Clarification to Minimum Wage Increase News Flash

 

We realize that it has been a few years since the federal contractor minimum wage regulations from Executive Order 13658 have gone into effect.  Due to several questions that we have received, we have put together specific information as to what contracts are covered, what your organization should do if you are covered, and more.

Also, we are including a link to the poster for you to display, if you aren’t already, in a conspicuous place to satisfy the notice requirement of the regulations.  The new poster for the 2018 increase will be officially released shortly.

What Contracts Are Covered?

First, the minimum wage regs only cover “new” contracts which are entered into or existing contracts that are modified or extended after January 1, 2015.

Second, the regs only apply to the following contracts/subcontracts:

  • Procurement contracts for construction covered by the Davis-Bacon Act (DBA).  It does not include construction contracts covered by DBA related acts such as the Federal-Aid Highway Acts, the Community Development Act, or the American Recovery and Investment Act.
  • Service contracts covered by the Service Contract Act (SCA).  Coverage of the SCA is fairly specific.  A DOL fact sheet, discussing coverage of the act can be found here.  If you have a service contract that does not specify that it is covered by the SCA, the regs do not apply.
  • Contracts for Concessions where the federal government contracts for the provision of food, lodging, fuel, souvenirs, recreational equipment or newspaper stands in connection with the use of federal property, lands or facilities.
  • Contracts in connection with federal property or lands for the provision of services to federal employees, their dependents, or the general public.  The provision of supplies in support of these contracts is not covered by the regs.

Continue reading Clarification to Minimum Wage Increase News Flash

VETS-4212 Filing Deadline Extended / Federal Contractor Minimum Wage Increasing

VETS-4212

The Department of Labor has announced a 45-day extension to the deadline for filing the VETS-4212 Report.  The deadline has been pushed from September 30, 2017 to November 15, 2017. 

This announcement comes off the heels of Hurricanes Harvey and Irma, granting employers across the country extra time as business returns to normal.

MINIMUM WAGE INCREASE

In other news, the minimum wage for federal contractors and subcontractors will increase to $10.35/hour on January 1, 2018, up from the current rate of $10.20/hour.  The hourly rate for tipped employees will also jump to $7.25/hour, up from the current rate of $6.80/hour. 

This will be the third increase since Executive Order 13658 went into effect in January 2015.

Please don’t hesitate to contact our office with any questions.

OFCCP/EEOC Merger is off the Table

The prospect of having a combined OFCCP and EEOC is no more.  On September 12, the House of Representatives agreed to prohibit funds from being used to combine the two agencies, slamming the door to any possibility of a merger.

The House’s rejection follows in the footsteps of last week’s merger denial by the Senate Appropriations Committee.  Quoted by Bloomberg as calling the merger proposal “a total mess,” Rep. Bobby Scott (D-Va.), ranking member of the House Committee on Education and the Workforce, explained that each agency has its own distinct mission and that combining them would lead to “total confusion.”

President Trump proposed the idea of a merger to promote cost-savings and efficiencies in the government.  However, the idea of a combined OFCCP and EEOC was quickly met by staunch opposition by civil rights organizations and management-side stakeholders.

So, what does this mean for contractors? 

First, the House and Senate will soon be meeting to reconcile their proposed budgets for the OFCCP.  Currently, the OFCCP is funded with $105 million.  The Senate proposed to lower funding to $103.5 million, whereas the House proposed funding of $94 million.  These are both significantly higher than President Trump’s proposed funding of $88 million.  Regardless of the agency’s new level of funding, cuts will be made, whether in terms of personnel and/or district offices.

Second, and perhaps more importantly, unless there is a fundamental change in the implementing regulations or a change in the legal status of affirmative action, the mission and activities of the OFCCP will remain essentially unchanged.  AAPs will still be required.  The OFCCP will still be conducting audits, though the frequency and duration of audit activity is unknown.  Employers will still be required to perform outreach, maintain records, and conduct self-audits.  So, in essence, we believe it will be business as usual in terms of affirmative action and OFCCP compliance. 

Please don’t hesitate to contact our office with any affirmative action or OFCCP matter.

