[Federal Register Volume 62, Number 99 (Thursday, May 22, 1997)]
[Rules and Regulations]
[Pages 28176-28193]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-13336]
[[Page 28175]]
_______________________________________________________________________
Part VI
Department of Labor
_______________________________________________________________________
Employment Standards Administration; Wage and Hour Division
_______________________________________________________________________
29 CFR Part 9
Executive Order 12933 of October 20, 1994--Nondisplacement of Qualified
Workers Under Certain Contracts; Final Rule
Federal Register / Vol. 62, No. 99 / Thursday, May 22, 1997 / Rules
and Regulations
[[Page 28176]]
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DEPARTMENT OF LABOR
Employment Standards Administration
Wage and Hour Division
29 CFR Part 9
RIN 1215-AA95
Executive Order 12933 of October 20, 1994--``Nondisplacement of
Qualified Workers Under Certain Contracts''
AGENCY: Wage and Hour Division, Employment Standards Administration,
Labor.
ACTION: Final rule.
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SUMMARY: This document provides the text of final regulations to
implement Executive Order 12933, ``Nondisplacement of Qualified Workers
Under Certain Contracts'' (59 FR 53560, October 24, 1994). The
Executive Order requires that workers on a building service contract
for a public building be given the right of first refusal for
employment with a successor contractor, if they would otherwise lose
their jobs as a result of the termination of the contract. The final
rules contain a contract clause that must be incorporated into each
covered contract, implementing regulations, and enforcement procedures.
DATES: These rules are effective on July 21, 1997.
FOR FURTHER INFORMATION CONTACT: Ethel P. Miller, Government Contracts
Team, Office of Enforcement Policy, Wage and Hour Division, Employment
Standards Administration, U.S. Department of Labor, Room S-3018, 200
Constitution Avenue, NW, Washington, DC 20210; telephone (202) 219-
7541. This is not a toll-free number.
SUPPLEMENTARY INFORMATION:
I. Paperwork Reduction Act
The reporting and recordkeeping requirements contained in
Secs. 9.6(c), 9.9(b) and 9.11 of this rule were submitted to and
approved by the Office of Management and Budget (OMB) under the
Paperwork Reduction Act of 1995 and assigned OMB Control No. 1215-0190.
The reporting requirements of Secs. 9.6(c) and 9.11 are already
required by the McNamara-O'Hara Service Contract Act regulations, 29
CFR 4.6(l)(2), assigned OMB Control No. 1215-0150, and impose no
additional burdens.
No comments were received from the public regarding this burden or
these regulatory provisions.
No material change has been made in this final rule which affect
the reporting or recordkeeping requirements and estimated burdens
previously submitted to OMB and discussed in the proposed rule.
II. Background
Executive Order 12933 was signed October 20, 1994, by President
Clinton, and published in the Federal Register on October 24, 1994 (59
FR 53560). The purpose and need for the Executive Order are clearly
stated in the Executive Order itself:
When a service contract for the maintenance of a public building
expires and a follow-on contract is awarded for the same service,
the successor contractor typically hires the majority of the
predecessor's employees. On occasion, however, a follow-on
contractor will hire a new work force, and the predecessor's
employees are displaced.
As a buyer and participant in the marketplace, the Government is
concerned about hardships to individuals that may result from the
operation of our procurement system.
Furthermore, the Government's procurement interests in economy
and efficiency benefit from the fact that a carryover work force
will minimize disruption to the delivery of services during any
period of transition and provide the Government the benefits of an
experienced and trained work force rather than one that may not be
familiar with the Government facility.
In order to address these concerns, section 1 of the Executive
Order makes the following statement of policy:
It is the policy of the Federal Government that solicitations
and building service contracts for public buildings shall include a
clause that requires the contractor under a contract that succeeds a
contract for performance of similar services at the same public
building to offer those employees (other than managerial or
supervisory employees) under the predecessor contract whose
employment will be terminated as a result of the award of the
successor contract, a right of first refusal to employment under the
contract in positions for which they are qualified. There shall be
no employment openings under the contract until such right of first
refusal has been provided. Nothing in this order shall be construed
to permit a contractor to fail to comply with any provision of any
other Executive order or laws of the United States.
The Executive Order requires implementing regulations to be issued
by the Secretary of Labor in consultation with the Federal Acquisition
Regulatory (FAR) Council, and that DOL and FAR regulations be issued
which require inclusion of the contract clause in covered Federal
solicitations and contracts. The Executive Order provides that the
order does not confer any right or benefit enforceable against the
United States, but that it is not intended to preclude judicial review
of final decisions by the Secretary of Labor in accordance with the
Administrative Procedure Act, 5 U.S.C. 701 et seq.
To obtain public input and assist in the development of these
regulations, the Department published a notice of proposed rulemaking
in the Federal Register on July 18, 1995 (60 FR 36756), inviting
comments until September 1, 1995, on a variety of questions and issues.
As required by the Executive Order, the Department of Labor (DOL) has
consulted with the FAR Council with respect to the implementation of
the Executive Order.
III. Summary of Comments and Discussion
Comments were received in response to the notice from the Building
Service Contractors Association International (BSCAI), the Service
Employees International Union, AFL-CIO (SEIU), the Laborers'
International Union of North America (LIUNA), and from Mr. Russell E.
Willis.
The BSCAI questioned the legality of and the rationale for the
Executive Order. These issues are clearly not within the purview of
this rulemaking action. All other comments are summarized in the
preamble under the relevant subsections.
Scope of Coverage
General Coverage (9.2)
The Executive Order applies only to ``building service contracts''
for ``public buildings'' where the contract is entered into by the
United States. These terms are defined in the Executive Order and
elsewhere in the regulations. The Order applies only to contracts of an
amount equal to or greater than the simplified acquisition threshold,
set by the Office of Federal Procurement Policy Act (41 U.S.C. 403(11))
at $100,000.
Where a contract is for both recurring building services and some
other purpose, such as construction or other types of services, the
building services for the public building are subject to the Order, but
not any other portions of the contract. However, where the building
services are only incidental to a contract for another purpose, such as
incidental maintenance performed under a contract to operate a day-care
center, the Order would not apply to such services. The standards used
for determining when construction work performed under a mixed contract
is covered by the Davis-Bacon Act are incorporated in the regulation as
the standard for determining when building services for
[[Page 28177]]
a public building are more than incidental. See 29 CFR 4.116(c)(2); 48
CFR 22.402(b)(ii).
As discussed under Sec. 9.3, below, the regulation is amended to
make it clear that if a contract provides services for more than one
public building, only buildings for which services were provided under
a predecessor contract are covered.
It should be recognized that the coverage principles of the
Executive Order differ from those of the McNamara-O'Hara Service
Contract Act (SCA), 41 U.S.C. 351 et seq., although there is
significant overlap between the two programs. SCA prevailing wage
requirements apply to service contracts of Federal agencies and the
District of Columbia, the principal purpose of which is to furnish
services in the United States through the use of service employees. 29
CFR 4.110. The Executive Order covers service contracts of $100,000 or
more with the Federal government for the maintenance of a public
building and contains no principal purpose requirement. Therefore, not
all SCA covered contracts are within the scope of the Executive Order,
and it may be that some contracts covered under the Executive Order are
not covered by the SCA.
Building Services Contract (9.3)
Section 2(b) of the Executive Order defines the term ``building
services contract'' to include contracts ``for recurring services
related to the maintenance of a public building, e.g., janitorial,
window washing, food service * * *.'' The regulations define
``recurring services'' to include services performed regularly or
periodically throughout a contract (and its follow-on contract) at the
same building. Contracts which are for non-recurring maintenance
services, such as servicing of fixed equipment which is performed only
one time each year, and contracts for services which are not
maintenance services, such as operation of a day care center, are not
subject to the Order.
SEIU suggested that the last sentence in Sec. 9.3(a) be clarified
to indicate which contracts are excluded. LIUNA expressed concern that
restricting the Executive Order's coverage to successor or follow-on
contracts ``at the same building'' may exclude a workforce that is
employed at multiple locations, all of which are public buildings.
LIUNA suggests that the final regulations should expressly state that
the Executive Order applies to contracts such as pest control, trash
removal, and window washing where the contractor's workforce is
employed only at buildings covered by the Executive Order.
We agree that the intent of the Executive Order was to cover
contracts which provided recurring building services at more than one
public building. However, as provided in Sec. 9.5(b)(5), the Executive
Order does not apply in certain cases to services where the
contractor's employees perform work both at a covered public building
and at other locations under contracts not covered by the Executive
Order. To avoid possible confusion, the discussion in Sec. 9.3 of
contracts which may be excluded from coverage has been moved to
Sec. 9.5. Sections 9.3 and 9.5 have been clarified in accordance with
this discussion.
Public Building (9.4)
Section 2 of the Executive Order defining the term ``public
building'' is patterned after the definition of a public building in
Section 13 of the Public Buildings Act of 1959, 40 U.S.C. 612. The
definition in the Executive Order is set forth and explained in
Sec. 9.4 of the regulations. Generally, buildings suitable for office
or storage space and administered by the General Services
Administration (GSA) or by another Federal agency under a delegation
from GSA are considered to be ``public buildings.''
Many buildings are specifically excluded from the term ``public
building,'' including buildings on properties of the United States
Postal Service, on military installations, and on Department of
Veterans Affairs installations used for hospital or domiciliary
purposes. In addition, buildings ``on the public domain (including that
reserved for national forests and other purposes)'' are not ``public
buildings.'' We have been unable to find any regulation, opinion, or
case law interpreting ``public domain'' as the term is used in the
Public Buildings Act of 1959, but the term is commonly considered to
refer to public lands in the West. Because these lands are administered
by the Department of Interior, Bureau of Land Management (BLM) (see 43
CFR 2091.0-5(c)), ``public domain'' was so defined in the proposed
regulations. In addition, because national forests are specifically
referenced in the Executive Order, lands administered by the Department
of Agriculture, U.S. Forest Service were included in the definition.
Buildings on other Federal property are not considered to be ``on the
public domain'' for purposes of the Executive Order.
SEIU and LIUNA objected to the proposed definition of ``public
domain'' as too broad, because it includes all lands administered by
the BLM and the U.S. Forest Service. LIUNA suggested a definition which
would exclude from the ``public domain'' land that ``has not been
specifically designated for a public or governmental use.'' SEIU
suggests that the public domain exception apply to buildings on land
``which has not been reserved for any specific governmental purpose or
purchased for a specific purpose such as an office building.''
These suggestions would be contrary to the plain meaning of the
Executive Order, which states that ``public domain'' includes land
``reserved for national forests and other purposes. For purposes of the
Executive Order, the Department agrees that the term ``public domain''
should be construed narrowly. The Department believes that an
appropriate definition of ``public domain'' is (1) any public lands
owned by the United States and administered by the Department of the
Interior, Bureau of Land Management, and (2) the National Forest System
administered by the Department of Agriculture, U.S. Forest Service.
However, the Department agrees with the commenters that the ``public
domain'' does not include Federal office buildings occupied by BLM or
the U.S. Forest Service where such buildings are not on lands
administered by those agencies, such as office buildings in cities and
towns. The regulation has been clarified accordingly.
A unique situation arises with respect to the Pentagon. Originally,
the Pentagon was considered a ``public building'' within the scope of
the Public Buildings Act (not an exempt ``military installation'').
Subsequently, Section 2804 of the National Defense Authorization for FY
1991 (10 U.S.C. 2674) removed the Pentagon from GSA's authority under
the Public Buildings Act; however, that legislation did not change the
Public Buildings Act's definition of a public building. For these
reasons, and consistent with the purpose of the Executive Order to
cover Government office buildings, the preamble to the proposed
regulations stated that the Department of Labor considers the Pentagon
to be a ``public building'' within the meaning of the Executive Order.
Russell Willis commented that by covering the Pentagon, the
Executive Order appears to provide broader coverage than coverage under
GSA's authority. SEIU and LIUNA commented that the Pentagon should be
covered by the Executive Order.
As explained above, the Pentagon was removed from GSA's
jurisdiction without similarly restricting the definition of ``public
building.'' The
[[Page 28178]]
final rule has been revised to expressly provide that the Pentagon is
not excluded from the Executive Order.
