Category: Federal Contractors

  • U.S. Appeals Court Overturns $15 Minimum Wage for Federal Contractors

    U.S. Appeals Court Overturns $15 Minimum Wage for Federal Contractors

    by CUPA-HR | November 12, 2024

    On November 5, the 9th U.S. Circuit Court of Appeals reversed a lower district court’s decision to dismiss a lawsuit challenging the Biden administration’s executive order and the Department of Labor (DOL)’s final rule to increase the minimum wage for federal contractors. The ruling orders the legal challenge to proceed, which could ultimately strike down the executive order and final rule.

    In April 2021, the Biden administration published executive order 14026, which directed DOL to issue regulations to increase the minimum wage for federal contractors to $15 per hour beginning on January 30, 2022. Subsequently, in November 2021, DOL issued its final rule to implement the executive order, setting the minimum wage for federal contractors to $15 per hour on January 30, 2022, and requiring the secretary of Labor to annually review and determine the minimum wage amount beginning in January 2023.

    The executive order and final rule were challenged by five states: Arizona, Idaho, Indiana, Nebraska and South Carolina. In their suit, the states claimed that the Biden administration violated the Federal Property and Administrative Services Act (FPASA) and exceeded its authority granted under the law by imposing a wage mandate through an executive order. They also argued that DOL violated the Administrative Procedure Act (APA), which governs how federal agencies proceed through the notice-and-comment rulemaking process, when implementing the final rule. The lawsuit was originally dismissed by a federal judge in the U.S. District Court of Arizona, leading the states to appeal to the 9th Circuit.

    In the 9th Circuit’s ruling, two of the three judges on the panel sided with the states’ arguments, reversing the dismissal of the case from the lower district court. The majority opinion held that the minimum wage mandate exceeded the president’s authority under FPASA and that DOL’s final rule was subject to arbitrary-or-capricious review under the APA. As such, the circuit court sends the case back to the district court, where the federal judge will proceed with the case and issue a further ruling to uphold or strike down the executive order and final rule. For now, the order and final rule are still in place, but the future of both is uncertain. CUPA-HR will keep members apprised of any updates related to this lawsuit and further laws and regulations impacting federal contractors.

     

     



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  • Federal Agencies Issue Proposed Rule on Pay Equity and Transparency for Federal Contractors – CUPA-HR

    Federal Agencies Issue Proposed Rule on Pay Equity and Transparency for Federal Contractors – CUPA-HR

    by CUPA-HR | February 14, 2024

    On January 30, the Department of Defense, General Services Administration, and NASA issued a proposed rule to amend the Federal Acquisition Regulation (FAR) to create a salary history ban and require pay transparency during the hiring process for federal contractors and subcontractors. The proposed rule aligns with the Biden administration’s 2022 Executive Order, “Advancing Economy, Efficiency, and Effectiveness in Federal Contracting by Promoting Pay Equity and Transparency.”

    According to the proposed rule, the FAR would be amended to implement a government-wide policy that would:

    1. prohibit contractors and subcontractors from seeking and considering job applicants’ previous compensation when making employment decisions about personnel working on or in connection with a government contract (“salary history ban”); and
    2. require these contractors and subcontractors to disclose on job announcements the compensation to be offered (“compensation disclosure” or “pay transparency”).

    The proposed rule comes as many states and localities have recently implemented salary history bans and pay transparency laws. As the Notice of Proposed Rulemaking notes, 21 states, 22 localities, and Washington, D.C., have put bans into place that prohibit employers from asking job applicants for their salary, and 10 states have pay transparency laws in place, with several other states working toward implementing such laws.

    The agencies have provided a 70-day comment period for the proposed rule, closing on April 1. Stakeholders are invited to submit comments on their support for or opposition to the provisions of the proposed rule. CUPA-HR will monitor for additional updates on this proposed rule and other policy initiatives at the federal level as they relate to pay transparency and salary history bans.