New DOL Salary Level Test Blocked / EEO-1 Data Capture Period Announced

On August 31, a federal court in Texas ruled that the proposed increase in the salary threshold, from $23,660 per year to $47,476 per year to determine eligibility for overtime, is invalid as a matter of law.  This is the same court which imposed a temporary stay last November, preventing the increase from going into effect on December 1, 2016.  Last week’s action resulted in a permanent injunction.

In its opinion, the court explained that the Department of Labor overstepped its authority in determining overtime eligibility by concentrating too much on employee compensation, rather than job duties.   

If the rule had gone into effect as planned, the salary threshold test (the first stage of the exemption analysis) would have increased 100%, with further increases to follow every three years beginning in 2020. 

While this ruling may be appealed, we may not hear of further developments for some time.

In other news, following last week’s announcement that the current EEO-1 Report will remain in effect, the EEOC revealed that the “data reporting snapshot” for the upcoming report can be taken from a payroll period in either October, November, or December 2017.  Employers should begin to consider which period to use for the upcoming report, which is due March 31, 2018.

Employers who prepare their AAP’s on a calendar-year basis can utilize the same data snapshot for both the AAP and the EEO-1 Report.

Please don’t hesitate to contact our office with any questions regarding the above.

OMB Suspends New EEO-1 Report and Other OFCCP Updates

In a welcome announcement for employers, the Office of Management and Budget (OMB) informed the Equal Employment Opportunity Commission (EEOC) that the compensation and hours-worked components of the new EEO-1 Report have been delayed from implementation pending further review.

In other words, the “old” EEO-1 Report employers are familiar with will remain in effect.

In a memo to the EEOC, the Office of Information and Regulatory Affairs explained that the lack of a public comment period for the method of data submission, as well as the need for further study of the burden to employers, resulted in the recommendation to delay the new Report.

Although the previous form has been reinstated, employers will still need to submit 2017 data by the new deadline of March 31, 2018.  Further information regarding when to capture the employee data will be forthcoming shortly.

Despite the changes with the EEO-1 Report, be aware that federal contractors must still file the VETS-4212 report by September 30, 2017.

Shifting to the world of OFCCP, the Agency has started to offer “buyouts” to eligible employees ahead of a proposed $10 million budget cut.  With a reduction in staff on the horizon, employers will likely continue to see a decrease in compliance audit activity.  In addition, audits will be taking more time to complete.  The OFCCP’s union is estimating up to 50-75 agency employees could leave.  This reduced headcount will likely result in the closure of some number of district offices.

Finally, according to a letter from Acting Director Tom Dowd dated August 29, the Trump administration’s proposed merger of the EEOC and OFCCP will likely be delayed due to the need for legislative action to transfer enforcement authority from the Department of Labor to the EEOC.  Because of the length of time required, the likelihood of this merger being accomplished before the next election cycle, if at all, is dwindling. 

Please don’t hesitate to contact our office with any questions regarding the above.

Asking Applicants for Prior Salary: Options for the Future

Throughout 2017, more and more states and municipalities have introduced and enacted legislation barring employers from asking for or only considering a job applicant’s prior salary in formulating a job offer.  Following in the footsteps of Massachusetts, Oregon, Delaware, and more, roughly twenty-five states and the District of Columbia are considering their own prior salary measures. 

The rationale behind these prohibitions is that existing wage inequities are perpetuated when considering the applicant’s salary history to set starting pay.

Employers across the country now find themselves at a critical juncture and should be weighing their options.  So, what are some broad considerations that an organization should be thinking about with an eye toward the future?

A first option is to get ahead of the curve and eliminate all inquiries regarding prior salary altogether.  From an administrative standpoint, this would be the easiest option, as the inquiry about prior salary would be removed from all applications and interviewer questionnaires.  Continue reading Asking Applicants for Prior Salary: Options for the Future

Update on the Future of the New EEO-1 Report

Not a week goes by without the question being asked, “What should I be doing right now to prepare to file the revised EEO-1 Report?”  And the answer is:

“We still don’t know.”