Leased buildings are not public buildings covered by the Executive
Order unless they are being leased to the Government pursuant to lease-
purchase contracts. It should be noted, however, that building services
performed on a building being leased pursuant to a lease-purchase
contract would be covered only if the services are being performed
under a contract directly with the Government; building services
performed by the lessor would be considered incidental to the lease
(see Sec. 9.2) and would not be covered.
LIUNA expressed concern that excluding other leased facilities
would create a gap in protection for building service employees. The
plain language of the Executive Order, however, limits coverage to
``Government-owned building(s).''
Coverage Limitations (9.5)
The Order does not apply to contracts under the simplified
acquisition threshold, which is currently $100,000. In addition,
certain other contracts are excluded from coverage pursuant to sections
3 (b)-(d) of the Executive Order, including: Contracts for commodities
or services by the blind or severely handicapped awarded pursuant to
the Javits-Wagner-O'Day Act, 41 U.S.C. 46-48a; contracts for certain
services provided by sheltered workshops for the severely handicapped,
awarded pursuant to the Edgar Amendment of the Treasury, Postal
Services and General Government Appropriations Act, Pub. L. 103-329;
and vending service contracts operated by the blind, awarded pursuant
to the Randolph-Sheppard Act, 20 U.S.C. 107.
The Executive Order also excludes ``services where the contractor's
employees perform work at the public building and at other locations
under contracts not subject to (the) Order (e.g., pest control or trash
removal where the contractor's employees visit the site periodically
and where the employees under the contract respond to service calls),''
provided that employees are not deployed in a manner designed to avoid
the purposes of the Order. Thus, the manner in which employees are
deployed by the successor contractor to perform the contract services,
as well as the nature of the services must both be considered in
determining whether a building services contract is subject to the
Executive Order.
The following discussion of comments regarding the exclusion of
contracts for services at a public building which are also performed at
locations under contracts not subject to the Executive Order, also
addresses the corresponding provision Sec. 9.8(b)(3) regarding when a
successor contractor must offer employment to the predecessor's
employees.
In commenting on these sections (Secs. 9.5 and 9.8(b)(3)) of the
proposed rule, SEIU suggested that these sections erroneously interpret
the Executive Order. SEIU is of the view that there is no basis in the
Executive Order for excluding ``positions'' as provided in
Sec. 9.8(b)(3) of the proposed regulations, and that the exclusion
refers only to ``services.'' SEIU asserts that this reference is to
services performed under a particular building service contract. SEIU
maintains that a particular contract should either be covered or not
covered by the Executive Order, and once a building service contract is
covered, the only ``positions'' excluded are those positions which are
not deemed to be ``service employees'' within the meaning of SCA, 41
U.S.C. 357(d), citing section 4(b)(2) of the Executive Order.
In support of their view, SEIU explained that to exclude certain
positions under covered contracts will mean that coverage depends upon
whether particular employees of the predecessor contractor
coincidentally decided to work for the same contractor at another
building. SEIU contends that this result is inconsistent with the
purpose of section 3(e) of the Executive Order and is likely to lead to
confusion.
In a similar manner, LIUNA and SEIU also commented that the
regulations could be read to exclude from coverage building service
contracts where all or part of the workforce was incidentally employed
by the contractor at other non-covered buildings. They suggested that,
under the proposed regulation, the exclusion would depend upon whether
the predecessor's employees happen to work for the contractor at
another location; that contract coverage will be determined at any
particular time based upon who the incumbent contractor is and the
employment needs of that contractor's employees, rather than on the
nature of the service contract itself and how those services are
typically rendered to the government. They contend that such an
unworkable result was not intended by the Executive Order. Similar or
even identical building service contracts might be covered in one case
and excluded in another.
SEIU pointed out that federal service contracts often have a work
force that is employed less than full time under that contract. The
employees will sometimes also apply to work for the same contractor
under another non-federal contract. SEIU reports that the practice in
the industry is for the workers to apply separately for work on the
non-federal job. The SEIU notes the difference between this situation
and one in which the entire workforce moves from location to location
performing the same work under many different contracts, only a few of
which are covered by the Executive Order.
SEIU recommends that Sec. 9.8(b)(3) be deleted and that the final
regulations clarify that entire contracts are either covered or not
covered based upon whether the workforce that performs the contract was
normally hired to (1) perform only that contract or (2) perform a
number of contracts including contracts not covered by the Executive
Order.
In a similar manner, LIUNA and SEIU also commented that the
Executive Order provides examples of services which are excluded from
coverage, where the employees only periodically visit the site and
where the employees respond to service calls at other non-covered
locations. As an exclusion from coverage, they contend that this
provision should be given a narrow interpretation.
LIUNA suggests that Sec. 9.8(b)(3) of the regulation be qualified
by the addition of language identical to that found in proposed
Sec. 9.3(b)(1), limiting the exclusion to services offered ``once a
year'' or on a ``one-time or annual basis.'' LIUNA asserts that
otherwise, large categories of typical building service contracts which
were intended to be covered, such as janitorial contracts performed
continuously, but only for several hours a day, will be excluded from
the Executive Order.
The Executive Order expressly excludes services where the
contractor's employees perform work at the public building and at other
locations under contracts not subject to the Executive Order and these
regulations, provided that the employees are not deployed in a manner
that is designed to avoid the purposes of the Order. The Executive
Order provides examples of services which are excluded from coverage,
where the employees only periodically visit the Federal building site
to perform contract work and where the employees typically respond as
well to service calls at non-covered locations. As an exclusion from
coverage, this provision should be given a narrow interpretation. The
Department agrees that the proposed regulations are confusing and could
allow results which would be inconsistent with the intent of the
Executive Order.
[[Page 28179]]
The regulations have been amended to look at how the services in
question are performed, by examining whether a majority of the
employees performing the services in question under the contract work
both at buildings under contracts subject to the Executive Order and at
other locations not subject to the Executive Order. Where a majority of
the workers furnishing the contract services in question go from
location to location, including other locations under contracts not
subject to the Order, the exclusion will apply. In addition, the
regulation provides that the exclusion does not apply where the
employees separately applied for the non-federal job.
The Executive Order's exclusion would not apply if the employees
are deployed in a manner designed to avoid the purposes of the
Executive Order. The regulation has been clarified to provide that in
examining whether or not there is an attempt to avoid coverage under
the Executive Order, the Department will look carefully at how the
predecessor contractor deployed its workforce. The Department may also
consider the manner in which the work force is typically deployed to
perform the services in question and the manner in which the contracts
are structured to determine whether the building services contract
meets the coverage provisions of the Executive Order.
Contract Clause (9.6)
Section 4 of the Executive Order specifies the contract clause that
must be included in solicitations and contracts for building services
that succeed contracts for the performance of similar work at the same
public building. The regulations set forth additional provisions which
are necessary to implement the Order. In accordance with Section 5 of
the Order, a provision of the clause makes it clear that disputes under
the Order are to be resolved in accordance with Department of Labor
procedures rather than pursuant to the general disputes clause of the
Contract Disputes Act, 41 U.S.C. 601 et seq.
Other provisions state that contract funds may be withheld in the
event the contractor is determined to have violated the provisions of
the Executive Order and is found liable for lost wages or other
monetary relief, and require contractors to cooperate in investigations
by the Department of Labor or the contracting agency.
Introductory language has been added so that the clauses would not
be included in contracts which are excluded from the Executive Order
pursuant to subsections (b), (c) and (d) of section 3 of the Order and
Secs. 9.5(b) (2), (3) and (4) of these regulations. However, the
clauses must be included in contracts which may be exempt pursuant to
subsection (e) (Sec. 9.5(b)(5) of the regulations) since exclusion of
such a contract is dependent upon how workers are deployed by the
successor contractor, rather than just the nature of the contract
services and how the workers were deployed by the predecessor
contractor, and therefore cannot be known at the time of the bid
solicitation. A new paragraph (d) has been added, and the remaining
paragraphs have been re-ordered accordingly, to address the exclusion
from coverage in Sec. 9.5(b)(5), where the services are performed by
workers who also work at other locations under contracts not subject to
the Executive Order.
The application of the clause in paragraph (c), concerning the list
of employees to be provided by the predecessor contractor, is explained
in Sec. 9.11 of the regulations. Because paragraph (c) is confusing,
however, and this provision rather than Sec. 9.11 will be included in
contracts, the language is revised to conform to Sec. 9.11 by stating
that the list must contain the names of all employees working for the
contractor at the time the list is provided, to make it clear that
compliance with this provision will constitute compliance with the
referenced provision in the Service Contract Act regulations, and to
use the title of the clause utilized in the Federal Acquisition
Regulations. The Department notes that the situation may arise where
the clauses are not included in a contract because it does not itself
succeed a contract for the performance of similar services. In such
circumstances, in order to assist the successor contractor, it is
suggested that contracting agencies request that the predecessor
contractor, where possible, provide the list required by the SCA
regulations 60 days before the end of the contract.
Because the phrase ``[d]isputes arising out of this clause'' may be
construed too broadly to include disputes over issues such as whether
contractors should be reimbursed for costs incurred, paragraph (h) is
revised to provide language similar to the SCA provision entitled
``Disputes Concerning Labor Standards'' in the FAR at 48 CFR 52.222-
42(t).
Contractor Obligations
Employee coverage/staffing (9.7/9.8)
With certain exclusions, all employees performing recurring
building services on the predecessor contract whose employment would
otherwise be terminated as the result of the award of the contract to a
new contractor, must in good faith be offered the right of first
refusal to employment under the successor contract before any other
employees may be hired. Because the successor contractor will not know
whether an individual employee of the predecessor contractor will
continue to be employed or will be terminated because of the change in
contracts, the regulations state a presumption that all employees will
be terminated when the predecessor's contract expires. This presumption
can be defeated by specific evidence to the contrary, which the
successor contractor could obtain through inquiries of, or contact
with, the contracting officer, the employees, or the predecessor
contractor after award of the contract to the successor.
The Executive Order does not require that a successor contractor
perform a contract with the same number of employees as the
predecessor. For example, if the predecessor employed twenty (20)
custodial workers, the successor may determine it can perform the
contract work with only eighteen (18) custodial workers. Thus if the
contractor continues to employ five (5) of its existing workers, the
offer of the right of first refusal would initially be limited to
thirteen (13) employees of the predecessor. The successor contractor
has discretion, within the constraints of these regulations, to
determine which employees will first be offered a right of first
refusal. If any of the predecessor's employees to whom the right of
first refusal is offered declines that offer, then the successor must
offer the right of first refusal to any remaining employees of the
predecessor who were not originally offered the right of first refusal.
The question arises, however, whether the successor contractor's
obligations continue throughout the performance of the contract.
Although the language of the Executive Order could suggest such a
result, it would be impractical and unduly burdensome. Therefore, the
proposed regulations provided at Sec. 9.8(c) that once the contract had
been fully staffed and contract performance had commenced, the
obligation to offer the right of first refusal ceased, and any
subsequent vacant positions could be filled in accordance with the
successor's normal business practices. The only proposed exception to
this provision was if the evidence showed that the successor contractor
increased the initial staffing level within the first three months
after commencement of the contract. Three months was selected as a
reasonable
[[Page 28180]]
period for continuing to impose an obligation to offer a right of first
refusal in order to ensure that any necessary staffing adjustments
during the start-up period would be covered, and at the same time to
discourage attempts to manipulate the starting work force. The proposed
regulation required that the right of first refusal be offered to any
eligible employees of the predecessor contractor during this three-
month period, or until the full staffing level is reached, whichever
comes first.
Both SEIU and LIUNA believe the Department of Labor incorrectly
interpreted the Executive Order in Sec. 9.8(c) as relieving the
successor contractor of its obligation to offer a right of first
refusal to the predecessor's employees once the successor contractor
reaches a full staffing level. They contend there is nothing in the
Executive Order that relieves the successor employer of its obligation
to offer a right of first refusal when vacancies become available under
the contract. They believe the obligation by the successor contractor
should continue until all predecessor employees have been offered
employment or until three months after the successor contract has
begun.
