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Employment Law Alert – Two Recent Developments Impact Federal Government Contractors

March 13, 2014

Two Recent Developments Impact Federal Government Contractors

Government contractors must be aware of two recent developments that will affect their obligations to current employees and job applicants.  First, last month President Obama made good on a promise made during his State of the Union Address by raising the minimum wage for government contractor employees to $10.10 per hour ($4.95 for tipped employees in specific circumstances where the employer is eligible for a “tip credit”).  The new minimum wage does not become effective until January 1, 2015.  Look for some states to follow the Federal government’s lead, raising the minimum wage for companies working on state contracts.

Second, beginning later this month the Office of Federal Contract Compliance Programs’ (“OFCCP”) regulations will require government contractors to invite job applicants and employees to self-identify their disabilities on a standard Self-Identification of a Disability Form.  The Office of Management and Budget approved a revised version of the standard form in January.  The revised form allows employees and applicants to affirmatively state that they do not have a disability, and also allows employees and applicants with disabilities to note necessary accommodations.  OFCCP regulations require government contractors to survey their existing workforce within the first year of the employer’s next regular Affirmative Action Program (“AAP”) update following the March 24, 2014 effective date of the regulations.  Contractors should incorporate this revised form into their AAP to ensure compliance with the self-identification requirement.

Affordable Care Act:
Employer Mandate for Medium-Sized Employers Delayed

Last month, the Obama administration announced new rules that further delayed implementation of the employer mandate provisions of the Affordable Care Act.  Under the employer mandate, employers with 50 or more full-time workers are required to provide their full-time work force with health insurance coverage which meets specified standards, or face tax penalties.  Under the new rules, medium-sized employers (those that employ 50 to 99 employees) will not have to comply with the employer mandate until 2016.  The new rules also provide some relief to large employers (companies that employ 100 or more workers) by allowing them to avoid penalties by offering insurance coverage to at least 70 percent of their full-time workers in 2015 (compared to at least 95 percent under the prior rules).   

SOX Whistleblower Protections Extended to Public Contractor Employees

Earlier this month, in Lawson v. FMR LLC, the United States Supreme Court ruled that Section 806 of the Sarbanes-Oxley Act (“SOX”), the post-Enron Act which bans retaliation against whistleblowers, applies not just to employees of public companies, but also to employees of contractors and subcontractors who work for those public companies. The Court found that absent such a ruling, contractors’ employees, including attorneys and accountants, could be retaliated against by their employers for whistleblowing on violations committed by the public companies with which their employers contract, which is precisely what the Act seeks to deter.  Accordingly, a new type of whistleblower suit is now possible.  Moreover, an additional class of employees – employees of contractors – now may feel empowered to report perceived wrongdoing, which may lead to additional investigations by the SEC, DOJ and other enforcement authorities, regardless of whether the company that employs the whistleblower is itself public.  Companies should evaluate their whistleblower policies and consider adopting new policies to protect their interests in the event that the SEC, DOJ or some other “unexpected” regulator knocks on their door.

Watch this space:  The President recently announced potentially dramatic changes to the FLSA overtime obligations.  We will send an update once concrete information becomes available. 

The contents of this Alert are for informational purposes only, and do not constitute legal advice. If you have any questions about this Alert, please contact a member of the Shulman Rogers Employment and Labor Law Group or the Shulman Rogers attorney with whom you regularly work. 


Gregory D. Grant

Meredith “Merry” Campbell

Joy C. Einstein