Overtime Exemption Regulation Submitted for Review

We have learned that the long-awaited proposed regulation regarding overtime pay exemptions (the “White Collar Exemption Regulation”) has been submitted by the Department of Labor to the Office of Management and Budget (OMB) for review.  Although there is no deadline for this initial review, the start of the oversight process indicates that the proposed regulation will be published for notice and comment in the near future.

The publication of the proposed regulation is only the beginning of the process.  Once published, the public—including, particularly, affected employers—will have an opportunity to comment on the proposal during a required “notice and comment” period.  This period is often 90 days, but for regulations with significant economic impact, the comment period may be longer and can be extended.  This is an important step, and is the process for ensuring that employer’s views are considered by DOL as part of the rulemaking process.

In 2016, the Obama Administration published an overtime regulation that would have altered long-standing exemptions and raised the overtime pay threshold from $23,660 annually to $47,476.  Many positions once considered executive, administrative or professional would, thus, be subject to overtime pay.  Further, the pay threshold would be indexed to wage growth and updated once every three years.  This regulation was challenged and enjoined by the courts.  A new overtime rule has been promised by the Trump Administration.

FortneyScott will closely monitor this development and keep you informed.  Additionally, we will be filing comments on behalf of clients after the proposed regulations are published.

For more information please contact your FortneyScott attorney or email us at info@fortneyscott.com.

 

E-Verify Unavailable Due to Government Shutdown

Employers who rely on E-Verify, the web-based system that allows enrolled employers to confirm the eligibility of their employees to work in the United States, will be unable to access the system due to the government shutdown.

This is especially important for employers with federal contracts or subcontracts that contain the Federal Acquisition Regulation (FAR) E-Verify clause, as all such employers are required to enroll in E-Verify as a condition of federal contracting.

No alternative to E-Verify has been announced.

FortneyScott will closely monitor this situation and post any new developments.

OFCCP Officially Names Craig Leen as Permanent Director

Craig Leen, formerly the acting director of the Office of Federal Contract Compliance Programs, was named the agency’s permanent leader by the Department of Labor on December 26th. Leen took over for the previous politically appointed director in July. The position does not require Senate confirmation.

Six OFCCP Predictions for 2019

The second year at the OFCCP under the Trump Administration has been marked by activity – two Directors and nine Directives (which have limited enforceability according to the Department of Justice) – but little to show for it: $10 million less in recoveries than FY2017, and fewer audits than in any recent fiscal year. As 2019 begins, however, the agency has begun to make some of the changes federal contractors have been hoping to see since the end of the Obama Administration.

Based on what has happened in 2018, the OFCCP Practice Group attorneys at FortneyScott offer the following six OFCCP predictions for 2019:

  1. An increased number of audits in calendar year 2019. In OFCCP Acting Director Craig Leen’s November 2, 2018 testimony before the Commission on Civil Rights, Leen said that he plans to increase the number of audits in FY2019 to 3,500. In FY2018, OFCCP only completed 800 audits. It is questionable whether that number will be reached, but there is clearly intent to do more audits.
  2. New and different types of audits. One way more audits will be undertaken is to change how audits are conducted. In addition to the full audits, the agency will perform “no-certify” audits and compliance checks based on the SAM database; pre-award audits; complaint investigations; and construction audits, all designed to be more quickly resolved. At least 500 of the audits scheduled will be focused reviews under one of the three laws enforced by OFCCP—Executive Order 11246, Section 503 or VEVRAA.
  3. Audits will be conducted more efficiently and effectively. OFCCP’s new Directive on compliance audit procedure, DIR 2019-01, rescinded Active Case Enforcement and outlines a more streamlined audit process. The commitment to greater transparency under new Directive, DIR 2018-08, will aid federal contractors in better understanding and managing their compliance audits.
  4. Compensation will continue to be the BIG issue for OFCCP. Although Acting Director Leen rescinded Directive 307 with Directive 2018-05, the new compensation Directive kept many of the worst features of Directive 307, including pooled regressions, OFCCP-created pay analysis groups (PAGs), and analyzing multiple years of compensation data together. An increased percentage of OFCCP’s FY2018 settlements were based on compensation and contractors, and we will see that trend continue in 2019.
  5. New Early Resolution Procedures. Although some aspects of the new Early Resolution Procedures (DIR 2019-02) are very helpful to contractors, contractors need to consider the ramifications very carefully before agreeing to the new OFCCP’s Early Resolution Conciliation Agreement with Corporate-Wide Corrective Action (ERCA), especially for material violations alleging discrimination. The proposal to close audits with non-material violations with just a closure letter is a welcome return to earlier approaches. However, the material violation discrimination resolution procedures will subject all of a federal contractor’s establishments to OFCCP reporting, and may not provide the best resolution terms for the federal contractor. As a result, we predict that few contractors will elect to seek these agreements.
  6. New Opinion Letters and Help Desk. OFCCP’s new Directive on opinion letters and an enhanced help desk (DIR 2019-03) is an attempt to provide contractors with more useful compliance assistance. While OFCCP seems to be mirroring DOL’s Wage & Hour Opinion Letters, it is unclear whether the contractors will be able to rely on those letters as they can W&H’s opinion letters. As a result, it remains to be seen whether contractors will avail themselves of this opportunity.