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  • HR and the Courts — March 2023 – CUPA-HR

    HR and the Courts — March 2023 – CUPA-HR

    by CUPA-HR | March 15, 2023

    Each month, CUPA-HR General Counsel Ira Shepard provides an overview of several labor and employment law cases and regulatory actions with implications for the higher ed workplace. Here’s the latest from Ira.

    Court of Appeals May Narrow LBGTQ Rights Under Title VII

    The 5th U.S. Circuit Court of Appeals (covering Texas, Louisiana and Mississippi) recently heard oral argument over a U.S. District Court judge’s ruling that private businesses may assert a religious exemption to bias claims brought by LBGTQ workers under federal anti-discrimination statutes. The trial court had granted summary judgment that religious employers objecting to dress codes, bathroom policies or hiring of LBGTQ employees are protected by the First Amendment (Braidwood Management v. EEOC (5th Cir. No 22-10145, oral ARG 2/7/23).

    If the trial court decision is upheld, it would blunt the reach of the recent Supreme Court decision in Bostock v. Clayton County, which held that LBGTQ workers can sue employers for job discrimination under Title VII based on gender identity or sexual orientation. The plaintiffs in the case are a Texas based healthcare provider and a Church. We will follow developments in this case.  

    Qualifying Temporary Workers Granted Pay-Parity Rights Equal to Full-Time Employees Under New Jersey State Statute

    New Jersey-based employers will have to grant certain temporary employees hired in the state pay and benefits equal to what the employer pays full-time direct-hire employees. The new law, recently signed by the governor (effective 180 days after the 2/7/23 signing), creates a “bill of rights” for many temporary employees and applies to specific New Jersey employers. The law applies only to the manufacturing, warehousing and logistics, food service, construction, building security and maintenance, cleaning, and landscaping industries. The statute does not cover healthcare workers, business and finance professionals, salespeople, and information security and technology staff. The statute does apply to temporary staffing agencies.

    New Jersey is joining California, Illinois and Massachusetts in adopting a statute protecting temporary employees. However, the New Jersey statute goes a step further than the other states in requiring pay and benefits equivalent to similarly situated full time employees in the industries and areas described above.   

    Offensive Music in Workplace Brings Sex Harassment/Hostile Environment Litigation  

    Bloomberg reports multiple filings of sex harassment, hostile work environment lawsuits based on claims that offensive music being played in the workplace creates a sexually hostile work environment. The multiple litigation filings involve manufacturing and warehouse employees. The employees are complaining that obscene and misogynistic rap music was continually played in the workplace over the objection of the complaining employees. The complaints allege that managers and other employees regularly played vulgar music and ignored the complaints and objections of offended employees. The allegations state that allowing the music to continue created a sexually hostile work environment, which is actionable under Title VII.

    Employers can avoid such litigation by establishing and enforcing policies that forbid sexually or racially offensive content in the workplace.  

    Tenured Public School Teacher’s Termination for Unprofessional Social Media Posts Reversed — Court Holds Tenure Entitled Her to a Warning and Opportunity to Remedy 

    A tenured Illinois public school history teacher who was terminated after posting publicly available “unprofessional” and “disrespectful” social media posts had her termination reversed by an Illinois appellate court. The termination had been affirmed by the trial court. The teacher claimed not to realize that her posts were public as opposed to being distributed only to “friends” on Facebook.

    Among other posts, the teacher shared a Facebook post from a group called Bored Teachers which stated, “I can think of no better form of birth control than to have people observe my class for a day.” In another post she described a student’s parents as “clearly crazy” and “nuts.” The teacher was terminated for making unprofessional remarks about students on Facebook. The head of HR testified that the plaintiff was not remorseful and thought the posts were therapeutic.

    The Illinois appellate court concluded that the plaintiff’s posts were “clearly foolish” and “unprofessional.” Nonetheless the appellate court concluded that the Illinois state statute afforded tenured teachers the right to warning and a chance to remedy their transgressions (Kelleher v. Illinois State Board of Education (Ill App. Ct. 1st Dist. No. 1-22-0058, Order 2/14/23)). 

