Establishing Paid Sick Leave for Federal Contractors

A Proposed Rule by the Labor Department on 3/14/2016

Published in the Federal Register on 3/14/2016, this document extends the period for filing written comments until April 12, 2016 on the proposed rulemaking:  Establishing Paid Sick Leave for Federal Contractors. The Notice of Proposed Rulemaking (NPRM) was published in the Federal Register on February 25, 2016. The Department of Labor (Department) is taking this action in order to provide interested parties additional time to submit comments.

A Proposed Rule by the Labor Department on 2/25/2016

This rule proposes regulations to implement Executive Order 13706, Establishing Paid Sick Leave for Federal Contractors, signed by President Barack Obama on September 7, 2015, which requires certain parties that contract with the Federal Government to provide their employees with up to 7 days of paid sick leave annually, including paid leave allowing for family care. Executive Order 13706 explains that providing access to paid sick leave will improve the health and performance of employees of Federal contractors and bring their benefits packages in line with model employers, ensuring that Federal contractors remain competitive employers and generating savings and quality improvements that will lead to improved economy and efficiency in Government procurement.

The Executive Order directs the Secretary of Labor to issue regulations by September 30, 2016, to implement the Order's requirements. This proposed rule therefore defines terms used in the regulatory text, describes the categories of contracts and employees the Order covers and excludes from coverage, sets forth requirements and restrictions governing the accrual and use of paid sick leave, and prohibits interference with or discrimination for the exercise of rights under the Executive Order. It also describes the obligations of contracting agencies, the Department of Labor, and contractors under the Executive Order, and it establishes the standards and procedures for complaints, investigations, remedies, and administrative enforcement proceedings related to alleged violations of the Order. As required by the Order and to the extent practicable, the proposed rule incorporates existing definitions, procedures, remedies, and enforcement processes under the Fair Labor Standards Act, the Service Contract Act, the Davis-Bacon Act, the Family and Medical Leave Act, the Violence Against Women Act, and Executive Order 13658, Establishing a Minimum Wage for Contractors.

The comment period for the proposed rule ends on 3/28/2016.

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Lawsuit seeks to debar company from bidding on federal projects in the future

US Labor Department files suit against Northwest Title Agency to recover $230,688 in unpaid wages and benefits for 10 employees on HUD project

An investigation by the U.S. Department of Labor’s Wage and Hour Division has determined that White Bear Lake-based Northwest Title Agency Inc. failed to pay $230,688 in prevailing wage rates and fringe benefits to 10 workers, in violation of the Service Contract Act. The employees worked on real estate closings for U.S. Department of Housing and Urban Development-owned projects in Minnesota.

“Contractors that do business with the federal government have an obligation to pay their employees the required contractual rates and benefits,” said Theresa Walls, the Wage and Hour Division’s district director in Minneapolis. “When employers fail to do so, the department will not hesitate to pursue legal action, including debarment, to ensure employees working on federally funded projects are properly paid.”

The department filed a lawsuit with the Office of Administrative Law Judges against Northwest Title Agency, Chief Operating Officer Joel Holstad and Chief Executive Officer Wayne Holstad, alleging violations of the SCA’s prevailing wage and fringe benefit provisions and seeking payment of the back wages and benefits. The company held the HUD contract from April 2010 through April 2011, with an additional option year through April 2012. The complaint also seeks to prohibit Northwest Title Agency from bidding on federal contracts in the future.

The complaint also alleges that Northwest Title Agency failed to notify the employees that work performed on the HUD contract was subject to SCA requirements. The investigation also found violations of the SCA’s record-keeping provisions for failing to maintain an accurate record of hours worked or to segregate hours for contract work from noncontract work.

The SCA requires contractors and subcontractors performing services on prime contracts in excess of $2,500 to pay service employees in various classes no less than the prevailing wage rates and fringe benefits found in the locality, or the rates, including prospective increases, contained in a predecessor contractor’s collective bargaining agreement. The department issues wage determinations on a contract-by-contract basis in response to specific requests from contracting agencies. These determinations are incorporated into the contract. Additional information on labor provisions and enforcement of government contracts is available at http://www.dol.gov/whd/govcontracts/.

Source: DOL

This information is intended to be educational and should not be considered legal advice on any specific matter.

DOL finds unpaid wages due to workers hired to transport veterans to VA medical centers

An investigation by the U.S. Department of Labor’s Wage and Hour Division has determined that Topeka, Kansas-based Assisted Transportation Inc. failed to pay $616,187 in prevailing wages, fringe benefits and overtime to 52 employees, in violation of the Service Contract Act and Contract Work Hours and Safety Standards Act. The employees provided wheelchair van services to veterans, transporting them between their homes and the Marion and Evansville, Indiana, VA Medical Centers.