We wish you the best for 2019, and we are happy to answer any questions that you may have about OFCCP compliance matters.

David S. Fortney

Jacqueline R. Scott

H. Juanita Beecher

Elizabeth B. Bradley

Burton J. Fishman

Sean D. Lee

Sara Nasseri

Consuela A. Pinto

Mickey Silberman

Leslie E. Silverman

DoD Issues new Other Transactions Guide

This week the Office of the Under Secretary of Defense for Acquisition and Sustainment (USD (A&S)) rescinded the January 2017 version of the Other Transactions (OT) Guide for Prototype Projects and issued a new, revised OT Guide.  OT agreements (OTAs) are not Federal Acquisition Regulation (FAR)-based procurement contracts, grants, or cooperative agreements.  As enunciated under the new OT Guide, OTAs are intended to utilize more commercial arrangements to accomplish particular projects.  While OTAs are subject to certain laws and provisions, they are not required to comply with the full panoply of procurement laws and regulations, such as the FAR and agency-specific supplemental acquisition regulations, applicable to FAR-based contracts.

Statutory authority for OTAs traditionally has been used to allow Department of Defense (DoD) to enter into agreements for new research, prototype development, and limited production.  This also includes Technology Investment Agreements (TIAs).  Revision of statutory authority has expanded the definition of non-traditional defense contractor (NTDC) and the use of OTAs to permit appropriate follow-on production agreements.  DoD uses OTAs to access state-of-the-art technology solutions from traditional defense contractors, non-traditional defense contractors that do not typically engage in contracts with the federal government, consortia, or through teaming arrangements involving these or other types of entities.    

The OT Guide provides a useful compendium of information on OTA authority, processes, administration and resources.  It includes a set of definitions, mythbusters, authorities, as well as examples of OTA arrangements, to clarify for both Government and industry the nature and scope of OTAs.  

Takeaways:

·       DoD is seeking access to state-of-the-art technology solutions.

·       OTAs provide one avenue through which NTDCs as well as traditional defense contractors, may be able to engage in research, prototyping, and appropriate follow-on production.

·       OTAs are not cookie-cutter.  The nature and scope of an OTA, as well as the terms, rights, and available remedies, are governed by the controlling statutory and policy provisions of the agency, and the negotiation and agreement of the parties.  OTAs can be issued to an individual entity, team, consortium, or a combination of entities.  It is wise to consider all aspects and options, including, for example, the nature of the problem; your proposed solution; terms for successful completion; the availability of your own, potential team members, and the DoD resources; cost-share and funding; and intellectual property rights needs, when seeking to work in this space.

Susan Warshaw Ebner, one of FortneyScott’s shareholders, has experience in OTAs and TIAs, as well as traditional FAR-based procurements, grants and cooperative agreements.  If you have questions about this advisory, or seek assistance with regard to these types of transactions, please contact Susan Warshaw Ebner or your FortneyScott counsel.

