Notice of 2021 Federal Contractor Minimum Wage Rate Change

The Department of Labor’s Wage and Hour Division (WHD) announced effective January 1, 2021, the new minimum wage for federal government contractors will be $10.95/hour as instructed by Executive Order 13658 (the Order), Establishing a Minimum Wage for Contractors.

The Order, adopted in 2014, raised the hourly minimum wage for federal contractor employees beginning on January 1, 2015, with annual adjustments after that. Each year, the WHD conducts an assessment to determine the yearly inflation-based increases to the minimum wage rate. The 2021 rate is an increase of $0.15/hour over the 2020 minimum wage.

The minimum wage for federal contractors applies to four categories of contractual agreements; service contracts covered by the Service Contract Act, construction contracts covered by the Davis-Bacon Act, concession contracts, and contracts connected with federal land use or property under which services are offered. However, any fringe benefits paid to workers may not count towards the wage rate.

The notice can be found at https://www.federalregister.gov/documents/2020/08/31/2020-19037/establishing-a-minimum-wage-for-contractors-notice-of-rate-change-in-effect-as-of-january-1-2021

DOL’s Final Rule On Joint-Employer Finds Opposition

The U.S. District Court for Southern District of New York struck down major portions of the U.S. Department of Labor’s (DOL) joint-employer final rule, which was issued earlier this year. The court found DOL’s new interpretation for vertical joint employer liability conflicts with the Fair Labor Standards Act (FLSA), and the DOL violated the Administrative Procedure Act’s (APA’s) rulemaking requirements.

In the joint-employer final rule, DOL revised the interpretation of joint-employer status under the FSLA to promote certainty for employers and employees and uniformity among court decisions, and to reduce litigation. The decision found that the update narrowed the definition of joint-employer, ignoring the FLSA’s broad definitions making it in direct conflict with FLSA.

Additionally, the DOL failed to adequately justify its departure from its prior interpretations, which violates the Administrative Procedure Act (APA). The APA requires agencies to ‘examine the relevant data and articulate a satisfactory explanation for its action, including a rational connection between the facts found and the choice made.

The DOL is expected to appeal this decision, but regardless of the next steps, employers in potential vertical joint employment scenarios should be aware of the decision and prepared to make changes to workforce and staffing arrangements in support of the final rule.

WHD Issues Field Assistance Bulletin Clarifying Employer’s Obligations Concerning Telework

The U.S. Department of Labor’s Wage and Hour Division (WHD) issued Field Assistance Bulletin 2020-5 to clarify an employer’s obligation under the Fair Labor Standards Act (FLSA), to track compensable hours employees work while away from worksites or premises controlled by the employer. This guidance responds to the unprecedented number of telework or remote work arrangements that arose in response to COVID-19.

The guidance reaffirms that employers are obligated to compensate their employees for all hours worked, including work not requested but permitted, and applies equally to work performed at home. Therefore, if the employer has reason to believe that an employee is performing work, the time must be counted as compensable hours worked.

Employers must pay employees the same hourly rate or salary regardless of where the work is taking place; unless the employer has a union contract or other employment contract. Additionally, when the Service Contract Act (SCA) or other state laws regulating the payment of wages also apply, nothing in the guidance nullifies or overrides any higher standards provided by such laws. 

The guidance also emphasizes the employer’s obligation to track all compensable hours worked by employees, which could be satisfied by providing a reasonable reporting method that also captures the non-scheduled time and even hours not requested by the employer. Keep in mind that if an employee fails to report unscheduled hours worked through such a method, the employer is then not in violation of the FLSA as the employer has no reason to know about those hours.

The WHD intended this guidance as another tool to help ensure employees receive the wages they have earned and that employers have the means to manage remote workers. This is a link to the Bulletin; https://www.dol.gov/sites/dolgov/files/WHD/legacy/files/fab_2020_5.pdf

DOL Clarifies ‘Regular Pay’ for COVID-Related Paid Sick Leave For SCA and DBA

On August 3, 2020, the Wage and Hour Division of the U.S. Department of Labor (DOL) released additional Q&A information regarding COVID-Related paid sick leave provided under the Families First Coronavirus Response Act for employees working under the McNamara- O’Hara Service Contract Act (SCA) and the Davis-Bacon Act (DBA).

What does the Q&A cover?