In that regard, these commenters stated that proposed Sec. 9.8(c)
(1) and (2) are inconsistent. Under proposed Sec. 9.8(c)(2), a
successor contractor who employs fewer employees than the predecessor
contractor must continue to offer a right of first refusal during the
first three months of the contract if the successor contractor decides
to increase the size of the workforce. However, under proposed
Sec. 9.8(c)(1), the successor contractor does not need to continue to
offer a right of first refusal if vacancies occur during the first
three months of the contract due to termination of one of the employees
who was employed under the successor contract. According to SEIU and
LIUNA, the successor contractor should first be required to offer
employment for that vacancy to any predecessor employees who have not
yet received an offer of employment. They suggest that because DOL
apparently determined in proposed Sec. 9.8(c)(2) that three months is a
reasonable time to continue the obligation of the contractor where
vacancies occur due to increases in the workforce, that same time
limitation should also be applied to vacancies created for other
reasons and Sec. 9.8(c)(1) should be so revised.
The Department agrees with the commenters and Sec. 9.8(c)(1) is
amended to reflect a continuing obligation of the successor contractor
to offer employment to the predecessor's employees for any position
vacancies which occur for any reason during the first three months of
the contract, until all of the predecessor's employees have received a
bona fide offer of employment.
Existing employees of the successor contractor. The Executive Order
provides that employees who worked for the successor contractor for at
least three months immediately preceding the commencement of the
successor contract and who would otherwise face lay-off or discharge,
may be employed on the successor contract without regard to the
successor's obligation to offer the right of first refusal. The key
elements are that the employee (1) must have been employed by the
successor for at least three months prior to the commencement of the
successor contract, and (2) would otherwise face lay-off or discharge.
Employees who had been laid-off by the successor prior to the
commencement of the successor contract or existing employees of the
successor who are not facing lay-off or termination because, for
example, they would continue to be employed on another contract, may
not be employed on the successor contract until all eligible employees
of the predecessor have been offered the right of first refusal.
No comments were received on this provision set forth in proposed
Sec. 9.7(b) and no revisions have been made.
Managerial and supervisory employees. The successor contractor is
not required to offer a right of first refusal to employees who
performed as managers or supervisors under the predecessor contract or
to employees who are not service employees within the meaning of the
SCA. Thus the proposed regulations provided at Sec. 9.8(b)(1) that
those employees who are employed as bona fide executive,
administrative, or professional employees within the meaning of the
regulations issued under the Fair Labor Standards Act (FLSA) at 29 CFR
part 541 (and therefore are exempt from the provisions of the FLSA and
SCA), need not be offered a right of first refusal, but the successor
contractor is under no obligation to make an offer to such a position.
The successor contractor has complete discretion to decide who will
be employed as managers and supervisors on the contract. If a service
employee of the predecessor is qualified for a management/supervisory
position, an offer of employment in that classification would satisfy
the successor's obligation to offer the employee a right of first
refusal, but the successor contractor is under no obligation to make an
offer to such a position.
No comments were received on this provision and no revisions have
been made.
Unsuitable employees. The successor contractor is not required to
offer a right of first refusal to any employee who the successor
reasonably believes, based on the particular employee's past
performance, has failed to perform suitably on the job. The proposed
regulation implementing this provision, Sec. 9.8(b)(2), did not define
what constituted a ``reasonable belief'' or ``suitable performance.''
However, the successor contractor must base the conclusion that an
employee failed to perform suitably on information relative to a
particular employee's past performance on the job obtained from a
credible source, such as the predecessor contractor, the employee's
supervisor or foreman, or the contracting agency. Information that does
not directly relate to an employee's performance on the predecessor
contract may not be used as a basis for failing to offer a right of
first refusal.
BSCAI commented that the Executive Order will require a successor
contractor to assume responsibility for workers that the contractor has
not screened or trained. In addition, BSCAI stated that requiring the
successor contractor to retain the predecessor's employees would defeat
the purpose of changing contractors--i.e., quality, performance and
cost could be compromised. The Executive Order expressly states,
however, that the contractor ``is not required to offer a right of
first refusal to any employee(s) of the predecessor contractor whom the
contractor reasonably believes, based on the particular employee's past
performance, has failed to perform suitably on the job.''
SEIU and LIUNA both commented that the exception should not become
a loophole to allow contractors to avoid their obligations under the
Executive Order based upon undocumented oral conversations. They stated
that the regulations should ensure the exception is limited to the
employee who clearly has not performed suitably. In that regard, both
commenters suggested that the regulations should make clear that an
employer's reasonable belief as to a particular employee's past
performance should be based upon a contemporaneous written record of
the predecessor contractor. It was their view that a written record
would help avoid disputes in the administration of the Executive Order
with regard to what the contractor knew or did not know when it made
the decision not to offer a right
[[Page 28181]]
of first refusal. If there is no written record, SEIU would require
that reports of the employee's performance be from persons with first-
hand knowledge of the employee's past performance. Putting the burden
of proof on the employer rather than the employee is clearly justified,
according to SEIU and LIUNA.
SEIU further commented that the regulations should state clearly
that a contractor's determination that an employee has not suitably
performed his or her job must be based on that employee's particular
past performance and not on the past performance of the predecessor
contractor. The Executive Order, by using the phrase ``based on the
particular employee's past performance,'' makes clear that the general
performance of the predecessor contractor is irrelevant to the
successor contractor's assessment of an employee's ability to perform
the work. Further, SEIU recommended that the regulations provide that
where an employee has worked for more than thirty days for the
predecessor contractor and has not been disciplined for inadequate
performance during that period of time, there would be a presumption
that the employee can suitably perform the job. The presumption would
make it more difficult for contractors to abuse this exception, while
making it rebuttable would still allow contractors to eliminate any
truly unsuitable employee. SEIU believes that the presumption would not
cause an undue hardship on successor contractors since the Executive
Order does not impose a continuing obligation to employ an employee
after the employee starts work with the successor contractor. The
successor employer will have an opportunity to evaluate the employee on
the job and to take appropriate action against the employee if that
employee is not performing adequately.
LIUNA recommended the creation of a similar presumption where an
employee has not been subject to discipline by the predecessor
contractor. The presumption would be greater for employees with greater
seniority and no record of disciplinary action.
The Department agrees with the comments that the Executive Order
does put the responsibility on the employer rather than the employee
regarding establishing a reasonable belief that the employee has failed
to perform suitably based on the employee's past performance.
Therefore, the regulation is revised to provide a presumption that an
employee has performed suitably. This presumption can be rebutted by
showing the contractor's reasonable belief that the employee had failed
to perform suitably--e.g., by evidence of past discipline for
unsuitable performance or evidence directly from contracting agency
officials that the particular employee had not performed suitably. The
Department is of the view that it is not necessary in every case to
have written or first-hand evidence, since such evidence frequently
will not be available to contractors. The evidentiary standard has been
tightened, however, to provide that the evidence must be ``based on
credible information provided by a knowledgeable source * * *''
Establishing a presumption based on a specific time frame under which
an employee has performed without disciplinary action goes beyond the
intent of the Executive Order, which requires only the successor
contractor's ``reasonable belief.'' In addition, the requirement that
past performance be based on the particular employee's performance
rather than the general performance of the predecessor contractor is
further clarified.
Services at buildings not covered by the Order. The proposed
regulation provided at Sec. 9.8(b)(3) that the successor contractor is
not obligated to offer a right of first refusal to employment in a
position which will perform building services both at public buildings
covered by the Executive Order and at other buildings not covered by
the Order.
The comments on and discussion of this section are included above
in Sec. 9.5, which has been amended to include a new explanatory
paragraph in Sec. 9.5(b)(5)(ii). Section 9.8(b)(3) has been revised to
include the language of the Executive Order exclusion, together with a
cross-reference to Sec. 9.5(b)(5)(ii), which applies this exclusion
only where a majority of the contractor's employees perform work at the
public building and at other locations under contracts not covered by
the Executive Order.
Offer of Employment/Recordkeeping (9.9, 9.10)
The Executive Order requires the successor to make an express offer
of employment to each employee and state the time within which the
employee must accept such offer, which must be at least ten (10) days.
The proposed regulation at Sec. 9.9 stated that the offer could be made
either in writing or orally at a meeting of the predecessor
contractor's employees, and required that the contractor keep either a
copy of the offer or documentation regarding the meeting at which the
offer was made, which could consist of notations on the attendance
roster and a copy of any written notice distributed.
The proposed regulations provided that the successor's obligation
to extend a right of first refusal applied to all employees employed at
the end of the contract, including any who began work within 60 days
before the end of the predecessor contract and thus do not appear on
the list of employees which Sec. 9.11 requires the predecessor
contractor to provide at least 60 days before the end of the contract.
Given that successor contractors commonly hire the predecessor's work
force without the convenience of such a list, it is not likely that the
absence of such employees' names from the list would be unduly
burdensome.
The proposed regulations at Sec. 9.10 discussed what is a bona fide
offer of employment. In general, an offer of employment will be
presumed to be bona fide. Employees need not be offered employment in
the same job that they were employed in under the predecessor contract,
provided the employee is qualified for the position offered. Thus an
employee may be equipped by education, training or experience to
perform the duties of a position to be filled by the successor
contractor, even though he or she held a position under the predecessor
contractor that did not require or utilize such education, training or
experience. The proposed regulation further provided that an offer of
employment at a lower level or to a different position may be a basis
for closely examining whether the offer is bona fide, i.e., based on
valid business reasons.
Both SEIU and LIUNA suggested that the final regulations should
require that the ``express offer of employment'' be made in writing in
order to avoid disputes regarding whether an offer is properly made.
Both parties also recommend that the offer be made in a language in
which the employees are fluent in order to make it meaningful. SEIU
does not believe this would be a hardship on the employer since the
employer must have a supervisory employee fluent in the language of the
employees in order to properly supervise them.
The regulations have been revised to state that the employer should
take reasonable efforts to make the employment offer in a language that
the workers understand. We do not anticipate that this will place
significant burden on contractors since both the predecessor and
successor contractor will need to have some mechanism to communicate
with the workers. This may be accomplished, for example, by having a
co-worker or other person fluent in the workers' language at the
meeting to translate or otherwise assist
[[Page 28182]]
employees who are not fluent in English. The Department recognizes that
there may be a rare case where a contractor may need to hire an
interpreter or translate a written offer.
SEIU, while noting that there is nothing in the Executive Order
that requires a successor contractor to offer employment to the
employee in the same position that he or she held with the predecessor
contractor, stated concerns that employers may offer employment in
lower level positions or different positions in order to discourage
acceptance of offers of employment. SEIU believes that the regulations
should go further than to state that where an employee is offered a
position at a lower level, the basis for doing so should be ``closely
examined to insure that the offers are bona fide.'' SEIU and LIUNA
believe that the final regulation should create a presumption that
offers of employment to a lower or less favorable position are not bona
fide offers, but that the presumption can be overcome by the employer
showing a valid business reason for offering that particular employee
employment at a lower or less favorable position. They state that the
creation of this presumption will help to protect against contractors
frustrating the purposes of the Executive Order. Otherwise, according
to LIUNA, this proposed subsection does not provide sufficient
protections to employees who may have performed acceptably at higher
level positions under previous contractors.
In addition, SEIU believes the final regulations should provide
that there is a presumption that an employer has not made a good faith
offer of employment if the employer terminates the employee within the
first ninety days of employment. The presumption could be overcome by
the employer by showing a valid business reason, such as a reduction in
force or unsatisfactory performance by the employee. SEIU expressed the
view that the use of the term ``good faith offer'' in the Executive
Order was intended to guard against successor employers frustrating the
intent of the Executive Order by making an offer, employing the
individual and then terminating the individual immediately without any
valid reason for doing so.
The Department agrees with the concerns expressed by the commenters
and has revised Sec. 9.10(b) to provide that an offer may be made to a
position providing lower pay or benefits than the employee held with
the predecessor if the contractor shows valid business reasons. The
Department does not believe that it is appropriate to have a
presumption that an offer is not bona fide where an employee is
terminated from employment shortly after being hired. Terminations
which are not for valid reasons would not ordinarily be in the
employer's interest, due to such concerns as unemployment insurance
obligations and similar reasons. However, the regulation has been
revised to state that the Department will closely examine cases,
including the facts and circumstances of the dismissal, where the
timing of an employee's termination suggests that the offer of
employment may not have been bona fide.
