Full Year Appropriations Reached

Last week, just before adjourning for the holidays, the House Appropriations Committee released the 2016 Omnibus Appropriations bill which includes full Appropriations legislation and funding for the 12 annual Appropriations bills through the end of the fiscal year, September 30, 2016. After passing both the House and Senate, the President promptly signed the bill which provides discretionary funding for the federal government for the current fiscal year avoiding the threat of a government shutdown.

The bill is consistent with the increased domestic discretionary funding provided by the Bipartisan Budget Act of 2015 that was passed November 2, 2015.

Bill highlights include:

• A total of $1.149 trillion base
• Up to $680 billion in tax breaks
• $73.7 billion  Global War on Terror (GWOT)/Overseas Contingency Operations (OCO) funding for the operations of the federal government to combat the threat of ISIL and other enemies around the world
• Provides $548 billion for defense and $518 billion for non-defense base

Moreover, the bill covers a wide range of important policy items such as increasing transparency and accountability at federal agencies, and halting administrative overreach that hinders economic growth. Appropriations Chairman Hal Rogers noted that “this bill will provide a stop to wasteful and unnecessary spending and reining in regulatory overreach that hinders growth and job creation. It will help move the country in the right fiscal direction as we embark on a new year.”

FAR Issues Final Rule

Last week, the Federal Acquisition Regulation (FAR) which is administered by the Department of Defense (DoD), the General Services Administration (GSA) and the National Aeronautics and Space Administration (NASA) issued the final rule to implement Executive Order (E.O.) 13658, Establishing a Minimum Wage for Contractors. The final rule has significant implications for employers who have workers that will perform work under covered federal contracts or subcontracts.

The final rule implements E.O. 13658 by increasing the federal minimum wage for contract workers which was increased to $10.10 an hour in 2015 and for which will increase to $10.15 per hour starting January 1, 2016 due to changes to the Consumer Price Index.

The final rule identifies important terms used in the E.O., explaining the contractors’ obligations including a thorough description of the types of covered contracts such as those covered by the Davis-Bacon Act and the Service Contract Act as well as concession contracts or any contract in connection with a Federal contract.

In addition, the rule requires that contractors provide notice to anyone, including their employees, who enter into a lower-tier contract. Notices need to specify that, as a condition of payment, the wages paid for work covered under the contract must comply with the minimum hourly wage rates.

Employers should be watchful about checking whether their contracts will be subject to the terms of the final rule which will apply to new contracts with the federal government as well as with replacements for expiring contracts that result from solicitations issued on or after Jan. 1 and to contracts that are awarded outside the solicitation process on or after Jan. 1.

Highway Bill Signed into Law

Just as federal infrastructure funding was about to run out, President Obama signed into law a 5-year, $305 billion Highway Bill which Congress approved with strong bipartisan support.  After years of short-term efforts, this bill features the first transportation funding since 2005 to last longer than two years.

The bill, also known as the “Fixing America’s Surface Transportation (FAST) Act,” is intended to improve surface transportation infrastructure, reform and refocus programs on addressing national priorities, maintain a strong commitment to safety and promote innovation. In addition, the bill is to give state and local governments greater certainty about transportation funding so they can plan crucial projects.

Though it received strong support, Congress struggled with funding the bill for the 5-year duration. For now funding is set to come from a combination of gas tax revenue and a package of $70 billion in offsets from other areas of the federal budget. However, a future Congress and president will need to determine how to permanently fund the bill’s priorities.

DOL Announces Minimum Wage Increase for Work on Federal Contracts

On September 16th the US Department of Labor Wage and Hour Division (WHD) announced that beginning January 1, 2016 the minimum wage for performing work on Federal contracts covered by Executive Order 13658 will increase to $10.15. President Obama signed the Order establishing minimum wage for contractors back in February of 2014, which raised the hourly minimum wage paid to workers performing work on covered Federal contracts to $10.10 beginning January 1, 2015. The final regulations implementing the contractor minimum wage calls for annual adjustments. View the announcement here.

Wisconsin Approves Changes to Prevailing Wage Law

On July 8th, Wisconsin legislation amended the state’s prevailing wage law so that it no longer applies to local projects. The newly amended law removed several existing requirements and changed the manner in which the prevailing wage is calculated and who has oversight.

As a result of the approved changes, the prevailing wage law will now apply only to state projects and will no longer pertain to county, municipal, or school projects. Local governments are prohibited from enacting or administering their own prevailing wage laws or similar ordinances.

The repeal also specifies that the formula for calculating the prevailing wage will come from the U.S. Department of Labor (USDOL) and will not be determined by the State’s Department of Workforce Development as it has been previously. State projects will now use prevailing wage rate data determined by the USDOL under the federal Davis-Bacon Act.

Provisions of the legislation also establish that the Department of Administration (DOA) will now have full oversight and rule-making authority to enforce and administer the law with the exception of  state highway projects, which are administered by the Department of Transportation (DOT).

The provisions take effect  January 1, 2017, and will be applied to any request for bids issued on or after that date.

DOL Issues Additional Independent Contractor Guidance

The US Department of Labor (USDOL) Wage and Hour Division recently issued Administrator’s Interpretation No. 2015-1 which provides additional guidance regarding independent contractors under the Fair Labor Standards Act. The Department of Labor has been working for years with the IRS and state agencies to curtail misclassification of employees as independent contractors.

Despite these efforts to educate employers on correctly classifying workers as employees or independent contractors, the USDOL states, “Misclassification of employees as independent contractors is found in an increasing number of workplaces in the United States.” Therefore the Administrator believes additional guidance “may be helpful to the regulated community in classifying workers and ultimately in curtailing misclassification.”