The DOL’s question and answer information provides clarification to employers working on government contracts on the appropriate use of fringe benefits. Specifically, the DOL clarifies that an employer generally should not include the SCA or DBA health and welfare fringe benefit rate when determining the “regular rate” of pay for purposes of the FFCRA paid leave. This is true even when the employer has opted to pay the fringe amount as cash in lieu of a benefit.

What is the fringe benefit obligation?

To provide some background, the SCA and DBA include a fringe benefit payment obligation for each wage determination. A contractor must generally meet this benefit payment requirement for each hour worked by an employee working on the government contract. The fringe benefit obligation also applies to hours that an employee takes for vacation, sick leave, and holiday hours up to a maximum of 40-hours per week or 2,080 hours per year on each contract. Separately, Executive Order 13706 (EO 13706) added a requirement for SCA and DBA contractors to provide up to seven (7) days of paid sick leave every year for new and replacement contracts on and after January 1, 2017.

Where does the FFCRA factor in?

The Families First Coronavirus Response Act (FFCRA), which became law on March 18, 2020, includes a temporary requirement for employers to provide up to 14 days of paid sick leave under certain situations due to an employee’s need to take leave from work due to COVID-19.  The amount to be paid the employee for this expanded paid family and medical leave is based on the employee’s ‘regular rate’ for up to the fourteen (14) day period.

For purposes of the FFCRA, an employee’s ‘regular rate’ is the higher of: the employee’s regular rate of pay, the federal minimum wage in effect under the Fair Labor Standards Act, or the applicable State or local minimum wage.  Under this recent DOL guidance, an employer need not include the hourly fringe benefit obligation when determining an employee’s regular rate’ for FFCRA-paid leave.

It is important to note that an employer that provides health insurance to the employee must maintain the employee’s health insurance while the employee is taking FFCRA paid leave as if the employee was working. If an employee takes the FFCRA-expanded leave concurrently with other leave provided under the SCA, DBA, or EO 13706, then the health and welfare fringe benefit rate or the monetary equivalent, would apply to the hours taken by the employee.

August 2020 Construction Spending Increases

The U.S. Census Bureau announced construction spending for August 2020 was at a seasonally adjusted annual rate of $ 1,413 billion, 1.4% above the revised estimate in July. Compared to 2019, August 2020 total spending is up 2.5%. Also, during the first eight months of 2020, construction spending amounted to $ 928 billion, 4.2% above the $890 billion for the same period in 2019.

While private construction spending in August was $ 1,061 billion, 1.9% above the revised July estimate of $ 1,042 billion, public construction spending was $351 billion, 0.1% above last month’s revised estimates of $351 billion.

Compared to August 2019, public construction spending was up 5.5%. The most significant contributor on a percentage basis to the increase in public construction for the year is public safety, which was $15 billion, 41% above the $11 billion for the same period in 2019. Additionally, contributing to public spending growth from the previous year is highway construction at a seasonally adjusted annual rate of $101 billion, up 7.2% in 2019. Highway construction also grew 1.9% from the previous month.

More information may be found at: https://www.census.gov/construction/c30/pdf/release.pdf

Training On Labor Standards Requirements For Federally Funded Construction And Federal Service Contractors Set For September 2020

The U.S. Department of Labor’s Wage and Hour Division (WHD) will offer virtual compliance assistance seminars for contracting agencies, contractors, unions, workers, and other stakeholders to provide information about the legal requirements to pay prevailing wages on federally funded construction and service contracts.

The training is the latest in WHD’s ongoing efforts to increase awareness and improve compliance with federal prevailing wage requirements among employers performing work on federally funded construction or services contracts. The seminars will include video training on a variety of Davis-Bacon Act and Service Contract Act topics that will be provided to participants after registration for self-paced study before live, interactive question and answer sessions. WHD experts will field questions during these live sessions, and lead discussions about topics participants raise.

WHD offers the live portions of these seminars at the following dates and times:

Davis-Bacon Act Virtual Prevailing Wage Seminar

• September 9, 2020, 2:00 p.m. – 3:30 p.m. EDT; or
• September 15, 2020, 2:00 p.m. – 3:30 p.m. EDT

Register here: https://www.eventbrite.com/e/dol-davis-bacon-act-virtual-prevailing-wage-seminar-tickets-110203122506

Service Contract Act Virtual Prevailing Wage Seminar

• September 10, 2020, 2:00 p.m. – 3:30 p.m. EDT; or
• September 16, 2020, 2:00 p.m. – 3:30 p.m. EDT

Register here: https://www.eventbrite.com/e/dol-service-contract-act-virtual-prevailing-wage-seminar-tickets-111345776214

While seminar attendance is free, registration is required.

