Protection of the workforce is a major focus of the Biden Administration. Rather than attempting to pass new legislation or amend existing statutes, the path of least resistance in the short term appears to be the use of executive orders to implement or, as here, rescind Trump Administration Executive Orders and put into effect many of the same policies as the Obama Administration. The starting point for the Biden Administration is to take the steps to implement rules with respect to the federal workforce and the workforce performing federal government contracts.
One of President Biden’s first actions in office was to direct federal government agencies to start the work to permit implementation of certain changes within the first 100 days of the administration through further executive action. These initiatives most likely will include an increased federal contractor minimum wage, requirements to offer employment to employees of an incumbent contractor, perhaps requiring contractors to disclose labor violations when seeking federal contracts, and increased Service Contract Act (“SCA”) enforcement.
- President Biden’s Executive Order 14003 on Protecting the Federal Workforce issued on January 22, among other requirements, directed the Office of Management and Budget to make recommendations regarding establishing a $15 minimum wage for federal employees and federal contractors and subcontractors (the current federal contractor minimum wage is $10.95) and to provide employees with emergency paid leave.
- President Biden’s Executive Order 13985 on Advancing Racial Equity and Support for Underserved Communities Through the Federal Government issued on January 20 revoked President Trump’s controversial Executive Order prohibiting certain types of workplace diversity trainings for federal government contractors.
In addition, Federal contractors also should expect to see reimplementation of President Obama’s Executive Order 13495, Nondisplacement of Qualified Workers Under Service Contracts, which in certain circumstances required successor contractors to offer, on a first refusal basis, employment to SCA-covered workers of outgoing predecessor contractors.
Similarly, no one should be surprised if the Biden Administration reimplements some form of the controversial Obama Administration’s Fair Pay and Safe Workplaces Executive Order 13673 —so-called “blacklisting” by its critics. Among other requirements, that Executive Order required federal contractors pursuing contracts in excess of $500,000 to disclose violations of certain labor laws. In 2016, the U.S. District Court for the Eastern District of Texas enjoined much of the implementation in Associated Builders and Contractors of Southeast Texas v. Rung. Federal contractors should expect to see a tweaked version of this policy from the new Administration.
Finally, federal contractors may see increased enforcement with respect to SCA compliance. Because statutory and regulatory changes would be difficult, it is likely that the prioritization of SCA compliance will also be implemented through an executive order. As discussed above, one likely change is an increased federal contractor minimum wage to $15 per hour. SCA enforcement by the Department of Labor, Office of Wage and Hour Division (“WHD”), is often talked about but rarely seen. Rather, enforcement appears to be more the result of whistleblowers contacting WHD. Making matters worse, alleged SCA violations can be amorphous involving technical issues like labor category mapping, worker misclassification (employee vs. independent contractor), and the timing and applicability of Wage Determinations. Defense of such investigations is time-consuming, record intensive, and expensive—regardless of whether there is an actual SCA violation. With respect to wage and benefit increases under SCA-covered contracts, perhaps the only silver lining is that, under certain types of contracts (fixed-price, labor-hour, or time-and-materials), contractors are entitled to price adjustments for an increase in the federal contractor minimum wage and wage and fringe-benefits increases in applicable wage determinations. See Federal Acquisition Regulations 52.222-43 and -44.
Federal contractors will likely see more activity than normal this Spring in terms of changes to the rules applicable to their workforce. There will be confusion and changing circumstances in terms of applicability and timing of workforce rules and policies. Federal contractors would be wise to dust off some of their old policies and procedures and get ready for these changes to their workforce rules.