Government Contractors: New Obligations for 2016

Recent Executive Orders and proposed Regulations are creating significant new obligations for many federal government employers in 2016.

MINIMUM WAGE INCREASE:  Executive Order 13658.

Beginning Jan. 1, 2016, the minimum wage for work performed under covered federal contracts will increase to $10.15. Employees working under covered federal contracts who receive tips as part of their compensation must be paid a minimum cash wage of $5.85 an hour starting Jan. 1. DOL is authorized to adjust the wage rate annually.

The wage requirement applies to new and replacement contracts arising out of solicitations issued on or after Jan. 1, 2015, that are (1) construction contracts covered by the Davis-Bacon Act (DBA); (2) service contracts covered by the Service Contract Act (SCA); (3) concessions contracts; or (4) contracts in connection with federal property or lands related to offering services for federal employees, their dependents, or the public. The requirement flows down to subcontractors.

PAY TRANSPARENCY: Executive Order 13665.

On Jan. 11, 2016, Executive Order 13665  prohibits covered federal contractors and subcontractors from discharging or otherwise discriminating against employees who inquire about, discuss, or disclose their compensation or the compensation of another employee or applicant. The pay transparency rule applies to employers with federal contracts or subcontracts totaling more than $10,000 that are entered into or modified after Jan. 11, 2016.

EXPANDING PROTECTED CLASSES: Executive Order 11246.

Covered federal contractors and subcontractors are prohibited from discriminating on the basis of sexual orientation and gender identity. Executive Order 11246 further requires federal contractors and subcontractors to take affirmative action to ensure that equal opportunity is provided in all aspects of employment.

Contractors with a single federal contract or subcontract—or an aggregate of federal contracts or subcontracts in a 12-month period—in excess of $10,000 are subject to Executive Order 11246. Additionally, contractors with a single federal contract or subcontract of $50,000 or more and 50 or more employees also must prepare an annual comprehensive affirmative action plan and conduct related analysis and oversight.

FAIR PAY AND SAFE WORKPLACES: Executive Order 13673.

Proposed regulations implementing Executive Order 13673, titled Fair Pay and Safe Workplaces will require contractors seeking new federal procurement contracts valued at $500,000 or more or contractors with more than 50 employees to report any violations of federal labor and employment laws and equivalent state laws that occurred in the three years before bidding. A continuing duty to report requires disclosure of any such violation every six months after award of the contract.

Written by: Don Benson, Esq.