    EEOC Commissioner Charges at Record High 

    EEOC commissioner charges for fiscal 2022 jumped to a record high of 22, up from just 3 in the previous year and the highest number since records have been kept on annual commissioner charges. A commissioner charge is one filed by an EEOC commissioner raising a potential legal issue. The vast majority of EEOC charges are filed by alleged victims.

    Commentators point out that the commissioner charge increase is likely due to a partisan block of action at the EEOC. Under the Biden administration, the EEOC had a Democrat chair and a Republican majority of members (three Republicans, two Democrats) until November 2022. Currently, the commission has a Democrat chair and a vacant seat, leaving it with two Democrat members and two Republican members. The filling of the open commission seat is still on hold due to blockage of the nomination process in Congress. 

    OFCCP Rescinds Trump Administration Religious Carve-Out Allowing Federal Contractors to Ignore Anti-Discrimination Obligations Based on Faith 

    The OFCCP announced new regulations on February 28, 2023, rescinding the Trump administration regulations allowing government contractors to ignore certain anti-discrimination obligations based on their faith. The new regulations bring back the prior standard, which had been in place for nearly two decades, and do not allow the defense. The new regulations will be published shortly and effective 30 days after publication. The Trump administration rule, which will be revoked, faced continued opposition from civil rights groups and LBGTQ advocates. This rule applies to the OFCCP enforcement of antidiscrimination rules under Executive Order 11246, applicable to all federal government contractors. 

     



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  • DOL Targets October 2022 for Release of a New Overtime Proposal – CUPA-HR

    DOL Targets October 2022 for Release of a New Overtime Proposal – CUPA-HR

    by CUPA-HR | June 29, 2022

    On June 21, the Biden administration released the anticipated Spring 2022 Unified Agenda of Regulatory and Deregulatory Actions (Regulatory Agenda), providing the public with a detailed glimpse into the regulatory and deregulatory activities under development across approximately 67 federal departments, agencies and commissions. Agendas are generally released in the fall and spring and set target dates for each agency and sub-agency’s regulatory actions for the coming year.

    Based on a thorough review of the Regulatory Agenda, CUPA-HR would like to highlight the following proposed actions for members, including an updated target date for the release of a new overtime proposal.

    Department of Labor

    Wage and Hour Division – Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees

    According to the Regulatory Agenda, the Department of Labor (DOL)’s Wage and Hour Division (WHD) is now planning to release a Notice of Proposed Rulemaking (NPRM) to address changes to the Fair Labor Standards Act (FLSA)’s overtime pay requirements in October 2022. In the Fall 2021 Regulatory Agenda, WHD announced their intention to move forward with the NPRM with the goal “to update the salary level requirement of the section 13(a)(1) exemption [under the FLSA].”

    Changes to overtime pay requirements have been implemented through regulations under both the Obama and Trump administrations. In May 2016, the Obama administration’s DOL issued a final rule increasing the salary threshold from $23,660 to $47,476 per year and imposed automatic updates to the threshold every three years. However, court challenges prevented the rule from taking effect and it was permanently enjoined in September 2017. After the Trump administration started the rulemaking process anew, in September 2019, DOL issued a new final rule raising the minimum salary level required for exemption from $23,660 annually to $35,568 annually. This final rule went into effect January 1, 2020, and it remains in effect today.

    From April through June 2022, DOL held several listening sessions for interested stakeholders to discuss any support or concerns they may have with the anticipated rulemaking. CUPA-HR participated in all of the calls, expressing our concerns with the timing of the rulemaking as it relates to the ongoing challenges of the COVID-19 pandemic, a historically tight labor market, and increasing inflation.

    Employment and Training Administration – Strengthening Wage Protections for the Temporary and Permanent Employment of Certain Aliens in the United States

    In October 2022, DOL’s Employment and Training Administration (ETA) plans to issue an NPRM to establish “a new wage methodology for setting prevailing wage levels for H-1B/H-1B1/E-3 and PERM programs consistent with the requirements of the Immigration and Nationality Act.” The proposal will likely amend the Trump administration’s final rule that was scheduled to take effect on November 14, 2022, but was subsequently vacated by a federal court in June 2021. The new proposal, which is included in the Department’s Statement of Regulatory Priorities, will take into consideration the feedback it received in response to a Request for Information (RFI) on data and methods for determining prevailing wage levels “to ensure fair wages and strengthen protections for foreign and U.S. workers.”