Predecessor's Obligation To Provide a List of Employees (9.11)
The Executive Order requires that, no less than 60 days before the
completion of the contract, the predecessor contractor provide the
contracting officer with a certified list of all service employees
working at the Federal facility during the last month of the contract.
The list is also required to contain anniversary dates of employment,
either with the current or predecessor contractor (as appropriate), of
each service employee. The contracting officer in turn will provide the
list to the successor contractor, and it will be provided on request to
employees or their representatives.
Except for the timing of submission of the list, this requirement
is the same as the requirement under the SCA at 29 CFR 4.6(l)(2) that
the predecessor furnish the names and anniversary dates at least ten
days before contract termination. By providing the names of all service
employees working on the contract 60 days in advance of termination, as
required by the Executive Order, the predecessor contractor also
fulfills its obligation under 29 CFR 4.6(l)(2). Thus the Executive
Order does not create any new obligation on the predecessor, but simply
moves forward the date the list must be submitted.
Because the predecessor contractor cannot know with certainty, 60
days in advance of termination, who will be performing on the contract
in the final month, the regulations provide that the predecessor will
provide the names of all service employees working on the contract at
the time the list is submitted. The successor in turn must assume the
employees listed will be working during the final month of the contract
unless the facts demonstrate otherwise.
No comments were received on this provision, but language was added
to clarify that the list is to contain the names of all employees
working for the contractor at the Federal location.
Notice to Employees (9.12)
Service employees need to be advised of their right of first
refusal in the event of contract transition. Various options were
considered regarding how the employees should be so advised. Notice
could easily be accomplished by the predecessor contractor, but it has
no substantive obligations under the Order. The Department also
considered placing the obligation on the successor contractor, but
concluded that it would be more efficient to require notification by
the contracting agency since the predecessor's employees are working
regularly at the Federal building. Therefore, the proposed regulations
required that the agency either post a notice or give individual notice
to the predecessor contractor's employees. A prototype notice was
included in an Appendix to the proposed regulations.
SEIU and LIUNA urged the Department to require that the notice also
be provided by the predecessor contractor. They also suggested that the
notice be posted both in English and in other languages spoken by the
employees, if they are not fluent in English.
It remains the Department's view that the predecessor should have
no obligation to provide notice. The Executive Order places no
obligation on the predecessor contractor except providing a list of
employees. The Department does not consider it appropriate to impose
unnecessary notice obligations on predecessor contractors. The
Executive Order clearly places the responsibility upon the successor
contractor to ``make an express offer of employment'' to each service
employee. Therefore, the Department continues to believe that notice to
employees of their right of first refusal should be accomplished by
placing the responsibility with the contracting agency. The Department
expects the contracting agency to provide notice in English and in any
other language that is understandable by a substantial portion of the
service employees performing work under the predecessor contract. In
response to comments, the Department expanded and clarified the
prototype notice in the Appendix.
Enforcement (Subpart B)
Section 5 of the Executive Order provides that the Secretary of
Labor is responsible for investigating and obtaining compliance with
the Executive Order. It further provides that the Secretary has the
authority to issue
[[Page 28183]]
final orders prescribing appropriate sanctions and remedies, including
but not limited to, orders requiring employment and payment of wages
lost.
The Executive Order also requires that alternative dispute
mechanisms be utilized to the maximum extent possible in resolving
enforcement issues. Thus, the thrust of the Executive Order is to keep
the enforcement processes as simple and timely as possible, given the
immediacy of both the employees' and the contractor's need for
resolution.
Role of the Contracting Officer (9.100)
The enforcement provisions of the regulations seek to provide a
process that encourages resolution at the earliest possible stage with
fairness and efficiency. For this reason, the proposed regulations
provided that complaints alleging violations shall be filed with the
contracting officer, who will provide the employee and the successor
contractor with information about the requirements of the Executive
Order. If this is not sufficient to resolve the matter, the proposed
regulations provided that the contracting officer will obtain
statements from the parties of their respective positions and submit a
report to the Department of Labor.
While SEIU is not opposed to DOL requiring that contracting
officers attempt to resolve violations of the Executive Order as a
first step, SEIU expressed concern that contracting officers not become
an impediment to effective and quick resolution of disputes. SEIU
contends the proposed regulations are seriously deficient because they
permit contracting officers to block enforcement of employee rights by
simply delaying completion of their responsibilities. SEIU and LIUNA
suggest that this problem can be alleviated by placing a time limit on
when the contracting officers must take action and recommend that the
final regulations in Sec. 9.100(b) provide that the contracting officer
must perform his or her duties within ten days of receiving a complaint
from an employee of the predecessor contractor. LIUNA suggests that if
the matter is not resolved within ten days, the contracting officer
should have ten additional days to obtain the statements from the
parties and prepare a report to submit to the Wage and Hour Division.
SEIU recommends that where a contracting officer has failed to gather
information and report to Wage and Hour within ten days, an employee
may go directly to the Wage and Hour Division to file a complaint. SEIU
also suggests that when the contracting officer files his/her report
with Wage and Hour, the statements of position submitted by the parties
should be included.
The Department agrees with the thrust of these comments and has
modified the regulations to establish a time frame of 30 days for the
contracting officer to forward to Wage and Hour any unresolved
complaints, together with the contracting officer's summary of the
relevant facts and issues and the statements of the parties. In
addition, the regulation is revised to permit an employee to file a
complaint directly with Wage-Hour if the complaint has not been timely
forwarded to Wage-Hour.
Role of the Department of Labor (9.101, 9.102)
If the contracting officer cannot resolve the dispute, proposed
Sec. 9.100(b) provided that the contracting officer will submit a
report to the Wage and Hour Division. Based on the contracting
officer's report, Wage and Hour could attempt to resolve the dispute
through conciliation procedures; however, if that is not successful,
Wage and Hour would investigate as necessary to determine the facts and
issue a determination as to whether a violation occurred. The proposed
regulations also provided that the Administrator has the authority to
conduct an investigation on his or her own initiative, without a
complaint.
SEIU contends the proposed regulations regarding conciliation
efforts are inadequate as they do not set a time limit on how long the
conciliation efforts should continue. SEIU believes conciliation
procedures should not drag on unnecessarily and recommends the final
regulations place a ten day limitation on conciliations, with a caveat
that this period can be extended by the mutual consent of the parties.
LIUNA also favors a ten day limit.
SEIU and LIUNA suggest that there ought to be a 30-day time limit
from the date the conciliation effort is over for issuance of a written
determination by the Administrator. LIUNA also states that if any time
limits set forth in this section are not met, the complainant should
have an automatic right to appeal to the next level of the complaint
procedure and at the same time there should be an automatic employment
offer to the employee who is the subject of the complaint. According to
LIUNA, these revisions would ensure that the rights of employees are
not rendered meaningless by a delay in the complaint procedures.
The Department is committed to prompt resolution of complaints
under the Executive Order because employees' jobs and livelihood are at
issue. Therefore Secs. 9.101 and 9.102 are amended to provide that an
investigation shall be commenced within 15 days of receipt of the
contracting officer's report or the complaint unless the parties agree
that the investigation should be delayed so that conciliation efforts
can be completed.
However, the Department believes that setting a 30-day limit from
the date a conciliation effort is terminated for issuance of a written
determination by the Administrator is not appropriate. Where the
conciliation effort is unsuccessful and the Department undertakes an
investigation, 30 days may not be sufficient to conduct a thorough
investigation and issue the Administrator's determination. Finally, the
Department cannot concur with the suggestion that the contractor be
required to hire an employee if the government fails to meet regulatory
deadlines. This section, therefore, remains as proposed with minor
clarification.
SEIU and LIUNA also suggest that Sec. 9.102(c) should state how an
aggrieved party may appeal a decision of the Administrator, how the
request is made, and how long an aggrieved party has to file that
appeal. Both commenters also state that the last sentence of this
section should be clarified to make sure that copies of the
Administrator's determination are given by certified mail to the
complainant's representative, as well as to the successor contractor
and the successor contractor's representative. They assert that under
the proposed regulations, it is unclear whether there is a requirement
to give copies to the complainant's representative.
The parties' concern in Sec. 9.102(c) regarding appeal procedures
are addressed in Sec. 9.103. The Department concurs with the suggestion
to clarify that copies of the Administrator's decision are to be sent
to the complainant's representative(s) and the regulations are amended
accordingly.
Hearing Procedures (9.103-9.107)
The proposed regulations provided that the Administrator's
determination becomes a final order of the Secretary unless a request
for a hearing is filed within 20 days of the date of the determination
or, where the Administrator determines that relevant facts are not in
dispute, a petition for review is filed with the Board of Service
Contract Appeals (BSCA). Section 9.103 provided the procedures and time
frames for appeal to the BSCA.
SEIU and LIUNA urge the Department to include clarifying language
indicating that the Administrator will notify the
[[Page 28184]]
employee representative, if any, of her determination if there is no
relevant issue of fact. The language of the regulations was intended to
provide such notice. However, for the sake of clarification,
Sec. 9.103(b) of the regulations now expressly provides that the
Administrator will notify the parties and their representatives, if
any, ``where no relevant facts are in dispute.'' In addition,
Sec. 9.102(c) is clarified by providing that the notice of
determination of a violation will be given to the parties and their
representatives, if any. Finally, Sec. 9.103(a) is clarified to provide
that ``the Administrator shall advise the parties'' including their
representatives, that the notice of determination shall become final
unless a hearing is requested.
Sections 9.103, 9.106 and 9.107 have been amended to provide for
review by the Administrative Review Board (ARB). (Effective May 3,
1996, the Administrative Review Board was established within the
Department of Labor as a reorganization and consolidation of the
functions of the former Board of Service Contract Appeals, the Wage
Appeals Board, and the Office of Administrative Appeals, which prepared
decisions for the Secretary in all other programs). See Secretary's
Order 2-96, 61 FR 19,978 (May 3, 1996).
Consistent with the Executive Order's directive to favor the
resolution of disputes by efficient and informal alternative dispute
methods, Sec. 9.104 encourages parties to utilize settlement judges to
mediate settlement negotiations prior to an Administrative Law Judge
(ALJ) hearing. The general ALJ regulations, 29 CFR part 18, Sec. 18.9,
already provide settlement judge procedures, and these procedures have
been expressly adopted for use under the Executive Order.
Like the Department's ``whistleblower'' proceedings under 29 CFR
part 24, it is anticipated that complainants may often appear pro se.
Therefore Sec. 9.105(f)(1) has been amended to provide that the ALJ's
Rules of Evidence shall not apply. See 29 CFR 24.5(e).
If a complaint cannot be resolved informally through the
conciliation or the settlement judge process, then Sec. 9.105 provides
procedures for a hearing before an ALJ. In most cases it is envisioned
that the parties to the proceeding will be the contractor and the
complainant (if any). However, the Wage-Hour Administrator may appear
in any proceeding as a party or as amicus curiae, and will appear as a
party in all cases in which ineligibility sanctions have been sought.
The contracting agency may also appear as amicus curiae.
As provided in Sec. 9.106, the ALJ shall issue a decision within 60
days after the proceeding at which evidence was submitted. If the ALJ
determines that a violation has occurred, the ALJ may order appropriate
relief (Sec. 9.106(c)). Section 9.107 provides the procedures for
appealing an ALJ decision to the ARB.
The proposed regulations provided for assessment of costs and
stated in the preamble that the Department was considering providing
for payment of attorney fees or costs where the complainant prevails.
SEIU urged that Secs. 9.106(c) and 9.107(f) of the final
regulations be amended to empower the ALJ and the ARB to award attorney
fees to a prevailing complaining employee. The SEIU further suggests
that an award of attorney fees should be mandatory where the employee
prevails.
LIUNA also commented that the ALJ should be expressly permitted to
assess attorney fees, since it would be a permissible interpretation of
the Executive Order's requirements and a reasonable means to enforce
the Executive Order. LIUNA further states that Sec. 9.107(f) should
contain a similar provision to allow an employee to pursue his or her
appeal rights.