As you are aware, the EEOC moved the filing date for the revised EEO-1 from September 30, 2017 to March 31, 2018.  This was done to ostensibly give employers additional time to gather the compensation data that now must be reported along with the customary employee demographic information provided to the Joint Reporting Committee.

However, there has been substantial controversy and conflicting reports as to whether the compensation reporting provision of the revised EEO-1 will survive in its current iteration.  What we do know is that:

  • Legislation has been introduced that would prevent the EEOC from spending any money to implement the new report.  Note that this would not do away with the requirement to gather and submit the data.
  • President Trump has nominated two Republicans to the remaining vacant EEOC Commission slots.  Janet Dhillon has been nominated to also be EEOC Chairperson, and Daniel M. Gade was nominated to the last open position.  The nomination and appointment of Chair Dhillon and Commissioner Gade would swing the make-up of the leadership of the EEOC to majority Republican.  This would seem to indicate a willingness to address the concerns voiced by the employer community regarding the revised EEO-1.
  • The U.S. Chamber of Commerce has petitioned the Office of Management and Budget (OMB) to re-evaluate the “burden estimate” to comply with the data collection and reporting requirements of the revised form.
  • On August 3, 2017, Acting EEOC Chairperson, Victoria Lipnic, announced at the National Industry Liaison Group (NILG) conference in San Antonio, TX that she had contacted the new head of the Office of Information and Regulatory Affairs (OIRA), Neomi Rao.  The OIRA is the office within OMB charged with reviewing proposed regulations as well as their implementation.  Acting Chair Lipnic has not been shy about voicing her opinion that the compensation portion of the revised EEO-1 is a “poster child” of the excessive regulatory burden that the current administration vowed to overturn after the election.  Acting Chair Lipnic has requested that OIRA and OMB provide employers with an answer by August 31, 2017 regarding the future of the revised EEO-1.

Speculation at the conference was that while the March 31, 2018 filing date would remain unchanged, implementation of the compensation and reporting component would likely be delayed a year. 
 
So, what should employers be doing now?  Our recommendation is to continue to wait, at least until the end of August, to see if there is any guidance forthcoming from the EEOC or OMB.  At that point, if there is still no information regarding future of the compensation component, then employers should begin to evaluate what will need to be done to file the revised EEO-1, including the compensation component, by March 31, 2018.   This should be accomplished, keeping in mind that between August 31, 2017 and March 31, 2018, much can change.

Revised Form I-9 Now Available

 

On July 17, 2017, U.S. Citizenship and Immigration Services (USCIS) released a new version of Form I-9, Employment Eligibility Verification.  Employers can use the new revised version immediately, or may continue using the Form I-9 with a revision date of 11/14/16 N through September 17, 2017.  Effective September 18, 2017, employers must use the Form I-9 with a revision date of 7/17/17 N. 

Employers must continue to follow existing storage and retention rules for any previously completed Form I-9.

What revisions were made to the instructions for the new Form I-9?

  • The name of the Office of Special Counsel for Immigration-Related Unfair Employment Practices was changed to its new name, Immigrant and Employee Rights (EIR) Section. 
  • The phrase “end of” was removed from the phrase “first day of employment” in Section 1, describing the timeframe during which the Form I-9 must be completed.
  • Download the revised Instructions for Form I-9 here.

What revisions were made relative to the List of Acceptable Documents on Form I-9?

  • The Consular Report of Birth Abroad (Form FS-240) was added to List C.  Employers using the interactive Form I-9 or E-Verify will be able to select Form FS-240 from the drop-down menus available.
  • All the certifications of report of birth issued by the Department of State (Form FS-545, Form DS-1350 and Form FS-240) were combined into selection C#2 in List C. 
  • All of the List C documents were renumbered, except the Social Security card.
  • These changes are included in an easier-to-navigate, revised version of the Handbook for Employers: Guidance for Completing Form I-9 (M-274). 

Remember, even if your company uses E-Verify, employers must still complete Form I-9.  Utilizing E-Verify does not remove an employer’s obligation to complete Form I-9.

Continue reading Revised Form I-9 Now Available

Proposed Merger of the OFCCP & EEOC – The Trump Administration Wants to See This Happen!

