The U.S. Department of Labor recently issued a final rule implementing Executive Order 14055 (EO), which requires federal contractors and subcontractors on certain successor federal service contracts to offer employment to service employees on predecessor contracts. The final rule is effective February 12, 2024 and applies only to contract solicitations issued on or after that date by the Federal Acquisition Regulatory Council.
The final rule and FAQs prepared by the DOL state, among other things:
- The final rule applies to any contract, contract-like instrument or subcontract for services covered by the Service Contract Act. It does not apply to prime contracts under the simplified acquisition threshold (currently $250,000) and any subcontracts of any tier under such prime contracts.
- Contracting agencies are responsible for determining whether a solicitation is covered by the EO, deciding whether to waive the requirements of the EO and conducting a “location continuity” analysis to consider whether to include a location-continuity requirement or preference in a covered solicitation.
- Contracting agencies must send the successor contractor a certified list of names of the employees working under the predecessor prime contract and any subcontract.
- Successor contractors must make written job offers to service employees who were employed under the predecessor contract. The successor contractor must offer employment even if it does not receive a list of employees on the predecessor contract (in which case, it is required to accept other reliable evidence of a worker’s right to receive a job offer). Employees must be given at least 10 business days to consider and accept the offer. The offer does not need to be for a position similar to the one the employee previously held—it just needs to be a position for which the employee is qualified. The offer also may include different employment terms and conditions, including changes to pay, benefits or the option of remote work, as long as the different terms are not offered to discourage the employee from accepting the offer.
If you have any questions about this Alert, we encourage you to reach out to your Shulman Rogers contact for solutions and recommendations for addressing these issues.