Russell Willis commented that express statutory authority is
necessary to provide for payment of attorney fees and costs.
The Supreme Court has held that under the American Rule, which
governs the award of attorney's fees in the United States, the
prevailing party may not recover attorney's fees as costs or otherwise
absent statute or enforceable contract. See Alyeska Pipeline Service
Co. v. The Wilderness Society, 421 U.S. 240, 245-247 (1975). Because
neither the Executive Order nor any statutes provide for the award of
attorney fees, there is an insufficient legal basis to provide for
attorney fees by regulation in disputes arising under the Executive
Order. Sections 9.106(c) and 9.107(f) have been clarified by expressly
excluding attorney fees from an assessment of costs by the
Administrative Law Judge or the Administrative Review Board.
Finally, the legislative history of the Equal Access to Justice Act
(EAJA), 5 U.S.C. 504, indicates that the Act excludes from coverage
those hearings which are not required by an underlying statute.
Similarly, the EAJA regulations promulgated by the Department of Labor
exclude from coverage those proceedings which are established by
regulation, but are not required by the governing statute. See 29 CFR
part 16. Neither the underlying statute, nor Executive Order 12933,
require hearings. Accordingly, in any proceeding conducted pursuant to
the provisions of Secs. 9.105-9.107, the Administrative Review Board
shall have no power or authority to award attorney fees and/or other
litigation expenses pursuant to the Equal Access to Justice Act.
Appropriate language has been included in the regulations.
Remedies/Ineligibility Sanction (9.108-9.109)
Section 5 of the Executive Order provides that the Secretary has
the authority to prescribe appropriate remedies, including orders
requiring employment and payment of wages lost. Proposed Sec. 9.108
also set forth withholding procedures to obtain wages due, and a
provision for suspension of payments if the predecessor fails to
provide the contracting officer with a list of employees on the
contract. Furthermore, where a contractor has failed to comply with any
order of the Secretary or has committed willful violations of the
Executive Order or its regulations, the contractor and its responsible
officers, and any firm in which the contractor has a substantial
interest, shall be ineligible to be awarded any contract or subcontract
of the United States for a period of up to three years. Since debarment
is only imposed for the most serious of violations--i.e., violations
that are willful or failure to comply with an order of the Secretary,
which in itself is a willful violation--the proposed regulations at
Sec. 9.109 prescribed a three-year period for debarment in all cases.
SEIU stated that the ineligibility sanctions should be mandatory
whenever there are violations unless the contractor can show that it
acted in good faith; LIUNA suggested that the regulation specify that
all violations are presumed to be willful.
The plain language of the Executive Order grants the Secretary the
discretion to impose debarment where a contractor fails to comply with
any order of the Secretary or has committed a willful violation. Thus,
the standard proposed by the commenters is not consistent with that
provided by the Executive Order and is not adopted in the final rule.
Definitions (9.200)
The regulations include definitions of several important terms. The
definition of ``service employee'' is based on the Service Contract
Act, as the Executive Order provides. Coverage under the
[[Page 28185]]
Executive Order, however, applies only to those service employees
performing recurring building services, and not to other employees on
contracts subject to SCA.
LIUNA suggested that the term ``contract'' and ``building service
contract'' should include ``subcontracts.''
Because the language of the Executive Order does not specifically
refer to subcontracts, and because the requirements are not practical
as applied to subcontracts, the regulations contain no ``flow-down''
requirements for subcontractors. No amendment is made to this
provision.
Dates of Applicability
The clauses contained in Sec. 9.6 must be included in all contracts
awarded after the effective date of these regulations. In addition, the
regulations shall apply as of the effective date to all contracts
awarded prior to the effective date which contain the clauses set forth
in section 4 of the Executive Order (Sec. 9.6 (a), (b), (c), and (e) of
the regulations), and those contracts should be amended where
practicable to incorporate the additional clauses set forth in the
regulations (Sec. 9.6 (d), (f), (g), and (h)).
In order to provide successor contractors with the convenience of a
list of names from the predecessor contractor earlier than the SCA
requirement of 10 days before completion of the contract, all existing
contracts (whether or not they contain the clauses of the Executive
Order) should be amended to include the clause in Sec. 9.6(c).
Executive Order 12866/Sec. 202 of the Unfunded Mandates Reform Act of
1995/Executive Order 12875/Small Business Regulatory Enforcement
Fairness Act
Because this rule provides the initial implementing regulations for
an Executive Order issued by the President, it is being treated as a
``significant regulatory action'' within the meaning of Executive Order
12866. However, no economic analysis is required because the rule will
not have a significant economic impact. For the same reason, the rule
is not a major rule within the meaning of the Small Business Regulatory
Enforcement Fairness Act. The total value of Federal contracts covered
by Executive Order 12933 is less than $100 million, and only a small
fraction of that total may involve terminations of predecessor
employees. General Services Administration data for Fiscal Year 1994
indicate that no more than 88 new building service contract actions
were taken, with a value of $39.2 million. Since only a very small
percentage of that dollar value involves terminations, the economic
impact of the Executive Order is minimal.
In addition, the rule does not require a Sec. 202 statement under
the Unfunded Mandates Reform Act of 1995. Although State, local, and
tribal governments are not precluded from receiving Federal contracts
to provide building services at public buildings, the Department is not
aware of any governmental entities that are performing public building
service contracts within the purview of this rule. Thus this rule would
not result in a mandate upon a State, local, or tribal government for
purposes of Executive Order 12875. The Executive Order simply requires
contractors to the Federal Government to follow the practice which is
currently followed in most cases in any event as a good business
practice, and will improve Government efficiency and economy in those
few cases where the practice would not otherwise have been followed by
decreasing or eliminating the loss of productivity that may occur when
experienced employees are terminated.
Regulatory Flexibility Analysis
The Regulatory Flexibility Act of 1980 (RFA) requires agencies to
prepare regulatory flexibility analyses, and to develop alternatives,
whenever possible, in drafting regulations that will have a
``significant economic impact on a substantial number of small
entities.'' The Department has determined that such an analysis is not
required for this rulemaking. This conclusion is based on the fact that
the Executive Order mandates a practice which is already followed in
almost all cases. Accordingly, this regulation will not have a
significant economic impact on a substantial number of small entities
within the meaning of the RFA. The Administrator has certified to the
Chief Counsel for Advocacy of the Small Business Administration to this
effect. Therefore, no regulatory flexibility analysis is required.
Document Preparation
This document was prepared under the direction and control of John
R. Fraser, Acting Administrator, Wage and Hour Division, Employment
Standards Administration, U.S. Department of Labor.
List of Subjects in 29 CFR Part 9
Employment, Federal buildings and facilities, Government contracts,
Labor, Law enforcement.
Signed at Washington, DC, on this 16th day of May, 1997.
John R. Fraser,
Acting Administrator, Wage and Hour Division.
Accordingly, for the reasons set out in the preamble, 29 CFR part 9
is added as follows:
PART 9--NONDISPLACEMENT OF QUALIFIED WORKERS UNDER CERTAIN
CONTRACTS
Subpart A--How is Executive Order 12933 Applied?
Covered Contracts Generally
Sec.
9.1 What is the purpose of Executive Order 12933?
9.2 Which contracts are covered by Executive Order 12933?
9.3 What is a ``building service contract?''
9.4 What is a ``public building?''
9.5 Which contracts are not covered by Executive Order 12933?
Contract Clauses
9.6 What contract clauses must be included in covered contracts?
Contractor Obligations
9.7 May a contractor employ persons other than the predecessor
contractor's employees?
9.8 Must the successor contractor offer a right of first refusal to
all employees of the predecessor contractor?
9.9 In what manner must the successor contractor offer employment?
9.10 What constitutes a bona fide offer of employment?
9.11 What are the obligations of the predecessor contractor?
Notice to Employees
9.12 How will employees learn of their rights?
Subpart B--What Enforcement Mechanisms does Executive Order 12933
Provide?
Complaint Procedures
9.100 What may employees do if they believe that their rights under
the Executive Order have been violated?
9.101 What action will the Wage and Hour Division take to try to
resolve the complaint?
9.102 How are complaints resolved if conciliation is unsuccessful?
9.103 How are decisions of the Administrator appealed?
Administrative Law Judge Procedures
9.104 How may cases be settled without formal hearing?
9.105 What procedures are followed if a complaint cannot be
resolved through conciliation or settlement agreement?
9.106 What rules apply to the decision of the administrative law
judge?
[[Page 28186]]
Appeal Procedures
9.107 How may an administrative law judge's decision or the
Administrator's determination be appealed?
Enforcement Remedies
9.108 What are the consequences to a contractor of not complying
with the Executive Order?
9.109 Under what circumstances will ineligibility sanctions be
imposed?
Subpart C--Definitions
9.200 Definitions
Appendix to Part 9--Notice to Building Service Contract Employees
Authority: Secs. 4-6, Executive Order 12933; 5 U.S.C. 301.
Subpart A--How is Executive Order 12933 Applied?
Covered Contracts Generally
Sec. 9.1 What is the purpose of Executive Order 12933?
The Government's procurement interests in both economy and
efficiency are furthered when a successor contractor carries over an
existing work force. A carryover work force minimizes disruption in the
delivery of services during a period of transition and provides the
Government the benefit of an experienced and trained work force.
Executive Order 12933 therefore generally requires that successor
contractors performing building service contracts for public buildings
offer a right of first refusal to employment under the contract to
those employees under the predecessor contract whose employment will be
terminated as a result of the award of the successor contract.
Sec. 9.2 Which contracts are covered by Executive Order 12933?
(a) The Executive Order and these rules apply to ``building service
contracts'' for ``public buildings'' where the contract is entered into
by the United States in an amount equal to or greater than the
simplified acquisition threshold of $100,000, as set forth in section
4(11) of the Office of Federal Procurement Policy Act (41 U.S.C.
403(11)).
(b)(1) Except as provided in paragraph (b)(2) of this section, a
contract which includes a requirement for recurring building services
is subject to the Executive Order and these regulations even if the
contract also contains other non-covered services or non-service
requirements, such as construction or supplies, and even if the
contract is not subject to the McNamara-O'Hara Service Contract Act, 41
U.S.C. 351 et seq. However, the requirements of the Executive Order
apply only to the building services portion of the contract, and only
to those buildings for which services were provided under a predecessor
contract.
(2) The requirements of the Executive Order do not apply to
building services which are only incidental to a contract for another
purpose, such as incidental maintenance under a contract to operate a
day-care center.
(i) Building service requirements will not be considered
incidental, and therefore will be subject to the Executive Order, where
(A) the contract contains specific requirements for a substantial
amount of building services or it is ascertainable that a substantial
amount of building services will be necessary to the performance of the
contract (the word ``substantial'' relates to the type and quantity of
building services to be performed and not merely to the total value of
such work, whether in absolute dollars or cost percentages as compared
to the total value of the contract); and
(B) the building services work is physically or functionally
separate from, and as a practical matter is capable of being performed
on a segregated basis from the other work called for by the contract.
(ii) Building services performed on a building being leased to the
Government pursuant to a lease-purchase contract are considered
incidental and not covered unless the services are being performed
under a contract directly with the Government.
Sec. 9.3 What is a ``building service contract?''
(a) A building service contract is a contract for recurring
services related to the maintenance of a public building. Recurring
services are services which are required to be performed regularly or
periodically throughout the course of a contract, and throughout the
course of the succeeding or follow-on contract(s) at one or more of the
same buildings. Examples of building services contracts include, but
are not limited to, contracts for the recurring provision of custodial
or janitorial services; window washing; laundry; food services; guard
or other protective services; landscaping and groundskeeping services;
and inspection, maintenance, and repair of fixed equipment such as
elevators, air conditioning, and heating systems.
(b)(1) Contracts which provide maintenance services only on a non-
recurring basis are not ``building service contracts'' within the
meaning of the Executive Order and are not subject to its provisions.
For example, a contract to perform servicing of fixed equipment once a
year, or to mulch a garden on a one-time or annual basis, is a non-
recurring maintenance contract that is not covered by the Executive
Order.
