United States: Big News For Federal Contractors

Last Updated: March 25 2014
Article by Saundra Brown Strong

Minimum Wage Hike

President Barack Obama announced last week that he is acting unilaterally to raise the minimum wage for new federal contract workers. President Obama stated he will sign an executive order lifting the minimum wage to $10.10 an hour for workers under new federal contracts, up from the current federal minimum wage of $7.25 an hour. The wage increase will touch few workers immediately. According to a White House statement, it will only kick in when new contracts are signed, and it will not cover existing employees until their contracts are renewed. However, depending on how the Executive Order implementing the new minimum wage is worded, the wage determination applicable to contract modifications or to multi-year service contracts could require current contractors to pay the new $10.10 minimum wage.

The number of federal contractors this executive order will effect remains to be seen. Valerie Jarrett, senior adviser to President Obama, recently opined that the order covers "a couple hundred thousand" employees of federal contractors. Others say that number is inflated since most workers employed by government contractors already earn more. Service and construction contracts are governed by two specific laws, the Service Contracting Act and the Davis-Bacon Act, that require the government to pay at least the prevailing wages in any given area. The impact of the executive order will be greatest in the areas of the country where prevailing wages are lower.

We have to wait for the Executive Order itself before we can offer specific guidance on its requirements, but it is not too early for contractors to begin thinking about how this might impact their business.

New Disability Self-Identification Form

Last week, the new disability self-identification form was made available to the public on the Office of Federal Contract Compliance Programs ("OFCCP") website. There were a number of changes made from the form that initially was submitted in the fall of last year. Most significantly, instead of the list of "major life activities," included in the original form, the final form includes a non-exhaustive bulleted list of disability examples, such as blindness, deafness, cancer, diabetes, autism, HIV, schizophrenia, major depression, post-traumatic stress disorder, and "intellectual disability (previously called mental retardation)." The form states that a response is voluntary, "but we hope that you will choose to fill it out," and provides the applicant/employee the opportunity to check one of three boxes: (1) Yes, I have a disability (or previously had a disability); (2) No, I don't have a disability; or (3) I don't wish to answer. Unlike the original draft, the revised form also includes a space for the applicant's/employee's name so that contractors can match the response to the appropriate job group for tracking and analysis purposes.

As a reminder, Federal contractors will be required to use this form to solicit disability status of applicants, pre and post offer, as well as employees. Federal contractors should not begin this data collection with applicants until at least March 24, 2014, the effective date of the regulations. Contractors also have the option to begin data collection on their next affirmative action plan cycle date following the effective date. This also is the deadline for compliance with the new Vietnam Era Veterans' Readjustment Assistance Act of 1974 ("VEVRAA") regulations.

The new Section 503 self-identification form is available here.

The Section 503 FAQs can be found here.

The new VEVRAA FAQs can found here.

OFCCP Courtesy Notifications

The word on the street is that OFCCP will mail approximately 2,193 courtesy notification (previously, the Corporate Scheduling Announcement Letter) letters to establishments of a total of 856 federal contractors. These letters will be sent to the establishments themselves rather than to the corporate contact. If you receive this letter, it means your company has been targeted for an affirmative action compliance review by OFCCP during the current scheduling cycle.

OFCCP's courtesy notifications are not the same as scheduling letters, which actually start the evaluation process and request submission of the contractor's affirmative action plan and supporting data within 30 days of receipt. If your company receives a courtesy notification letter, you should take advantage of the advance notice and immediately begin preparing for the compliance review. During the standard desk audit phase, companies are required to produce, among other things, copies of your affirmative action plans as well as raw data concerning your applicants, hires, promotions, terminations and employee compensation. In our experience not all establishments included in a courtesy notification letter actually will be audited. However, contractors should assume they will be audited and take steps now to confirm that their affirmative action plans are in proper order and to confirm the accuracy of the raw data that must be submitted with the plan.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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