OFCCP Issues Three New Directives

Today, the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) made a significant announcement affecting federal contractors.  First, under a new directive, DIR 2019-01, OFCCP rescinded Active Case Enforcement for compliance reviews.  Second, DIR 2019-02 outlines new Early Resolution Procedures which will offer a five-year break from agency audits in exchange for reporting certain employment data to resolve audits.  Finally, OFCCP officially stated that it will be issuing opinion letters that offer compliance guidance.

The new DIR 2019-02, Early Resolution Procedures (ERP), offers five years of respite from audits to contractors who are settling bias claims with the OFCCP, in exchange for contractors reporting hiring, pay, and other employment data to the agency.  The ERP provides the mechanism by which OFCCP staff may resolve violations and work with the contractor to develop corporate-wide corrective actions.

  • For nonmaterial violations found, which can be corrected immediately during an audit, the OFCCP can resolve the evaluation during the desk audit with compliance assistance resulting in the issuing of a closure letter referencing the nonmaterial violations and their remedies.
  • For material violations not involving discrimination and for material violations involving discrimination found during an audit OFCCP will agree to a five-year moratorium on audits at that establishment if the contractor agrees to an Early Resolution Conciliation Agreement with Corporate-Wide Corrective Action (ERCA). The ERCA requires the contractor to review all or a negotiated subset of its establishments for violations similar to those found in the initial audit and to implement of any corrective action including job offers. The ERCA also requires the contractor to submit progress reports on the results of its analysis, findings, corrective actions and all supporting documents reasonably related to the review for up to five years.

OFCCP also issued DIR 2019-03 in which it announced that it will begin issuing opinion letters, similar to the Labor Department’s Wage & Hour Division, offering guidance on how contractors can comply with their affirmative action and nondiscrimination obligations based on specific factual scenarios.  It also outlined plans to enhance its current Help Desk capabilities.  The Directive also states that OFCCP may consider whether a contractor’s actions are consistent with an opinion letter, FAQ, or help desk advice when considering whether to cite the contractor for a violation.

Finally, the agency issued Directive 2019-01, rescinding Active Case Enforcement (ACE), DIR 2011-01.  According to Directive 2019-01, the agency’s recent directives on Transparency in OFCCP Compliance Activities, DIR 2018-09; Affirmative Action Program Verification Initiative, DIR 2018-07; and Focused Reviews, DIR 2018-04 have embedded the most effective parts of ACE and ACM into its standard operating policies and procedures, so the ACE directive is no longer necessary.

BOTTOM LINE: While the new directives provide welcome new ways to resolve issues with the OFCCP, the question will be whether the “new” OFCCP will be any more reasonable in resolving those issues than the “old” OFCCP.  How these directives will be implemented remains to be seen.  The attorneys at FortneyScott will monitor implementation of the new directives and keep you informed of on ongoing developments. If you have any questions, contact your FortneyScott attorney.

 

FortneyScott Lunch & Learn: 2018 Midterm Elections Update

The votes are in! After a fiercely contested midterm election, Democrats have gained control of the U.S. House of Representatives, and Republicans have retained the Senate. What will this mean for employers and government contractors?

Join experienced Washington, DC-based attorneys David Fortney, Susan Warshaw Ebner, and Nita Beecher on Tuesday, November 13th at 12:00 pm  for a special post-election webinar as they weigh in on how the midterm results affect the legal landscape for labor and employment and government contracting, including:

  • How federal agencies will be affected by the election results, including whether there will be more Congressional oversight of federal agencies’ rulemaking and enforcement activities;
  • What is the impact of the election results on current Federal programs and contracts;
  • Who likely will be the leaders for the key Congressional committees, and what will be their agendas;
  • What is the impact of the elections on the confirmation proceedings for many long-pending key agency nominations; and
  • Whether any key legislation is likely under the new 116th Congress or the final lame duck session of the 115th Congress?

Don’t miss this timely discussion! Click here to register.