(2) Contracts for the provision of services which may be performed
in a public building but are not ``building service contracts'' as
defined in paragraph (a) of this section are not covered by the
Executive Order and these rules. For example, a contract for day care
services in a Federal office building would not be subject to the
Executive Order.
Sec. 9.4 What is a ``public building?''
(a) A public building is any building owned by the United States
which is generally suitable for office or storage space or both for the
use of one or more Federal agencies or mixed ownership corporations,
together with its grounds, approaches, and appurtenances. Public
buildings shall include:
(1) Federal office buildings;
(2) Customhouses;
(3) Courthouses;
(4) Border inspection facilities;
(5) Warehouses;
(6) Records centers;
(7) Appraiser stores;
(8) Relocation facilities; and
(9) Similar Federal facilities.
(b)(1) Public buildings do not include any building on the public
domain. The public domain includes only: those public lands owned by
the United States and administered by the Department of Interior,
Bureau of Land Management; and the National Forest System administered
by the Department of Agriculture, U.S. Forest Service. The public
domain does not include Federal buildings, such as office buildings in
cities or towns, which are occupied by the Bureau of Land Management or
U.S. Forest Service where such buildings are not on lands administered
by those agencies.
(2) Also not covered are any buildings:
(i) On properties of the United States in foreign countries;
(ii) On Native American and Native Eskimo properties held in trust
by the United States;
(iii) On lands used in connection with Federal programs for
agricultural, recreational, and conservation purposes, including
research in connection therewith;
(iv) On or used in connection with river, harbor, flood control,
reclamation, or power projects; or for chemical manufacturing or
development projects; or for nuclear production, research, or
development projects;
(v) On or used in connection with housing and residential projects;
(vi) On properties of the United States Postal Service;
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(vii) On military installations (including any fort, camp, post,
naval training station, airfield, proving ground, military supply
depot, military school, or any similar facility of the Department of
Defense, but not including the Pentagon);
(viii) On installations of the National Aeronautic and Space
Administration, except regular office buildings; and
(ix) On Department of Veterans Affairs installations used for
hospital or domiciliary purposes.
(3) Buildings leased to the Government are not public buildings
unless the building is leased pursuant to a lease-purchase contract.
Sec. 9.5 Which contracts are not covered by Executive Order 12933?
(a) A contract is not covered by the Executive Order unless it
requires the provision of recurring building services, and unless the
contract succeeds a contract for similar work at one or more of the
same public building(s).
(b) The Executive Order expressly excludes:
(1) Contracts for services under the simplified acquisition
threshold ($100,000);
(2) Contracts for commodities or services produced or provided by
the blind or severely handicapped, awarded pursuant to the Javits-
Wagner-O'Day Act, 41 U.S.C. 46-48a, and any future enacted law creating
an employment preference for some group of workers under building
service contracts;
(3) Guard, elevator operator, messenger, or custodial services
provided to the Government under contracts with sheltered workshops
employing the severely handicapped as outlined in the Edgar Amendment,
section 505 of the Treasury, Postal Services and General Government
Appropriations Act, 1995, Pub. L.103-329;
(4) Agreements for vending facilities operated by the blind,
entered into under the preference provisions of the Randolph-Sheppard
Act, 20 U.S.C. 107; and
(5)(i) As explained in paragraph (b)(5) (ii) of this section,
services where the contractor's employees perform work at the public
building and at other locations under contracts not subject to the
Executive Order and these regulations, provided that the employees are
not deployed in a manner that is designed to avoid the purposes of the
Order.
(ii) The successor contractor is not required to offer a right of
first refusal for employment where a majority of the successor
contractor's employees performing the particular service under the
contract work at the public building and at other locations under
contracts not subject to the Executive Order and these regulations.
Examples include, but are not limited to, pest control or trash removal
services where the employees periodically visit various Government and
non-Government sites, and make service calls to repair equipment at
various Government and non-Government buildings. This exclusion does
not apply, however, where the service employees' work on non-covered
contracts is not performed as a part of the same job as their work on
the Federal contract in question, or where they separately apply for
work on the non-Federal contracts. This exclusion also does not apply
where the employees are deployed in a manner that is designed to avoid
the purposes of the Executive Order. In making this determination, all
the facts and circumstances are examined, including particularly the
manner in which the predecessor contractor deployed its workforce to
perform the services, the manner in which the work force is typically
deployed to perform such services, and the manner in which the contract
is structured.
Contract Clauses
Sec. 9.6 What contract clauses must be included in covered contracts?
The clauses set forth in paragraphs (a) through (h) of this section
shall be included in full by the contracting agency in every
solicitation and contract entered into by the United States equal to or
in excess of the simplified acquisition threshold of $100,000, where
the contract requires the provision of building services and succeeds a
contract for the performance of similar services at one or more of the
same public building(s), except that such clauses need not be included
in any contract which is excluded from coverage of the Executive Order
pursuant to paragraph (b) (2), (3) or (4) of Sec. 9.5 of this part.
(a) Consistent with the efficient performance of this contract, the
contractor shall, except as otherwise provided herein, in good faith
offer those employees (other than managerial and supervisory employees)
under the predecessor contract whose employment will be terminated as a
result of award of this contract or the expiration of the contract
under which the employees were hired, a right of first refusal to
employment under the contract in positions for which the employees are
qualified. The contractor shall determine the number of employees
necessary for efficient performance of this contract and may elect to
employ fewer employees than the predecessor contractor employed in
connection with performance of the work. Except as provided in
paragraph (b) of this section, there shall be no employment opening
under the contract, and the contractor shall not offer employment under
the contract, to any person prior to having complied fully with this
obligation. The contractor shall make an express offer of employment to
each employee as provided herein and shall state the time within which
the employee must accept such offer, but in no case shall the period
within which the employee must accept such offer be less than 10 days.
(b) Notwithstanding the contractor's obligation under paragraph (a)
of this section, the contractor:
(1) May employ on the contract any employee who has worked for the
contractor for at least 3 months immediately preceding the commencement
of this contract and who would otherwise face lay-off or discharge, and
(2) Is not required to offer a right of first refusal to any
employee(s) of the predecessor contractor who are not service employees
within the meaning of the McNamara-O'Hara Service Contract Act, 41
U.S.C. 357(b), and
(3) Is not required to offer a right of first refusal to any
employee(s) of the predecessor contractor who the contractor reasonably
believes, based on the particular employee's past performance, has
failed to perform suitably on the job.
(c) In accordance with paragraph (n) of the clause of this contract
entitled ``Service Contract Act of 1965, as Amended'' and 29 CFR
4.6(l)(2), the contractor shall, no less than 60 days before completion
of this contract, furnish the Contracting Officer with a certified list
of the names of all service employees working at the Federal facility
at the time the list is submitted. The list shall also contain
anniversary dates of employment on the contract either with the current
or predecessor contractors of each service employee, as appropriate.
The Contracting Officer will provide the list to the successor
contractor and the list shall be provided on request to employees or
their representatives. Compliance with this paragraph shall constitute
compliance with paragraph (n) of the clause entitled ``Service Contract
Act of 1965, as Amended'' and 29 CFR 4.6(l)(2).
(Approved by the Office of Management and Budget under control
numbers 1215-0150 and 1215-0190)
[[Page 28188]]
(d) The requirements of this clause do not apply to services where
a majority of the contractor's employees performing the particular
services under the contract work at the public building and at other
locations under contracts not subject to Executive Order 12933,
provided that the employees are not deployed in a manner that is
designed to avoid the purposes of the Executive Order.
(e) If it is determined, pursuant to regulations issued by the
Secretary of Labor, that the contractor is not in compliance with the
requirements of this clause or any regulation or order of the
Secretary, appropriate sanctions may be imposed and remedies invoked
against the contractor, as provided in Executive Order No. 12933, the
regulations of the Secretary of Labor at 29 CFR part 9, and relevant
orders of the Secretary of Labor, or as otherwise provided by law.
(f) The Contracting Officer shall withhold or cause to be withheld
from the prime contractor under this or any other Government contract
with the same prime contractor such sums as an authorized official of
the Department of Labor requests, upon a determination by the
Administrator, the Administrative Law Judge, or the Administrative
Review Board, that the prime contractor failed to comply with the terms
of this clause, and that wages lost as a result of the violations are
due to employees or that other monetary relief is appropriate.
(g) The contractor shall cooperate in any investigation by the
contracting agency or the Department of Labor into possible violations
of the provisions of this clause and shall make records requested by
such official(s) available for inspection, copying, or transcription
upon request.
(h) Disputes concerning the requirements of this clause shall not
be subject to the general disputes clause of this contract. Such
disputes shall be resolved in accordance with the procedures of the
Department of Labor set forth in 29 CFR part 9. Disputes within the
meaning of this clause include disputes between or among any of the
following: The contractor, the contracting agency, the U.S. Department
of Labor, and the employees under the contract or its predecessor
contract.
Contractor Obligations
Sec. 9.7 May a contractor employ persons other than the predecessor
contractor's employees?
(a) There shall be no employment openings under a contract subject
to the Executive Order and the successor contractor shall not offer
employment under the contract until it fully complies with its
obligation to offer a right of first refusal, except as provided under
paragraph (b) of this section and Sec. 9.8.
(b) A successor contractor may employ on the contract any employee
who the contractor demonstrates has worked for that contractor for at
least 3 months immediately preceding the commencement of the contract
and would face lay-off or discharge if not employed on the subject
contract.
Sec. 9.8 Must the successor contractor offer a right of first refusal
to all employees of the predecessor contractor?
(a)(1) Except as provided in this section, a successor contractor
shall offer employment under the contract (i.e., a ``right of first
refusal'') to those employees of the predecessor contractor who, in the
final month of the contract, provided recurring building services
similar to the services to be performed at one or more of the same
public building(s) under the successor contract, and whose employment
will be terminated as a result of the award of the successor contract
or expiration of the contract under which the employees were hired.
(2) Unless the predecessor contractor (either directly or through
the contracting agency) or the individual employee in question provides
evidence to the contrary, the successor contractor must presume that
all service employees of the predecessor contractor who are working at
the same public building during the final month of contract performance
will be terminated when the contract ends.
(b)(1) A successor contractor is not required to offer a right of
first refusal to any managerial or supervisory employee or to any
employee of the predecessor contractor who is not a service employee
within the meaning of the McNamara-O'Hara Service Contract Act, 41
U.S.C. 357(b). ``Managerial and supervisory'' employees and employees
who are not ``service employees'' are those persons engaged in the
performance of services under the contract who are employed in a bona
fide executive, administrative, or professional capacity, as those
terms are defined in the Fair Labor Standards Act regulations, 29 CFR
part 541.
(2) The successor contractor must presume that all employees
working under the predecessor contract in the last month of performance
performed suitable work on the contract. However, a successor
contractor is not required to offer a right of first refusal to an
employee of the predecessor contractor if the successor contractor is
able to demonstrate its reasonable belief that the employee in fact
failed to perform suitably on the predecessor contract--for example,
through evidence of disciplinary action taken for poor performance or
evidence directly from the contracting agency that the particular
employee did not perform suitably. The successor contractor must
demonstrate that its belief that an employee has failed to perform
suitably on the predecessor contract is reasonable and based upon
credible information provided by a knowledgeable source such as the
predecessor contractor, the employee's supervisor, or the contracting
agency. Information regarding the general performance of the
predecessor contractor is not sufficient.
(3) The successor contractor is not required to offer a right of
first refusal for employment where a majority of the contractor's
employees performing the service in question under the contract work
both at the public building and at other locations under contracts not
subject to the Executive Order and these regulations. See
Sec. 9.5(b)(5)(ii) of this part.
