Insurance Insights: The Cleary Insurance Blog

At the December 2012 Professional Services Council Labor Relations Committee (PSCLRC) meeting, US Department of Labor (DOL) Wage and Hour Division representatives indicated that the Federal Acquisition Regulation Proposed Rule entitled Nondisplacement of Qualified Workers Under Service Contracts should become finalized early next year, possibly in January 2013.

DOL stated that they will have a webinar and separate e-mail for questions regarding this rule.

Contractors must still ensure that their respective contracting officers put this stipulation into their contracts before implementation.

DOL Investigations

At the December PSCLRC meeting, DOL Wage and Hour representatives revealed that there were more than 800 service contract investigations during the last fiscal period; $44 million collected in back pay wages from contractors; 15,000 employees investigated; and 19 debarments. The representatives were asked for additional quantitative breakdowns on this data, but they said the information was confidential. As a result of this response, another meeting with the DOL administrator is scheduled for January 2013 to continue the discussion.

All the contractors present at the meeting provided input to the DOL indicating that they have received numerous complaints from member companies as well as contracting agencies regarding the methodology of these investigations, some of which went on for as long as 18 months without reaching a conclusion.

The DOL confirmed that the 300-plus full-time investigators hired in the past three to four years under ARRA funding will remain. These investigators have been trained in stages, according to the when they audit contractors they have to check 10 to 12 statutes, which takes a considerable amount of time. There can also be delays if they request information from the contracting community and do not receive it in a timely fashion.

The DOL representatives stated that many of these investigations have been “directive” rather that responding to individual complaints. They also mentioned that if an investigator is directed to check out a complaint under Executive Order #13495, they may also conduct a complete investigation of the prime contractor and all of its subcontractors.

PSC members stated that some of the investigators have harassed contractors, alleging that if they did not pay what was stated in the summary of unpaid wages, the DOL would withhold funds on the contract or have them face debarment. Contractors also indicated that investigators were asking for too much company data and for too many records, and in many cases asked for the same data twice. There have also been many instances where investigators did not have a firm foundation in the Service Contract Act, leading to further delays in getting the audits completed. Some of these investigations are taking too long, the contractors said, and as a result, if there are findings that a contractor is liable and must pay back wages, the amount of back pay is more than it would have been had the audit been completed earlier.

PSC again reiterated to DOL that if an investigator finds that a contractor is not in violation, but the contracting entity has violated the rules and back pay is deemed necessary, it is the contractor who appears on the violation. PSC members feel this is unfair and must be corrected.

It was recommended that every contractor ensure that all their personnel dealing with Service Contract Act issues or responsibilities have adequate training. For more information, contact MARAL,LLC; or Al Corvigno, who provides a one-day SCA/DBA course, at 252-312-4853 or acorvigno@marallc.com.

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.