    CUPA-HR filed comments in opposition to the Trump administration’s regulations on the issue and in response to the Biden administration’s RFI.

    National Labor Relations Board

    Joint Employer

    In July 2022, the National Labor Relations Board (NLRB) is planning to release an NPRM to potentially amend the standard determining when two employers may be considered joint employers under the National Labor Relations Act. The new standard will revise the 2020 Trump Administration’s final rule, which reversed the Obama-era NLRB decision in the 2015 Browning-Ferris Industries case and established that an entity can only be a joint employer if it actually exercises control over the essential terms and conditions of another employer’s employees. While details of the Democratic-majority NLRB’s NPRM on joint employer status are unknown, we would expect them to revise the current standard to reflect the Obama-era decision.

    Department of Homeland Security

    USCIS – Modernizing H-1B Requirements and Oversight and Providing Flexibility in the F-1 Program

    In May 2023, the Department of Homeland Security (DHS)’s United States Citizenship and Immigration Services (USCIS) plans to release an NPRM to “amend its regulations governing H-1B specialty occupation workers and F-1 students who are the beneficiaries of timely filed H-1B cap-subject petitions.” The NPRM will specifically propose to “revise the regulations relating to ‘employer-employee relationship’ and provide flexibility for start-up entrepreneurs; implement new requirements and guidelines for site visits including in connection with petitions filed by H-1B dependent employers whose basic business information cannot be validated through commercially available data; provide flexibility on the employment start date listed on the petition (in limited circumstances); address ‘cap-gap’ issues; bolster the H-1B registration process to reduce the possibility of misuse and fraud in the H-1B registration system; and clarify the requirement that an amended or new petition be filed where there are material changes, including by streamlining notification requirements relating to certain worksite changes, among other provisions.”

    ICE – Optional Alternative to the Physical Examination Associated With Employment Eligibility Verification (Form I-9)

    According to the Regulatory Agenda, DHS plans to issue an NPRM in July 2022 to “revise employment eligibility verification regulations to allow the Secretary to authorize alternative document examination procedures in certain circumstances or with respect to certain employers.”

    DHS has provided temporary flexibility in the Form I-9 verification process since the beginning of the COVID-19 pandemic. Specifically, the flexibility guidance allows for remote inspection of Form I-9 documents in situations where employees work exclusively in a remote setting due to COVID-19-related precautions. While that guidance is only temporary, DHS issued a Request for Public Input (RPI) on October 26, 2021, to determine whether those flexibilities should be kept in place permanently. It is possible that DHS will use that feedback to develop and implement this NPRM.

    CUPA-HR has engaged with DHS on the Form I-9 flexibilities through the pandemic. Most recently, DHS announced an additional extension of the Form I-9 flexibility guidance through October 31, 2022. CUPA-HR sent a letter to USCIS Director Ur M. Jaddou asking for this additional extension. Additionally, CUPA-HR submitted comments in response to the RPI based on a recent survey detailing members’ experiences with the Form I-9 verification process flexibilities.

    On June 7, ICE sent its proposal to the Office of Information and Regulatory Affairs (OIRA). OIRA is the White House office responsible for reviewing regulations and proposed regulations before they are publicly released and generally takes 30-90 days for this review, indicating ICE is on target to issue their proposal in July.

    Department of Agriculture

    Agriculture Acquisition Regulation: Internal Policy and Procedural Updates and Technical Changes

    In December 2022, the Department of Agriculture (USDA) plans to re-propose an NPRM that was previously issued in February 2022 and included controversial provisions that would require federal contractors on projects procured by the agency to certify their compliance with dozens of federal and state labor laws and executive orders.