(c) The successor contractor shall determine the number of
employees necessary for the efficient performance of the contract. The
contractor may, for bona fide staffing or work assignment reasons,
employ fewer employees than the predecessor contractor. Thus, the
successor contractor need not extend the right of first refusal to all
employees of the predecessor contractor, but must offer employment only
to the number of eligible employees it believes necessary to meet its
anticipated staffing pattern, except that:
(1) Where a successor contractor offers a right of first refusal to
fewer employees than were employed by the predecessor contractor, its
obligation to offer employment under the contract to the predecessor's
employees continues for three months after commencement of the contract
to fill vacancies created by employee termination, either voluntarily
or for cause. For example, a contractor with eighteen (18) employment
openings and a list of twenty (20) predecessor contractor's employees
must continue to offer a right of first refusal to individuals on the
list until eighteen (18) of the employees accept the contractor's
employment offer, or until all of the employees have either accepted or
refused the job offer. Further, if an employee quits or is terminated
within three months of contract commencement and the contractor
determines that it must hire an additional employee to sufficiently
perform the contract requirements, the contractor must first offer a
right of first
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refusal to an eligible employee of the predecessor contractor and must
continue to offer a right of first refusal to the predecessor's
employees until one of the employees accepts the contractor's
employment offer, or, except as otherwise provided in this Section,
until all of the employees have refused a job offer.
(2) If a successor contractor raises its staffing level within
three months of the commencement of contract performance, its
obligation to offer employment under the contract to eligible employees
continues until the higher staffing level is reached. For example, if a
contractor determines two months into the contract period that it must
hire an additional ten (10) employees to sufficiently perform the
contract requirements, the contractor must first offer a right of first
refusal to ten (10) eligible employees of the predecessor contractor
(or to all of the employees of the predecessor contractor who have not
previously been offered a right of first refusal if less than ten
remain), and must continue to offer a right of first refusal to the
predecessor's employees until ten (10) of the employees accept the
contractor's employment offer, or, except as otherwise provided in this
Section, until all of the employees have refused a job offer.
Sec. 9.9 In what manner must the successor contractor offer
employment?
(a) Except as provided in Sec. 9.7 and 9.8 of this part, a
successor contractor must make a bona-fide express offer of employment
to each of the predecessor contractor's employees before offering
employment on the contract to any other person. The successor
contractor must offer employment to each employee, either individually
in writing or orally at a meeting attended by a group of the
predecessor contractor's employees. In order to ensure that the offer
is effectively communicated, the successor contractor should take
reasonable efforts to make the offer in a language that each worker
understands, for example, by having a co-worker or other person fluent
in the worker's language at the meeting to translate or otherwise
assist an employee who is not fluent in English.
(b) For a period of one year, the contractor must maintain copies
of any written offers of employment or a contemporaneous written record
of any oral offers of employment, including the date, location and
attendance roster of any employee meeting(s) at which the offers were
extended, a summary of each meeting and a copy of any written notice
which may have been distributed, and the names of the predecessor
contractor's employees to whom an offer was made. The contractor must
provide copies of such documentation upon request of any authorized
representative of the contracting agency or Department of Labor.
(Approved by the Office of Management and Budget under control
number 1215-0190)
(c) The contractor shall state the time within which an employee
must accept an employment offer, but in no case may the period in which
the employee has to accept the offer be less than 10 days.
(d) The successor contractor's obligation to offer a right of first
refusal exists even if the successor contractor has not been provided a
list of the predecessor contractor's employees, or the list does not
contain the names of all persons employed during the final month of
contract performance.
Sec. 9.10 What constitutes a bona fide offer of employment?
(a) As a general matter, an offer of employment will be presumed to
be a bona fide offer of employment. An offer of employment need not be
to a position similar to that which the employee previously held, but
the employee must be qualified for the position. Information regarding
an employee's qualifications shall ordinarily come directly from the
employee. If a question arises concerning an employee's qualifications,
that question shall be decided based upon the employee's education and
employment history with particular emphasis on the employee's
experience on the predecessor contract.
(b) An offer of employment to a position providing lower pay or
benefits than the employee held with the predecessor contractor will be
considered bona fide if the contractor shows valid business reasons
(not related to a desire that the employee refuse the offer, or that
other employees be hired). Where the timing of an employee's
termination suggests that the offer of employment may not have been
bona fide, the facts and circumstances of the offer and the termination
will be closely examined to be sure the offer was bona fide.
Sec. 9.11 What are the obligations of the predecessor contractor?
(a) Not less than 60 days before completion of its contract, the
predecessor contractor must furnish the contracting officer with a
certified list of the names of all service employees working for the
contractor at the Federal facility at the time the list is submitted,
together with their anniversary dates of employment. The contracting
officer in turn shall provide the list to the successor contractor and,
if requested, to employees of the predecessor contractor or their
representatives.
(b) Unless the predecessor contractor (either directly or through
the contracting agency) or the individual employee in question provides
evidence to the contrary, the successor contractor must presume that
all service employees of the predecessor contractor who are working at
the same public building during the final month of contract performance
will be terminated when the contract ends.
(Approved by the Office of Management and Budget under control
numbers 1215-0150 and 1215-0190)
Notice to Employees
Sec. 9.12 How will employees learn of their rights?
Where the successor contract is a contract subject to the Executive
Order and these regulations, the contracting officer (or designee) will
provide written notice to service employees of the predecessor
contractor who are engaged in building services of their possible right
to an offer of employment. Such notice may either be posted in a
conspicuous place at the worksite or may be delivered to the employees
individually. Contracting officers may either use the notice set forth
in Appendix A to this part or another form with the same information.
Subpart B--What Enforcement Mechanisms does Executive Order 12933
Provide?
Complaint Procedures
Sec. 9.100 What may employees do if they believe that their rights
under the Executive Order have been violated?
(a) Any employee of the predecessor contractor who believes he or
she was not offered employment by the successor contractor as required
by the Executive Order and these regulations may file a complaint with
the contracting officer of the appropriate Federal agency.
(b) Upon receipt of a complaint, the contracting officer (or
designee) shall provide information to the employee(s) and the
successor contractor about their rights and responsibilities under the
Executive Order. If the matter is not resolved through such actions,
the contracting officer shall, within 30 days from receipt of the
complaint, obtain statements of the positions of the parties and
forward the complaint and statements, together with a summary of the
issues and any relevant facts known to the contracting officer, to the
nearest District Office of the Wage and Hour
[[Page 28190]]
Division, Employment Standards Administration, U.S. Department of
Labor, with copies to the contractor and the complaining employee(s).
(c) If the contracting officer has not forwarded the complaint to
the Wage and Hour Division within 30 days of receipt of the complaint,
as required by paragraph (b) of this section, the complainant may
refile the complaint directly with the nearest District Office of the
Wage and Hour Division.
Sec. 9.101 What action will the Wage and Hour Division take to try to
resolve the complaint?
After obtaining the necessary information from the contracting
officer regarding the alleged violations, the Wage and Hour Division
may promptly contact the successor contractor and attempt, through
conciliation procedures, to obtain a resolution to the matter which is
satisfactory to both the complainant(s) and the successor contractor
and consistent with the requirements of the Executive Order and these
regulations. The Wage and Hour Division will commence an investigation
in accordance with Sec. 9.102 of this part if the dispute has not been
satisfactorily resolved within 15 days of receipt of the contracting
officer's report or the complaint, unless the successor contractor and
the complainant(s) agree to a delay in the commencement of the
investigation.
Sec. 9.102 How are complaints resolved if conciliation is
unsuccessful?
(a) Upon receipt of a contracting officer's report or a complaint
filed in accordance with Sec. 9.100(c) of this part, the Wage and Hour
Division, U.S. Department of Labor, will investigate as necessary to
gather sufficient data concerning such case unless the dispute has been
resolved through conciliation between the parties. Such an
investigation will be commenced within 15 days of receipt of the
contracting officer's report or the complaint unless conciliation
efforts are still underway and the complainant(s) and the successor
contractor have agreed to a delay in the investigation so that
conciliation efforts may be completed. The Administrator may also
initiate an investigation at any time on his or her own initiative. As
part of the investigation, the Administrator may inspect the records of
the predecessor and successor contractors (and make copies thereof),
may question the predecessor and successor contractors and any
employees of these contractors, and may require the production of any
documentary or other evidence deemed necessary to determine whether a
violation of the Executive Order (including conduct warranting
imposition of ineligibility sanctions pursuant to Sec. 9.109 of this
part) has been committed.
(b) The contractor and the predecessor contractor shall cooperate
in any investigation conducted pursuant to this subpart, and shall not
interfere with the investigation or intimidate, blacklist, discharge,
or in any other manner discriminate against any person because such
person has cooperated in an investigation or proceeding under this
subpart or has attempted to exercise any rights afforded under this
part.
(c) Upon completion of the investigation, the Administrator shall
issue a written determination of whether a violation has occurred which
shall contain a statement of findings and conclusions. A determination
that a violation occurred shall address appropriate relief and the
issue of ineligibility sanctions where appropriate. Notice of the
determination shall be given by certified mail to the complainant (if
any) and his/her representatives (if any), and to the successor
contractor and their representatives (if any).
(d) The Administrator may conduct a new investigation or issue a
new determination if the Administrator concludes circumstances warrant,
such as where the proceedings before an Administrative Law Judge reveal
that there may have been violations with respect to other employees of
the predecessor contractor, where imposition of ineligibility sanctions
is appropriate, or where the contractor has failed to comply with an
order of the Secretary.
Sec. 9.103 How are decisions of the Administrator appealed?
(a) Except as provided in paragraph (b) of this section, the
determination of the Administrator shall advise the parties (ordinarily
the complainant (if any), the successor contractor, and their
representatives (if any)), that the notice of determination shall
become the final order of the Secretary and shall not be appealable in
any administrative or judicial proceeding unless, within 20 days of the
date of the determination of the Administrator, the Chief
Administrative Law Judge receives a request for a hearing. Any
aggrieved party may file a request for a hearing. The request for a
hearing shall be accompanied by a copy of the Administrator's
determination and may be filed by U.S. mail, facsimile (FAX), telegram,
hand delivery, or next-day delivery service. At the same time, a copy
of any request for a hearing shall be sent to the complainant(s) or
successor contractor, and their representatives, if any, as
appropriate; the Administrator of the Wage and Hour Division; and the
Associate Solicitor, Division of Fair Labor Standards, U.S. Department
of Labor, Washington, DC 20210. The Administrator's failure or refusal
to seek ineligibility sanctions shall not be appealable.
(b) If the Administrator concludes that no relevant facts are in
dispute, the parties and their representatives, if any, will be so
advised and will be further advised that the determination shall become
the final order of the Secretary and shall not be appealable in any
administrative or judicial proceeding unless, within 20 days of the
date of the determination of the Administrator, a petition for review
is filed with the Administrative Review Board pursuant to Sec. 9.107 of
this part. The determination will further advise that if an aggrieved
party disagrees with the factual findings or believes there are
relevant facts in dispute, the aggrieved party may advise the
Administrator of the disputed facts and request a hearing by letter,
which must be received within 20 days of the date of the determination.
The Administrator will either refer the request for a hearing to the
Chief Administrative Law Judge, or notify the parties and their
representatives, if any, of the Administrator's determination that
there is no relevant issue of fact and that a petition for review may
be filed with the Administrative Review Board within 20 days of the
date of the notice, in accordance with the procedures at Sec. 9.107 of
this part.
(c) If any party desires review of the determination of the
Administrator, including judicial review, a request for an
administrative law judge hearing (or petition for review by the
Administrative Review Board) must first be filed in accordance with
paragraph (a) (or (b)) of this section. If a timely request for hearing
(or petition for review) is filed, the determination of the
Administrator shall be inoperative unless and until the administrative
law judge or the Administrative Review Board issues an order affirming
the determination.
Administrative Law Judge Procedures
Sec. 9.104 How may cases be settled without formal hearing?
(a) In accordance with the Executive Order's directive to favor the
resolution of disputes by efficient and informal alternative dispute
resolution methods, the parties are encouraged to resolve disputes in
accordance with the conciliation procedures set forth in
[[Page 28191]]
Sec. Sec. 9.100 and 9.101 of this subpart, or, where such efforts have
failed, to utilize settlement judges to mediate settlement negotiations
pursuant to 29 CFR part 18, Sec. 18.9. At any time after commencement
of a proceeding, the parties jointly may move to defer the hearing for
a reasonable time to permit negotiation of a settlement or an agreement
containing findings and an order disposing of the whole or any part of
the proceeding.