 

FortneyScott Presenting at the 45th Labor and Employment Law Institute

David Fortney will be presenting at the 2018 Labor & Employment Law Institute in Minnesota on November 15, 2018.  He will present on significant new developments out of the DOL – in particular, from the Wage and Hour Division and the Office of Federal Contract Compliance Programs (OFCCP). Join this session to learn practice tips for dealing with those divisions in matters involving your clients. 

 

For more information about the Labor & Employment Law Institute, please click here.

 

EEOC Public Meeting on “Revamping Workplace Culture to Prevent Harassment”

The EEOC held an important public meeting on “Revamping Workplace Culture to Prevent Harassment” on October 31, and Sara Nasseri, an attorney from FortneyScott, attended.  Continue reading to find out recommendations and best practices for employers in the current environment in which there is growing awareness and complaints about harassment and discrimination in the #MeToo environment.

The meeting focused on the EEOC’s efforts in addressing sexual harassment in the workplace. The meeting was an open discussion between EEOC’s leaders and various witnesses and experts in the field on steps that employers, and the community as a whole, should take in the wake of the growing momentum of the #MeToo movement. The areas that were discussed and that offer the key points for employers’ compliance efforts include:

  • changing company culture,
  • ensuring strong leadership and accountability, and
  • implementing effective policies, procedures, and training.

The EEOC’s Substantial Efforts:   Acting EEOC Chair Victoria Lipnic reviewed EEOC’s efforts to date. For decades, the EEOC has investigated and litigated all types of harassment in all types of workplaces. When the #MeToo movement began about a year ago, EEOC was already leading efforts. Indeed, the agency’s focused efforts began about three years ago with the creation of the Select Task Force on the Study of Harassment in the Workplace which comprised of 16 members from around the country from a range of industries. After 18 months of extensive study, a detailed report was issued by the EEOC Co-Chairs, which echoed the same themes of company culture, leadership and accountability, and policies, procedures, and training that were voiced during the public meeting. The task force reconvened this past June. The Acting Chair and Commissioners stressed the role the EEOC has been trying to take as an enforcer, educator, and leader.

The Panelists Presentations:  Seven panelists, ranging from a management labor and employment attorney to a rape and sexual assault survivor and activist, presented their testimonies on their perspectives on the issue and their recommendations for the EEOC. All panelists were questioned on various aspects of their testimonies and each was given an opportunity to really engage with the agency from both a personal and a professional perspective.

The key takeaways from the panelists include:

  • The EEOC is hoping to be a leader in this movement and their efforts have not gone unnoticed – it is reported that charges filed with the EEOC alleging sexual harassment the past FY 2018 increased by 13.6% from FY 2017.
  • Focus on company culture and for employers to shape their cultures in such a way as to stop harassment before it even starts.
  • Account for harassment on all bases and not just focus on sexual harassment in light of the growing #MeToo movement.
  • Understand that there is no “one size fits all” approach to policies, procedures, and training and tailoring different approaches to different types of workplaces. There are different vehicles by which to conduct training, which includes a wide range from harassment prevention and response to civility training.
  • Emphasize transparency so that communication lines are open and the workforce can trust that measures will be taken.

Next Steps for Employers:   Company culture was underscored and it was strongly recommended that employers “own” their culture down to the individual workplace level. Employers training and response efforts must be broad enough and targeted enough not only regarding harassment on the basis of sex but on all bases of unlawful discrimination, and across all industries.  Well-counseled employers are going well beyond the traditional, narrowly focused sexual harassment training.

If you have questions or need assistance on how your company can navigate the complexities and ever-evolving nature of the #MeToo movement, related training, or if you need more information about EEOC’s stepped up enforcement efforts, please contact Sara Nasseri or your FortneyScott attorney.

ABA 12th Annual Section of Labor and Employment Law Conference – Wage and Hour Update: What Has Really Changed Two Years into the Trump Presidency?

David S. Fortney, Esq. is presenting on Friday, November 9th at the ABA 12th Annual Labor and Employment Conference in San Francisco, CA from 8:00 AM – 9:15 AM.

You must register for this event. Click here for more information.