It’s officially on the table.  The 2018 budget proposal released yesterday by the Trump Administration officially calls for the merger of the OFFCP with the EEOC by the end of fiscal 2018 (September 30, 2018).  The proposal states:

“The proposed merger will benefit employers, workers, and the public by consolidating the oversight of federal equal employment opportunity under one roof.”

The budget also reduces funding for the OFCCP from $105M to $88M, a reduction of 16%.  This is expected to reduce Agency headcount from 571 employees in 2017 to 440 in 2018, a reduction of 131 employees or 23%.

The proposal also calls for establishing two Skilled Regional Centers, located in San Francisco and New York staffed with “…highly skilled and specialized compliance officers capable of handling various large, complex compliance evaluations in specific industries, such as financial services or information technology.”  The budget goes on to state that having these Centers, “…reduces the need for a network of field area and district offices.”  All of this points to the elimination of many of the District and Regional offices, and their staffs.

It is not clear what is meant by the phrase, “…handling various large, complex compliance evaluations…”  It could imply conducting compliance reviews of multi-establishment locations of a single contractor instead of the current focus on a single establishment.  This would be a major new development in the scope of compliance evaluations as well as conducting self-audits.

The budget anticipates that the Agency will continue to focus on systemic compensation discrimination and that 35% of conciliation agreements will be based on pay.  The other major focus will be on “…larger federal and federally-assisted construction projects…”

As an aside, since the proposal specifically references banks and IT organizations, this should be taken as a heads-up to these organizations that they should be anticipating in-depth reviews of their compensation practices. 

Preliminary reactions from the U.S. Chamber of Commerce and civil rights organizations have been to oppose the merger.  It is important to note that this is merely one of many proposals.  Comments from Senate and House Republicans have included statements that the budget will be “dead on arrival” when it reaches the respective legislative bodies.

It is important to keep in mind that even if the two Agencies do not merge, the OFCCP may still be looking at the loss of 16% of its funding and 23% of its staff as well as the fundamental restructuring of its operations.  This is just the opening salvo in the 2018 budget war.  Current indicators point to the legal concept of Affirmative Action and the associated compliance obligations continuing.  However, whether or not there is a merger, the enforcement protocols could be vastly different from what contractors have grown accustomed to under past administrations.

These remain interesting times.  We will keep you advised as further developments occur. 

The Future of the OFCCP, the Executive Order and Affirmative Action

It is with some trepidation that I even bring up this topic. However, as a practitioner of close to 40 years in the areas of affirmative action and EEO, I find myself more uncertain than ever before about the future of the Office of Federal Contract Compliance Programs (OFCCP), Executive Order (EO) 11246, and the legal principles behind affirmative action.

Ever since the election of Donald Trump, the future of affirmative action and the OFCCP has been a topic of discussion and conjecture in the legal, HR, and various stakeholder communities.  To the extent that commentators have been willing to weigh-in on the topic, most predictions have come down on the side that both the OFCCP and affirmative action as a legal principle are for the most part, “safe.”  However, just how “safe” things really are is far from certain.

On March 13, 2017, President Trump signed a new Executive Order directing the head of the Office of Management and Budget (OMB) to review every executive branch agency to identify “where money can be saved and services improved.”  OMB is to consider “… (ii) whether some or all of the functions of an agency, a component, or a program are redundant, including with those of another agency, component, or program…” and “… (iii) whether certain administrative capabilities necessary for operating an agency, a component, or a program are redundant with those of another agency, component, or program…”

Then, on March 16, 2017, President Trump’s 2017 budget was released.   The budget proposes a 21% reduction in funds for the Department of Labor (DOL).  There is nothing that indicates that the reductions will be spread evenly throughout the Department.  Some agencies and programs could experience larger reductions than others.

Six days later on March 22, 2017, Alexander Acosta, the nominee for Secretary of Labor, had his Senate confirmation hearing.  During the hearing, there was no discussion regarding his take on the future of the OFCCP.  However, in response to questioning, Acosta responded that he would follow the March 13, 2017 executive order.  Continue reading The Future of the OFCCP, the Executive Order and Affirmative Action

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