(b) A settlement judge may be appointed by the Chief Administrative
Law Judge upon a request by a party or the presiding administrative law
judge. The Chief Administrative Law Judge has sole discretion to decide
whether to appoint a settlement judge, except that a settlement judge
shall not be appointed when a party objects to referral of the matter
to a settlement judge.
Sec. 9.105 What procedures are followed if a complaint cannot be
resolved through conciliation or settlement agreement?
(a) If the case is not stayed to attempt settlement, the
administrative law judge to whom the case is assigned shall within
fifteen (15) calendar days following receipt of the request for
hearing, notify the parties and their representatives, if any, of the
day, time and place for hearing. The date of the hearing shall not be
more than 60 days from the date of receipt of the request for hearing.
(b) The administrative law judge may, at the request of a party, or
on his/her own motion, dismiss a challenge to a determination of the
Administrator upon the failure of the party requesting a hearing or
his/her representative to attend a hearing without good cause; or upon
the failure of said party to comply with a lawful order of the
administrative law judge.
(c) At the Administrator's discretion, the Administrator has the
right to participate as a party or as amicus curiae at any time in the
proceedings, including the right to petition for review of a decision
of an administrative law judge in a case in which the Administrator has
not previously participated. The Administrator shall participate as a
party in any proceeding in which the Administrator's determination has
sought imposition of ineligibility sanctions.
(d) Copies of the request for hearing and documents filed in all
cases, whether or not the Administrator is participating in the
proceeding, shall be sent to the Administrator, Wage and Hour Division,
and to the Associate Solicitor, Division of Fair Labor Standards, U.S.
Department of Labor, Washington, DC 20210.
(e) A Federal agency which is interested in a proceeding may
participate as amicus curiae at any time in the proceedings, at the
agency's discretion. At the request of a Federal agency which is
interested in a proceeding, copies of all pleadings in a case shall be
served on the Federal agency, whether or not the agency is
participating in the proceeding.
(f)(1) The rules of practice and procedure for administrative
hearings before the Office of Administrative Law Judges at 29 CFR part
18 shall be applicable to the proceedings provided by this section,
except that the Rules of Evidence at 29 CFR part 18, subpart B shall
not apply. Rules or principles designed to assure production of the
most probative evidence available shall be applied. The administrative
law judge may exclude evidence which is immaterial, irrelevant, or
unduly repetitive.
(2) To the extent the rules in 29 CFR part 18 are inconsistent with
a rule of special application provided by these regulations or the
Executive Order, these regulations and the Executive Order are
controlling.
Sec. 9.106 What rules apply to the decision of the administrative law
judge?
(a) The administrative law judge shall issue a decision within 60
days after completion of the proceeding at which evidence was
submitted. The decision shall contain appropriate findings,
conclusions, and an order and be served upon all parties to the
proceeding.
(b) Upon the conclusion of the hearing and the issuance of a
decision that a violation has occurred, the administrative law judge
shall issue an order that the successor contractor take appropriate
action to abate the violation, which may include hiring the affected
employee(s) in the same or a substantially equivalent position(s) to
that which the employee(s) held under the predecessor contract,
together with compensation (including lost wages), terms, conditions,
and privileges of that employment. Where ineligibility sanctions have
been sought by the Administrator, the order shall also address whether
such sanctions are appropriate.
(c) If an order is issued finding that the contractor violated the
Executive Order and these regulations, the administrative law judge may
assess a sum equal to the aggregate amount of all costs (not including
attorney fees) and expenses reasonably incurred by the aggrieved
employee(s) in the proceeding.
(d) A proceeding under subpart B of this part is not subject to the
Equal Access to Justice Act, as amended, 5 U.S.C. 504. In such a
proceeding, the administrative law judge shall have no authority to
award attorney fees and/or other litigation expenses pursuant to the
provisions of the Equal Access to Justice Act.
(e) The decision of the administrative law judge shall become the
final order of the Secretary unless a petition for review is timely
filed with the Administrative Review Board.
Appeal Procedures
Sec. 9.107 How may an administrative law judge's decision or the
Administrator's determination be appealed?
(a) The Administrative Review Board has jurisdiction to hear and
decide in its discretion appeals concerning questions of law and fact
from determinations of the Administrator pursuant to Sec. 9.103(b) of
this part and from decisions of administrative law judges pursuant to
Sec. 9.106 of this part.
(b) Any aggrieved party desiring review of a decision of the
administrative law judge (or of the Administrator, pursuant to
Sec. 9.103(b)) shall file a petition for review, in writing, with the
Administrative Review Board. No administrative or judicial review shall
be available unless a timely petition for review to the Administrative
Review Board is first filed. To be effective, such a petition for
review must be received within 20 days of the date of the decision of
the administrative law judge (or Administrator), and shall be served on
all parties and the Chief Administrative Law Judge (where the case
involves an appeal from an administrative law judge's decision). If a
timely petition for review is filed, the decision of the administrative
law judge (or Administrator) shall be inoperative unless and until the
Administrative Review Board issues an order affirming the decision or
declining review of the matter. If a petition for review concerns only
the imposition of ineligibility sanctions, however, the remainder of
the decision shall be effective immediately.
(c)(1) A petition for review shall refer to the specific findings
of fact, conclusions of law, or order at issue.
(2) Copies of the petition and all briefs shall be served on the
Administrator, Wage and Hour Division, and on the Associate Solicitor,
Division of Fair Labor Standards, U.S. Department of Labor, Washington,
DC 20210.
(d) The Board's final decision shall be issued within 90 days of
the receipt of the petition for review and shall be served upon all
parties by mail to the last known address, and on the Chief
[[Page 28192]]
Administrative Law Judge (in cases involving an appeal from an
administrative law judge's decision).
(e) If the Board concludes that the contractor has violated the
Executive Order, the final order shall order action to abate the
violation, which may include hiring the affected employee(s) in the
same or a substantially equivalent position(s) to that which the
employee(s) held under the predecessor contract, together with
compensation (including lost wages), terms, conditions, and privileges
of that employment. Where the Administrator has sought imposition of
ineligibility sanctions, the Board shall also determine whether an
order imposing ineligibility sanctions is appropriate.
(f) If a final order finding violations of the Executive Order is
issued, the Board may assess against the successor contractor a sum
equal to the aggregate amount of all costs (not including attorney
fees) and expenses reasonably incurred by the employee(s) in the
proceeding.
(g) In considering the matters within the scope of its jurisdiction
the Board shall act as the authorized representative of the Secretary
and shall act fully and finally on behalf of the Secretary concerning
such matters. The Board shall not have jurisdiction to pass on the
validity of any provision of this part. The Board is an appellate body
and shall decide cases properly before it on the basis of all relevant
matter contained in the entire record before it. The Board shall not
hear cases de novo or receive new evidence into the record.
(h) Proceedings under Executive Order 12933 are not subject to the
Equal Access to Justice Act (Pub. L. 96-481). Accordingly, in any
proceeding conducted pursuant to the provisions of Secs. 9.105-9.107,
the Administrative Review Board shall have no power or authority to
award attorney fees and/or other litigation expenses pursuant to the
Equal Access to Justice Act.
Enforcement Remedies
Sec. 9.108 What are the consequences to a contractor of not complying
with the Executive Order?
(a) The Executive Order provides that the Secretary shall have the
authority to issue orders prescribing appropriate remedies, including,
but not limited to, requiring employment of the predecessor
contractor's employees and payment of wages lost.
(b) After an investigation and a determination by the Administrator
that lost wages or other monetary relief is due, the Administrator may
direct that so much of the accrued payments due on either the contract
or any other contract between the contractor and the Government shall
be withheld in a deposit fund as are necessary to pay the moneys due.
Upon the final order of the Secretary that such moneys are due, the
Administrator may direct that such withheld funds be transferred to the
Department of Labor for disbursement.
(c) If the contracting officer or the Secretary finds that the
predecessor contractor has failed to provide a list of the names of
employees working under the contract in accordance with Sec. 9.6(c),
the contracting officer may take such action as may be necessary to
cause the suspension of the payment of funds until such time as the
list is provided to the contracting officer.
Sec. 9.109 Under what circumstances will ineligibility sanctions be
imposed?
(a) Where the Secretary finds that a contractor has failed to
comply with any order of the Secretary or has committed willful
violations of the Executive Order or these regulations, the Secretary
may order that the contractor and its responsible officers, and any
firm in which the contractor has a substantial interest, shall be
ineligible to be awarded any contract or subcontract of the United
States for a period of three years.
(b) Upon order of the Secretary, the names of persons or firms
found to be ineligible for contracts in accordance with this section
shall be added to the ``List of Parties Excluded from Federal
Procurement and Nonprocurement Programs,'' compiled, maintained and
distributed by the General Services Administration in accordance with
48 CFR 9.404. No contract of the United States shall be awarded to the
persons or firms appearing on this list or to any firm, corporation,
partnership, or association in which such persons or firms have a
substantial interest until three years have elapsed from the date the
persons' or firms' name was entered on the electronic version of the
list.
Subpart C--Definitions
Sec. 9.200 Definitions.
For purposes of this part:
Administrator means the Administrator of the Wage and Hour
Division, Employment Standards Administration, U.S. Department of
Labor, and includes any official of the Wage and Hour Division
authorized to perform any of the functions of the Administrator under
this part.
Contract means any prime contract subject wholly or in part to the
provisions of the Executive Order.
Contracting officer means the individual, a duly appointed
successor, or authorized representative who is designated and
authorized to enter into contracts on behalf of the Federal agency.
Executive Order or Order means Executive Order 12933 (59 FR 53559,
October 24, 1994).
Federal Government means an agency or instrumentality of the United
States which enters into a contract pursuant to authority derived from
the Constitution and the laws of the United States.
Secretary means the Secretary of Labor or his/her authorized
representative.
Service employee means any person engaged in the performance of
recurring building services other than a person employed in a bona fide
executive, administrative, or professional capacity, as those terms are
defined in part 541 of title 29, Code of Federal Regulations, and shall
include all such persons regardless of any contractual relationship
that may be alleged to exist between a contractor and such person.
United States means the United States and all executive
departments, independent establishments, administrative agencies, and
instrumentalities of the United States, including corporations, all or
substantially all of the stock of which is owned by the United States,
by the foregoing departments, establishments, agencies,
instrumentalities, and including non-appropriated fund
instrumentalities.
Appendix to Part 9--Notice to Building Service Contract Employees
The contract for (type of service) services currently performed
by (predecessor contractor) has been awarded to a new contractor.
(successor contractor) will begin performance on (date successor
contract begins) .
As a condition of the new contract(successor contractor) is
required to offer employment to the employees of (predecessor
contractor) working at (the contract worksite or worksites) except
in the following situations:
Managerial or supervisory employees on the current
contract are not entitled to an offer of employment.
(successor contractor) may reduce the size of the
current work force. Therefore, only a portion of the existing work
force may receive employment offers. However, (successor contractor)
must offer employment to the employees of (predecessor contractor)
if any vacancies occur in the first three months of the new
contract.
(successor contractor) may employ a current employee on the new
contract before offering employment to (predecessor contractor's)
employees only if the current employee has worked for (successor
contractor) for at least three months immediately preceding the
commencement of the new contract and would face layoff or
[[Page 28193]]
discharge if not employed under the new contract.
Where (successor contractor) has reason to believe,
based on credible information from a knowledgeable source, that an
employee's performance has been unsuitable on the current contract,
the employee is not entitled to employment with the new contractor.
If you are offered employment on the new contract, you
will have at least ten (10) days to accept the offer.
Any employee of (predecessor contractor) who believes that he or
she is entitled to an offer of employment with (successor
contractor) and has not received an offer, may file a complaint with
(contracting officer or representative), the contracting officer
handling this contract at: (address and telephone number of
contracting officer). If the contracting officer is unable to
resolve the complaint, the contracting officer shall promptly
forward a report to the U.S. Department of Labor, Wage and Hour
Division.
If you have any questions about your right to employment on the
new contract, contact: (Name, address, and telephone # for the
contracting officer or the contracting officer's representative)
[FR Doc. 97-13336 Filed 5-21-97; 8:45 am]
BILLING CODE 4510-27-P