WHD Provides Additional Contractor Guidance Concerning COVID-19

The U.S. Department of Labor, Wage and Hour Division (WHD) released additional guidance concerning the use of paid sick leave on certain federal contracts under the Emergency Paid Sick Leave Act or expanded family and medical leave under the Families First Coronavirus Relief Act (FFCRA). The guidance offers compliance support to businesses with federal service contracts covered by the Service Contract Act and federal construction contracts covered by the Davis-Bacon Act.

The guidance, laid out in a Question and Answer format, helps clarify contractor obligations. The guidance is available at www.dol.gov/agencies/whd/pandemic/sca-questions. Additionally, the WHD offers information on everyday matters businesses and workers face when responding to COVID-19 and its effects on wages and hours at www.dol.gov/agencies/whd/pandemic.

May 2020 Public Construction Spending Increases

The U.S. Census Bureau announced construction spending for May 2020 was at a seasonally adjusted annual rate of $ 1,356 billion, 2.1% below the revised estimate in April. Compared to 2019, May 2020 total spending is up 0.3%. Also, during the first five months of 2020, construction spending amounted to $ 543 billion, 5.7% above the $ 514 billion for the same period in 2019.

While private construction spending in May was $ 1,001 billion, 3.3% below the revised April estimate of $ 1,035 billion, public construction spending was $ 355 billion, 1.2% above last month’s revised estimates of $351 billion.

Compared to May 2019, public construction spending was up 4.9%. The most significant contributor on a percentage basis to the increase during that past 12 months, is construction spending for public safety, which was $14 million, 44.2% above the $10 million for the same period in 2019. Also contributing to public spending growth in May from the previous month is Highway construction, which was at a seasonally adjusted annual rate of $107 billion up 2.8% from the revised April estimate of $104 billion.

More information may be found at: https://www.census.gov/construction/c30/pdf/release.pdf

WHD Announces Job Openings to Assist with Federal Requirements

The U.S. Department of Labor, Wage and Hour Division (WHD) announced that they would be hiring 55 additional investigators and eight technicians to support their efforts to ensure that employers meet their federal compliance requirements. These recruits will join 92 investigators recently hired or awaiting placement and 28 technicians that WHD hired at the beginning of 2020.

Last year, WHD conducted a record-setting 3,700 public events to educate employers and workers about their workplace responsibilities and rights. Also, the division collected a record-setting $322 million in wages owed to employees.

WHD Administrator Cheryl Stanton noted that “in addition to enforcing long-standing protections, they now are enforcing the paid sick leave and expanded family and medical leave protections in the Families First Coronavirus Response Act.”

Those hired as investigators are responsible for conducting investigations to establish employers’ compliance with pertinent federal labor laws, while the technicians will provide front-line support for these efforts. Technicians also handle the receipt and evaluation of incoming complaints and ensure compliance information for employees, employers, and other stakeholders.

OSHA Issues Guidance for Reopening Non-Essential Businesses

The Occupational Safety and Health Administration (OSHA) issued recent guidance to help employers and workers in safely returning to work and reopening businesses regarded by local authorities as “non-essential businesses” during the evolving coronavirus pandemic. Employers are encouraged to use this guidance to develop policies and procedures to ensure their employees’ safety and health.

The guidance supplements previous information released from the U.S. Department of Labor, U.S. Department of Health and Human Services’ and the White House and focuses on general principles for updating restrictions initially put in place to slow the spread of the coronavirus.

OSHA points out that while state and local governments lift shelter-in-place or stay-at-home orders, Non-essential businesses should reopen and continue to follow to public health requirements and recommendations from the Centers for Disease Control and Prevention and other federal agencies.

The guidance notes that through each phase of the reopening process, employers should continue to develop policies and procedures for social distancing, basic hygiene, identification and isolation of sick employees, and employee training. Additionally, employers are encouraged to consider ways to use workplace flexibilities, such as remote work and alternative business operations, to provide goods and services to customers.

OSHA recommends that employers continually monitor federal, state, and local government guidelines for updated information about ongoing community transmission and mitigation measures, as well as for emerging guidance on disinfection and other best practices for employee protection.

For guidance, details visit https://www.osha.gov/Publications/OSHA4045.pdf