    In the February NPRM, USDA provided only 32 days for stakeholder comment submissions on the proposal. CUPA-HR filed an extension request with the department asking for an additional 90 days to “evaluate the NPRM’s impact on [members’] research missions and collect the information needed in order to provide thoughtful and accurate input to the USDA,” as well as official comments that were pulled from 2012 comments CUPA-HR submitted with the Society for Human Resource Management (SHRM).

    While it is unclear whether the December NPRM will include the blacklisting language again, the abstract of the re-proposal states that “the new proposed rule would be responsive to the comments received on our February 2022 proposal.”

     



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  • CUPA-HR Files Comment Extension Request to USDA Regarding New Blacklisting Regulation for Federal Contractors – CUPA-HR

    CUPA-HR Files Comment Extension Request to USDA Regarding New Blacklisting Regulation for Federal Contractors – CUPA-HR

    by CUPA-HR | March 21, 2022

    On February 17, the U.S. Department of Agriculture (USDA) issued a Notice of Proposed Rulemaking (NPRM) outlining plans to impose new HR-related conditions on USDA contracts. If finalized, the rule would require federal contractors on projects procured by the USDA to certify their compliance with dozens of federal and state labor laws and executive orders. The proposal mirrors similar “blacklisting” regulations pursued by the USDA during the Obama administration.

    The USDA provided only 32 days for stakeholders to submit comments on the proposal. CUPA-HR, along with several other higher education associations, filed an extension request with the department asking for an additional 90 days to “evaluate the NPRM’s impact on [members’] research missions and collect the information needed in order to provide thoughtful and accurate input to the USDA.” CUPA-HR plans to file comments on the proposal as well.

    The new proposed rulemaking amends the Agriculture Acquisition Regulation (AGAR) to require federal contractors on USDA supply and service projects that exceed the simplified acquisition threshold to certify that they and their subcontractors and suppliers are “in compliance with” 15 federal labor laws, their state equivalents and executive orders. This includes, but is not limited to:

    • Fair Labor Standards Act;
    • Occupational Safety and Health Act;
    • National Labor Relations Act;
    • Service Contract Act;
    • Davis-Bacon Act;
    • Title VII of the Civil Rights Act;
    • Americans with Disabilities Act;
    • Age Discrimination in Employment Act; and
    • Family and Medical Leave Act.

    Additionally, federal contractors submitting offers for a project would be required to disclose to the USDA previous violations and certify they and their subcontractors “are in compliance with” any required corrective actions for those violations. They would also be required to alert USDA to any future adjudications of non-compliance.

    In 2011, the USDA tried to implement a similar policy via a Direct Final Rule and NPRM, but was forced to withdraw both due to stakeholder pushback. CUPA-HR filed comments with the Society for Human Resource Management calling the rules arbitrary and capricious. Our comments also criticized the rules for not adequately clarifying how contractors were expected to comply with the changes and for imposing severe penalties. Additionally, CUPA-HR joined comments filed by the American Council on Education and several other higher education associations that argued the USDA’s rules “impose[d] an unmanageable compliance burden and uncertain compliance risk for colleges and universities that conduct agricultural research under contracts with the [USDA].”

    Additionally, the Obama administration issued an executive order in July 2014 implementing a similar government-wide policy. The Federal Acquisition Regulation (FAR) Council and the Department of Labor issued regulations and guidance, respectively, implementing the order, but they were blocked by a federal judge in October 2016 for violating the First Amendment and due process rights. Congress also passed a Congressional Review Act challenge to the executive order in 2017, permanently withdrawing the executive order and barring the FAR Council from issuing any substantially similar regulations.

    Unlike past proposals, this time the USDA has stated that the certifications will be subject to the False Claims Act (FCA), which provides for substantially increased liability. The FCA provides for treble damages and penalties and allows for private citizens to file suits on behalf of the government (called “qui tam” suits). Qui tam litigants receive a portion of the government’s recovery. According to the Department of Justice (DOJ), the awards to qui tam litigants in FCA suits topped $238 million in 2021. The same DOJ statistics show qui tam suits were the majority of FCA claims, with the government filing 203 new suits under FCA in 2021 compared to 598 qui tam suits in the same year.

