order may face in the near future.  In that regard, there is still time to submit comments on the Federal contractor minimum wage proposed regulations.  For information about lodging comments, see our earlier blog post.

We have learned that OFCCP has sent out a new wave of advance audit notification letters giving employers a “heads up” about upcoming compliance reviews.  It appears the letters were sent yesterday.

Like the last round of CSALs, OFCCP sent the letters to the local facility to be audited with no additional notification to Corporate. The notices are addressed ambiguously to “Human Resources Director” and not to any specific individual.  So, be on the lookout for these letters to start arriving any day.

We will provide an update as we learn additional facts about this latest wave of CSALs so stay tuned . . .

 

 

As reported more than a year ago, the U.S. Supreme Court remanded the Fisher v. University of Texas case back to the Court of Appeals for stricter scrutiny of the University’s consideration of race in its undergraduate admissions policy.  The case centers on Ms. Fisher’s claim she was denied admission to the University based on race in violation of the Equal Protection Clause of the U.S. Constitution.

This week, the Court of Appeals issued a decision once again upholding as constitutional the University’s consideration of race as a “factor of a factor” in its admission policy.

In a lengthy opinion relying heavily on minority and non-minority admission numbers under the University’s different programs to encourage minority admissions, the court ultimately held the admissions program is narrowly tailored to achieve the University’s compelling state interest in the recognized educational benefits of student body diversity.

While the case is not directly applicable to affirmative action under federal laws and regulations, these cases can affect public perception of affirmative action in other cases.  Stay tuned as the case may once again find its way to the Supreme Court before its final conclusion.

A recent DOL newsletter announced new options for contacting OFCCP.  The following links can be used to submit questions and check on the status of a pending question or complaint:   Submit a Question to OFCCP and Check Question or Complaint Status.

The links appear on the OFCCP Website under the “Workforce Corner” heading on the right half of the page.

Said OFCCP Director Patricia Shiu, “These new options will make it easier for stakeholders to interact with our officers and get the information they need.”

Can contacting OFCCP trigger an audit?  OFCCP says, no.  Its Non-Retaliation Policies are found under the  “Federal Contractor Corner” heading.

In response to several requests received from the public for more time to comment on the proposed regulations implementing President Obama’s Executive Order increasing the  minimum wage for federal contractors, the Department of Labor has extended the public comment period. The new deadline to submit comments is July 28, 2014.

In a long-running 4th Amendment case between OFCCP and Bank of America, a U.S. District Court has affirmed earlier rulings that:  (1) Bank of America (BoA) waived its 4th Amendment objection to an OFCCP Desk Audit by providing information in response to a scheduling letter; and (2) OFCCP had probable cause obtained during the Desk Audit to conduct an onsite at BoA’s facility to pursue alleged compensation issues.

BoA argued throughout the case that OFCCP violated the 4th Amendment because it did not select BoA for audit according to administratively-neutral criteria.  However, the court did not reach that question or the question of whether OFCCP’s audit selection and scheduling letter request for data and documents are an “administrative subpoena.” Rather, the court upheld the earlier finding that BoA consented to the Desk Audit (and waived its 4th Amendment objection) by voluntarily providing documents and data in response to the scheduling letter.

BoA also refused to allow OFCCP to come onsite to investigate alleged compensation issues and argued OFCCP had insufficient probable cause to go onsite.  Again, the court disagreed. The court said that even though OFCCP’s compensation regression analysis was flawed, the raw compensation data (which BoA voluntarily submitted during the Desk Audit) revealed gender and race disparities in average compensation “sufficient to provide the OFCCP with a reasonable suspicion of a violation.”  In an important ruling, the court stated OFCCP was under no obligation to rely on a regression analysis (or apparently any other analysis) to establish probable cause.

This may not be the final chapter in this case as BoA has the ability to appeal the decision.  In the meantime, this decision reinforces the important point that federal contractors must proactively identify and address problem areas, and cannot afford to turn over to OFCCP data or information which it is not prepared to explain and defend.

As we reported recently, President Obama intends to issue an Executive Order prohibiting sexual orientation and gender identity discrimination by federal contractors.  Also in support of LGBT Pride Month, Secretary of Labor Thomas Perez recently blogged that the DOL is “updating enforcement protocols and anti-discrimination guidance to clarify that [the DOL] provides the full protection of the federal non-discrimination laws that [the DOL] enforces to transgender individuals” including Title VII of the Civil Rights Act of 1964.

Secretary Perez says OFCCP will be involved:  “The Office of Federal Contract Compliance Programs and Civil Rights Center, along with the Employment and Training Administration, will issue guidance to make clear that discrimination on the basis of transgender status is discrimination based on sex.”

