Federal Service Contracts

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The U.S. Department of Labor issued a Final Rule implementing Executive Order # 13495, Nondisplacement of Qualified Workers under Service Contracts, signed by President Obama on January 30, 2009. The Order and the final rule require contractors and subcontractors who are awarded a federal service contract to provide the same or similar services at the same location to, in most circumstances, offer employment to the predecessor contractor’s employees in positions for which they are qualified.

Where the successor contract is a contract subject to the Order and the final rule, the contracting officer (or designee) will ensure that the contractor provides written notice to the eligible employees of the predecessor contractor 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. An offer of employment may be for any position for which the employee is qualified; the offer need not be for the same position that the employee previously held.

The effect on Contractors is outlined below:

  • With limited exceptions, the contractor will be compelled to initially offer employment to the predecessor contractor’s employees. The contractor’s workforce will be comprised of the predecessor company’s employees rather than employees selected or employed by the contractor.
  • If the predecessor workforce is unionized, the successor contractor will be required to recognize the union under the National Labor Relations Act successorship rules.
  • Additionally, if the predecessor’s workforce was in the process of unionizing, then those organizational efforts will continue with the new Employer.
  • The Final Rule’s effective date will probably be before year end when the Federal Acquisition Council issues companion regulations implementing the Executive Order.

Health and Welfare Changes

Effective June 17, 2012 the new SCA health and welfare benefit increased to $3.71 per hour. We encourage all contractors to not pay the new fringe benefit until it has been authorized by your Contracting Agency with a modification date.

At Cleary, we know how important a comprehensive benefits package can be to your continued success. Give us a call today at 617-723-0700 and we will work with you to create a plan that meets your fringe benefit obligations and provides your employees with valuable benefits.