    CUPA-HR will continue to monitor this issue closely.



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  • DOL Issues Final Rule to Increase Federal Contractor Minimum Wage – CUPA-HR

    DOL Issues Final Rule to Increase Federal Contractor Minimum Wage – CUPA-HR

    by CUPA-HR | December 13, 2021

    On November 24, the Department of Labor (DOL)’s Wage and Hour Division (WHD) issued a final rule implementing President Biden’s Executive Order 14026 (EO), “Increasing the Minimum Wage for Federal Contractors.” The rule increases the minimum wage for federal government contractors for workers who work on or in connection with a covered federal contract to $15 per hour beginning January 30, 2022, and requires the secretary of labor to annually review and determine the minimum wage amount beginning January 1, 2023.

    As stated above, the final rule establishes standards and procedures for implementing and enforcing the minimum wage protections of Executive Order 14026. Starting January 30, 2022, all agencies will need to include a $15 minimum wage in new contracts, new solicitations, extensions or renewals of an existing contract, and exercises of an option on an existing contract. Under the EO and final rule, contracts with solicitations issued before January 30, 2022, and entered into, on or between January 30 and March 30, 2022 will be exempt from the wage. If such a contract is subsequently extended or renewed or an option is exercised under the contract, the $15 minimum wage will apply.

    Covered Contracts

    According to the EO and as finalized in the rule, the $15 minimum wage requirement only applies to the following contracts:

    • Procurement contracts for services or construction;
    • Contracts for services covered by the Service Contract Act (SCA);
    • Contracts for concessions; and
    • Contracts “entered into with the Federal Government in connection with Federal property or lands and related to offering services for Federal employees, their dependents, or the general public.”

    The new minimum wage clause will NOT need to be included in:

    • Federal grants;
    • Contracts or agreements with Indian Tribes under the Indian Self-Determination and Education Assistance Act;
    • Procurement contracts for construction that are excluded from coverage of the Davis-Bacon Act (DBA);
    • Contracts for services that are exempt from coverage under the SCA; and
    • Contracts for the manufacturing of materials, supplies, articles or equipment to the Federal Government.

    Covered Workers

    The WHD defines a covered worker in the final rule as “any person engaged in performing work on or in connection with a contract covered by the EO, and whose wages under such contract are governed by the [Fair Labor Standards Act (FLSA)], the SCA or the DBA, regardless of the contractual relationship alleged to exist between the individual and the employer.” A worker who performs “on” a covered contract is defined as “any worker who directly performs the specific services called for by the contract’s terms,” and a worker who performs “in connection with” a covered contract is defined as “any worker who performs work activities that, although are not the specific services called for by the contract’s terms, are necessary to the performance of those specific services.”

    One exemption to the rule’s minimum wage requirement is provided for FLSA-covered workers performing work “in connection with” covered contracts for less than 20 percent of their working hours in a given workweek.

    The final rule also clarifies that certain employees who are exempt from the minimum wage protections under the FLSA are also not entitled to the $15 minimum wage protection of the EO and final rule. In an FAQ page on the EO and final rule, the WHD provides “learners, apprentices, messengers and full-time students employed under certificates pursuant to FLSA sections 14(a) and (b)” as examples of individuals who are excluded from the EO’s minimum wage requirements.

    Additional Considerations

    As mentioned above, the secretary of labor will be granted authority to annually review and increase the minimum wage beginning January 1, 2023. The minimum wage will be increased by the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers to address inflation.

    Additionally, the EO and final rule change compensation for tipped employees working on or in connection with a covered contract. Beginning January 30, 2022, such tipped employees must be paid a wage of at least $10.50 per hour. By January 1, 2024, the tip credit must be eliminated for such employees, and they must earn the same minimum hourly rate that other covered employees are entitled to.

    CUPA-HR will keep members apprised of any updates and resources to aid institutions as the new minimum wage final rule becomes effective.



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