The USDOL believes that the Fair Labor Standards Act definition of employ, “to suffer or permit to work”, as well as the “economic test” is broader in scope than the often-used “common law control” test, so the Department issued Interpretation No. 2015-1 to provide additional guidance.

The Interpretation includes additional insights regarding the “suffer or permit” standard as well multiple other factors to consider. A copy of the Interpretation can be obtained here: http://www.dol.gov/whd/workers/Misclassification/AI-2015_1.htm.

Fair Pay

Recently, in an effort to implement President Obama’s Executive Order (EO) 13673, “Fair Pay and Safe Workplaces,” the Federal Acquisition Regulatory Council issued a proposed regulation and the U.S. Department of Labor issued proposed guidance. This requirement, when implemented, will require covered federal contractors to disclose labor violations, contracting agencies to assess these violations, and the DOL to provide assistance.

 An employer’s record of violations may now be taken into account when contemplating whether to award future contracts, cancel existing contracts, and to potentially demand remedial action to address a pattern of violations.

Furthermore, the proposed guidance and regulations will require contractors to notify workers of their classification as an employee or independent contractor, exempt or non-exempt status under the FLSA, and provide thorough information and disclosures about workers’ pay. Employers with a government contract that exceeds $1 million will be barred from requiring employees to enter into mandatory pre-dispute arbitration agreements for disputes arising out of torts related to sexual harassment or assault, or the Title VII of the Civil Rights Act.

Supporters of the Fair Pay EO say it is intended to improve government contractor compliance with workplace labor requirements administered by the DOL as well as equivalent state laws.

Critics believe the proposed rules will deny federal contractors due process and permit or encourage discrimination in federal contracting based on arbitrary criteria, pre-adjudicated and/or false accusations, or a contractor’s labor affiliation.

A copy of the documents can be found at http://www.dol.gov/asp/fairpay/2015-12562.pdf and http://www.dol.gov/asp/fairpay/2015-12560.pdf.

DOL Proposes New Overtime Rules

On June 30^th, the US Department of Labor (DOL) released a Notice of Proposed Rulemaking (NPRM) focused on updating overtime salary and compensation levels. The NPRM extends overtime protections and overtime pay to most salaried workers earning less than the new threshold of $50,440.

The NPRM implements President Obama’s Memorandum that was issued over a year ago to increase overtime pay. The Memorandum directed the DOL to update the regulations defining which white collar workers are eligible to receive pay for hours worked over 40 in a workweek.

In response, the NPRM raises the salary threshold that businesses will use to determine whether employees are exempt from being paid overtime, simplifies the identification of nonexempt employees, and creates a process to automatically update compensation thresholds.

Under the Fair Labor Standards Act (FLSA), if a worker earned less than the current salary threshold of $23,660 per year, they are automatically qualified for overtime pay if they work more than 40 hours a week. This previously set threshold is below poverty level for a family of four and has been eroded by inflation, leaving a large percentage of workers “exempt” from earning overtime pay.

The Notice of Proposed Rulemaking (NPRM) was published on July 6, 2015 in the Federal Register (80 FR 38515) and interested parties are invited to submit comments on the proposed rule at www.regulations.gov on or before September 4, 2015.

Proposed Changes for Wisconsin’s Prevailing Wage Law

Wisconsin State Assembly Speaker Robin Vos, along with other Assembly members, has called upon the Wisconsin Senate to implement changes which would cut back the state’s prevailing wage.

An ongoing debate has been occurring between those pushing for full repeal of the prevailing wage law and those more focused on preserving the law. These differing positions may provide a compromise.

Proposed changes include cutting eligible projects by 60 percent, setting new minimum salaries for construction workers, and exempting projects that cost less than $450,000 from the law. Furthermore, projects worth less than $1 million would be exempt if at least half the funding comes from private donations.

Reform supporters believe these changes are a step in the right direction, as they would result in half of public construction projects becoming exempt from the law. Supporters also feel the changes would allow more businesses to participate in the projects since the state will require less paperwork from contractors. In addition, a reduction in administrative costs which were previously passed on to taxpayers is expected as administrative work is decreased.

Opponents, however, see these changes as another attempt to save money by lowering wages. They want to preserve the law to fight the risk of lowering the quality of workers, emphasizing that cheapest is not always a better value. The proposed change calls for a study in four years to determine whether the reforms were successful in lowering costs.

Fair Pay Executive Order Proposed Guidance and Rule Published

The US Department of Labor (USDOL) issued guidance and the Federal Acquisition Regulatory (FAR) Council recently published a proposed rule to implement President Obama’s Executive Order on Fair Pay and Safe Workplaces.

The Executive Order requires prospective and existing Federal contractors to disclose whether they have had certain labor law violations and contracting officers, in consultation with newly created labor compliance advisors, to consider the violation, as well as mitigating circumstances, in determining whether to award or extend a contract.

The Executive Order requires for contracts with a value greater than $500,000.

1. Contractors to disclose whether they have had any violations of any one of 14 different Federal labor laws, executive orders, or equivalent state labor laws during the preceding three years
2. Contracting agencies to evaluate these disclosures in determining whether the contractor has a satisfactory record of integrity and business ethics and qualified to receive a Federal contract, and
3. The USDOL to provide assistance to contractors to help them come into compliance.

Comments on these documents are being requested, due no later than July 27, 2015. For more information please see the USDOL press release, which includes links to the USDOL guidance and FAR Council proposed rule.