It’s not clear whether this guidance will be pursuant to the President’s forthcoming Executive Order which may require proposed regulations to implement.  However, the blog post indicates the guidance is not limited to federal contractors but will apply to all employers subject to Title VII.

Stay tuned for more updates.  Have a safe and enjoyable July 4th holiday.

Earlier today House Speaker John Boehner announced his intent to file a lawsuit challenging the constitutionality of the President’s recent Executive Order actions.  As we have been discussing, President Obama has recently issued  numerous Executive Orders affecting the employment practices of Federal Contractors.

The details of the Speaker’s proposed lawsuit are not yet available but we will make sure to keep you update as we learn of new developments on this front.

In addition to addressing questions about the self-identification process and hiring individuals with disabilities, OFCCP has provided further guidance on calculating “jobs filled” under the new regulations.

Under both the new VEVRAA and Section 503 regulations, employers must now track and compare the number of “jobs filled” to the number of “job openings” as part of the data we will use to gauge effectiveness of outreach efforts.

In an earlier FAQ, OFCCP states the term “jobs filled” should be read broadly to include jobs filled by competitive means (external hires and internal promotions) as well as non-competitive means (promotions, transfers and reassignments).

The new FAQ attempts to clarify whether this includes automatic step or ladder movements:

 Q: Does the number of “jobs filled” include step or ladder movements that are automatically attained upon completion of a stated event, such as time in the job or attainment of a particular certification?

A: Both competitive and non-competitive movements may qualify as “jobs filled,” so long as the movement is one into a different position, rather than simply a movement within the same position. This will necessarily be a fact-based determination. So, for example, a time-driven salary increase from one “step” to the next within the same position would not be a “job filled,” since there was not any movement into a new position. By contrast, if an apprentice completes a certification program and moves into a journeyman position, then such movement would be a “job filled,” since it is a movement from one position to another.

“Jobs filled” is not defined in the regulations, nor are the terms “new position” and “different position” used in the FAQ.

To make sense, the term “jobs filled” must be tied to and interpreted in conjunction with the term “job openings” as that is the comparison called for in the regulation.  Competitive promotions will likely be from one position to a “job opening” in a different position.  In other words, a job opening exists which needs to be filled by assessing interested candidate qualifications.

However, non-competitive moves are a different story.  The key here is a “factual determination:” where an employee move is automatic based on attainment of a service level or a certification or training (such as from Mechanic IV to Mechanic III), there is no “job filled” because it appears it is not movement into a “new position”  – there was no job opening or “new position” to be filled.

In order to calculate the most accurate ratio of jobs filled to job openings, contractors should review their job titles to determine if movement from one to another is truly movement to a “new” or “different” position.

Last week OFCCP released new FAQs providing additional guidance for employers implementing the new veterans and disability of regulations. OFCCP has used the post-effective date release to clarify questions for contractors as they work to implement the regulation’s new obligations.

On the issue of the treatment of individuals who identify as a protected veteran at the pre-offer stage but not post-offer, OFCCP posted the following FAQ:

Q: If an individual self-identifies as a protected veteran at the pre-offer stage of the application process, but does not self-identify again at the post-offer stage, may a contractor still count the individual as a protected veteran for purposes of applying the hiring benchmark and performing the required data collection analysis?

A: Section 60-300.42 of the new VEVRAA regulations requires contractors to invite applicants to self-identify as “protected veterans” at both the pre-offer and post-offer stages of the application process. If an applicant self-identifies as a “protected veteran” at the pre-offer stage but not at the post-offer stage, the contractor may identify the new hire as a “protected veteran” for purposes of compliance with the new VEVRAA regulations.

This FAQ makes sense to us. Employers should be able to assume the applicant accurately identified him/ herself at the time and should get credit for hiring applicants who identify themselves as protected veterans but later decline to do so.

OFCCP also provided this guidance of the issue of the hiring of individuals with disabilities:

Q: Under the new regulations, must a contractor hire an individual with a disability who is not the best qualified but who meets the minimum requirements of the job for the purposes of affirmative action?

A: No. The Section 503 regulations do not require contractors to hire an individual who is not qualified for the position being sought. Nor do they require contractors to hire a less qualified candidate instead of the best qualified candidate for the purposes of affirmative action. However, it would not violate Section 503 for a contractor to select a person with a disability over a candidate without a disability who was equally or better qualified, so long as that selection was not based on a prohibited factor such as race, gender or ethnicity.

So what OFCCP is saying is that while employers are not required to hire an equally-qualified individual with a disability it would not be a violation if an employer did so.  Reading between the lines, it seems that with this FAQ OFCCP is putting employers on notice that, if this type of situation is presented during a compliance review, employers better be prepared to explain, to the Agency’s satisfaction, why they didn’t select a qualified individual with a disability instead of an equally-qualified candidate without a disability.

Stay tuned for additional posts on other new FAQs.