“Assisted Transportation received government funding to provide services for our nation’s veterans. It has a legal and moral obligation to abide by the rules of the signed contract that requires proper pay to employees for work performed,” said Norma Cervi, the Wage and Hour Division’s director in St. Louis. “Government contracts include specific requirements regarding pay and benefits. Contractors are aware of these obligations when they bid for jobs and when contracts are awarded. Taxpayers have a right to expect that federal contractors, who are paid with tax dollars, will comply with the law.” The department has filed an administrative complaint with the Office of Administrative Law Judges seeking the back wages due.

Investigators from the division’s St. Louis District Office found that 51 shuttle bus drivers were misclassified as taxi cab drivers and were generally due an additional $3 to $5 per hour. In addition, the company allegedly only paid drivers the prevailing wage when a veteran was in the vehicle. All other time, such as wait time and time spent completing maintenance and paperwork, was considered noncontract time and paid at a lower hourly rate. These practices created fringe benefit violations. Additionally, Assisted Transportation failed to include health and welfare benefits with driver’s holiday pay. One employee was misclassified as a travel clerk when he performed the work of a motor vehicle dispatcher.

The company violated the overtime provisions of the CWHSSA by failing to classify the drivers properly under the SCA and pay legally required overtime at time and one-half the employees’ correct rates for all hours worked over 40 in a workweek. Additional information on labor provisions and enforcement of government contracts is available at http://www.dol.gov/whd/govcontracts/.
Assisted Transportation, which operates facilities in Marion and Evansville, is a subcontractor of Logistic Services LLC, based in Topeka, Kansas.

Source: DOL

This information is intended to be educational and should not be considered legal advice on any specific matter.

Federal Agency Issues Much Anticipated Proposal Governing SCA Exemption for Certain Extended Care Service Providers

On February 13, 2013, a proposed rule was issued providing long-awaited guidance regarding an exemption to the Service Contract Act (“SCA”) for certain providers of extended care programs entering into agreements with the U.S. Department of Veterans Affairs (the “VA”). The SCA imposes prevailing wage rate and fringe benefit standards, as well as various reporting requirements, on certain contractors and subcontractors.

The proposed rule pertains to the Veterans Health Care, Capital Asset and Business Improvement Act (“the Act”), which was passed in 2003 to expand access to care for veterans with mental illness. Although the Act has long been understood to provide an SCA exemption, the VA recommended that providers wait to apply the exemption until the regulations were issued. After a ten year wait, the proposed rules have been issued. Final rules are expected shortly, and the VA is advising eligible providers to prepare accordingly.
We spoke with the Director of the Purchased Long-Term Care Group at the VA about this critically important proposed rule. The core of this rule, largely drawn directly from the statute, is that the reporting and wage payment provisions of the SCA do not apply to certain “providers” of “extended care services” serving veterans, if the providers enter into “agreements” rather than “contracts” with the VA. Highlights from our interview appear below.

• What providers are covered by the exemption? To be exempt from the reporting and wage payment provisions, a “provider” must have an agreement with Medicare or Medicaid or participate in a state plan for home and community based services to veterans. The VA must approve and authorize the services being provided under a provider agreement. Many providers in rural areas do not participate in Medicare or Medicaid and thus must enter into agreements to participate in state plans for home and community-based services to veterans. This may prove difficult for small providers who may not have legal counsel.
• What are “provider agreements”? “Provider agreements” are instruments used by the federal government to purchase long-term care services without making the provider a federal contractor and therefore subject to many additional rules and regulations that do not apply to providers of care under Medicare and Medicaid. In its distilled form, it is a purchasing instrument the VA can use to acquire extended care services.
• What exactly are eligible providers exempt from under the proposed rule? Providers will be exempt from reporting and wage payment requirements under the SCA, effectively removing the ability of the Department of Labor to audit them for SCA compliance. While providers can determine their own wages, they must still comply with the Fair Labor Standards Act for their employees.
• What are “extended care services?” This includes nursing homes, home hostice, home health care, adult care, home respite, home or community based respite and geriatric evaluation services.
• What is the difference between “agreements” and “contracts?” The SCA applies to contracts, but not to agreements. The major difference between them is that the VA sets the amount of medical liability and insurance for contracts, whereas the state insurance commissioner determines this for provider agreements. Also, provider agreements, which are four pages or less, are easier to administer than contracts, which may be 70+ pages long.
• What will be reimbursed? The VA will pay the Medicare and Medicaid rates, whichever is higher.
• What does this mean for potentially exempt providers? The comment period is 30 days and it is expected to be another 90 days until the final rule is issued. In the interim, the VA advises providers to consult legal counsel regarding how to restructure their contracts, and to contact the appropriate individuals (head of geriatrics and extended care, head of social work, or head of community health nurse) at their local VA hospital to discuss moving forward with provider agreements.

Source: Healthcare Employment Counsel
By Elizabeth A. Lalik and Rebecca Signer Roche

This information is intended to be educational and should not be considered legal advice on any specific matter.