Service Contract Act—New Requirement Nondisplacement of Qualified Workers The “Right of First Refusal” Rule UTSA SBDC-PTAC Networking Breakfast—July 10, 2013 © Copyright: Cannot be copied or distributed without the written consent of an Onsi Group authorized representative. PRESENTED BY

© Copyright: Cannot be copied or distributed without the written consent of an Onsi Group authorized representative. Background  Executive Order  Issued on January 30, 2009  Effective January 18, 2013  Purpose  Economy and efficiency  Carryover workforce reduces disruption in delivery of services during transition period between contractors  Benefit of an experienced and trained workforce that’s familiar with the Government’s personnel, facilities, and requirements 2

© Copyright: Cannot be copied or distributed without the written consent of an Onsi Group authorized representative. Background  Coverage  Applicable ONLY to Solicitations for Service Contracts issued on or after January 18, 2013  Applies to the Prime and each of its Subcontractors  Dollar value of contract must be in access of $150,000  DOL Enforcement  All complaints must be filed with DOL’s Wage & Hour Division with 120 days from the first date of contract performance  All complaints will be handled initially by DOL’s DC office  Contact info for complaints: or 3

© Copyright: Cannot be copied or distributed without the written consent of an Onsi Group authorized representative. Contracting Agency  Contracting Agency Requirements  Incorporate contract clause 48 CFR  Now a mandatory clause for all Service Contracts  Currently, if not incorporated, DOL asking the Contracting Office to incorporate, then DOL enforces  Starting FY2014, DOL may enforce using the Christian Doctrine  GSA has now added the clause to its contracts  Direct the Predecessor Contractor to provide notice to its service employees of their possible right of an offer of employment  Provide Incumbent Contractor’s List to Successor 4

© Copyright: Cannot be copied or distributed without the written consent of an Onsi Group authorized representative. Contracting Agency  Contracting Agency Requirements— Continued  If complaint is filed, within 14 days of receiving notice of the complaint from DOL, must forward at least the following information to DOL:  Was the Solicitation issued after January 18, 2013?  Was the FAR clause incorporated into the Contract?  Did the Predecessor provide Notice to its service employees?  Was the Incumbent Contractor’s List provided to the Successor?  A copy of the Incumbent Contractor’s List  A copy of all service employee statements obtained by the Agency 5

© Copyright: Cannot be copied or distributed without the written consent of an Onsi Group authorized representative. Contractor  Contractor Requirements  Successor cannot fill any open positions until after an offer of “first right of refusal” has been extended to incumbent employees  Only required for those incumbent employees who worked during the last month of performance on the predecessor contract  Successor must still comply even if “Incumbent Contractor List” is not provided  Unlike the SCA vested vacation requirement which successors often have up to one year after SCA anniversary date for compliance, the “right of first refusal” requirement is immediate  Note: Agency can withhold predecessor’s last payment if Incumbent Contractor List is not provided 6

© Copyright: Cannot be copied or distributed without the written consent of an Onsi Group authorized representative. Contractor  Contractor Requirements-- Continued  Offer of employment can be oral or written  Strongly recommend written offers so avoid “he said/she said”  Must be provided in language that employee understands  Must give incumbent service employee at least 10 days to accept/decline the offer of employment  If the Award date and the Start date are less than 10 days, then service employee must make an independent decision and DOL will advise employee that the “short” lead time between Award and Start date must be taken into consideration with regard to the time limit 7

© Copyright: Cannot be copied or distributed without the written consent of an Onsi Group authorized representative. Contractor  Contractor Requirements-- Continued  Once employee declines, even if comes back within the minimum 10 day period, the Successor contractor has met its obligation and does not have to hire the incumbent employee  Predecessor contractor must provide a certified Incumbent Contractor List not less than 30 days before completion of contract  Any changes in the workforce after the initial submission must be update not less than 10 days before completion of the contract 8

© Copyright: Cannot be copied or distributed without the written consent of an Onsi Group authorized representative. Contractor  Contractor Requirements-- Continued  Successor contractor can offer the incumbent service employee:  a different position on the new contract if the employee is qualified for that new position  different pay rate and benefits  so long as the reason is not related to a desire that the employee refuse the offer or that other employees be hired for the position  DOL will look at the facts of each scenario 9

© Copyright: Cannot be copied or distributed without the written consent of an Onsi Group authorized representative. Contractor  Contractor Requirements-- Continued  Exceptions:  Nondisplaced employees—if retained by the predecessor then not “displaced” so no requirement of successor to offer position  Successor’s current employees—worked for contractor or subcontractor for at least 3 months immediately preceding the commencement of the contact and would be face lay-off/discharge  Predecessor contractor’s non-service employees—those employees exempt under FLSA  Employee’s past unsuitable performance—must have a prior written evaluation of failure to perform suitably on the job; cannot reply on hearsay 10

© Copyright: Cannot be copied or distributed without the written consent of an Onsi Group authorized representative. Contractor  Contractor Requirements-- Continued  Exceptions:  Non-Federal work—worked on multiple contracts with the predecessor as part of a “single job” for the predecessor  Reduced staffing—any open positions within first 90 days of contract start date Successor contractor must provide a “first right of refusal” to any remaining eligible incumbent employees  Contractor determines which employees—Successor does not have to make “first right of refusal” offers based on incumbent seniority; DOL does not consider it discrimination to hire the newest incumbent employees (who only have up to 2 weeks of SCA vested vacation benefits) over the longer serving incumbent employees (who have 3 to 5 weeks of SCA vested vacation benefits)  Changes to staffing pattern—Successor must make a best effort attempt to offer positions to the greatest number of incumbent employees 11

© Copyright: Cannot be copied or distributed without the written consent of an Onsi Group authorized representative. 1) Are SCA stipulations included in contract? 2) Does contract have correct WD? 3) Are the SCA poster & WD, including any Conformance actions, posted at the site or made available to employees? 4) Does WD contain necessary classifications? 5) Is a Conformance necessary? 6) Are employees properly classified (WD & FLSA)? 7) Are fringe benefits properly paid? 8) Is Overtime correctly paid under the FLSA or CWHSSA, if appropriate? 9) Has employer kept accurate payroll records? DOL Investigation Issues 12

This presentation is intended as general information only and does not carry the force of legal opinion. The Onsi Group is providing this information as a public training service. This information and related materials are presented to give the public access to information on related to the Service Contract Act of You should be aware that, while we try to keep the information timely and accurate, there will often be a delay between official publications of the materials and the modification of these pages. Therefore, we make no express or implied guarantees. The Federal Register and the Code of Federal Regulations remain the official source for regulatory information published by the Department of Labor. We will make every effort to keep this information current and to correct errors brought to our attention. © Copyright: Cannot be copied or distributed without the written consent of an Onsi Group authorized representative. 13 Disclaimer Disclaimer

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© Copyright: Cannot be copied or distributed without the written consent of an Onsi Group authorized representative. THANK YOU Angela Hendrix, JD—Founder & President 200 E Grayson, Suite 104, San Antonio, TX (o); (c) 15