The Davis-Bacon and Related Acts

• The Davis-Bacon and Related Acts apply to contractors and subcontractors working on construction, alteration or repair of public works and public buildings under contracts exceeding $2,000.
• The Act requires that employees who are working under such contracts must receive the locally prevailing wages and benefits.
• Congress has added prevailing wage provisions to approximately 60 statutes which assist construction projects through grants, loans, loan guarantees, and insurance. These are known as the “Related Acts.”

The Davis-Bacon and Related Acts apply to contractors and subcontractors performing on federally funded or assisted contracts in excess of $2,000 for the construction, alteration, or repair (including painting and decorating) of public buildings or public works.

Laborers and mechanics who work directly at the site have the right to receive at least the locally prevailing wage rate and fringe benefits, as determined by the Department of Labor, for the type of work performed.

On a contract to which the labor standards apply, holiday pay and/or vacation pay is required for specific classifications of workers only if the Davis-Bacon wage determination in the covered contract specifies such requirements for workers in those classifications.

Apprentices and trainees may be employed at less than predetermined rates. Apprentices must be employed pursuant to an apprenticeship program registered with the Department of Labor or with a state apprenticeship agency recognized by the Department. Trainees must be employed pursuant to a training program certified by the Department.

Contractors and subcontractors on prime contracts in excess of $100,000 are also required (under the Contract Work Hours and Safety Standards Act) to pay employees one and one-half times their basic rates of pay for all hours over 40 in a workweek.

Covered contractors and subcontractors are also required to pay employees weekly and to submit weekly certified payroll records to the contracting agency.

In addition to the Davis-Bacon Act, Congress has added prevailing wage provisions to approximately 60 statutes which assist construction projects through grants, loans, loan guarantees, and insurance. These “related Acts” involve construction in such areas as transportation, housing, air and water pollution reduction, and health. If a construction project is funded or assisted under more than one federal statute, the Davis-Bacon prevailing wage provisions may apply if any of the applicable statutes requires payment of Davis-Bacon wage rates.

The geographic scope of the Davis-Bacon Act is limited to the 50 states and the District of Columbia. The scope of each of the related Acts is determined by the terms of the particular statute under which the federal assistance is provided. For example, Davis-Bacon prevailing wage provisions would apply to a construction contract located in Guam or the Virgin Islands funded under the Housing and Community Development Act of 1974, even though the Davis-Bacon Act itself does not apply to federal construction contracts to be performed outside the 50 states and the District of Columbia.

McNamara-O’Hara Service Contract Act (SCA)

• The McNamara-O’Hara Service Contract Act covers contractors who provide federal and District of Columbia agencies with the work of service employees.
• The SCA provides covered service workers the right to receive at least the locally prevailing wage rate and fringe benefits, as determined by the Department of Labor, for the type of work performed.

The McNamara-O’Hara Service Contract Act (SCA) covers contracts entered into by federal and District of Columbia agencies where the principal purpose is to furnish services in the U.S. through the use of “service employees.” The definition of “service employee” includes any employee engaged in performing services on a covered contract other than a bona fide executive, administrative, or professional employee who meets the exemption criteria in 29 CFR Part 541.

This Act applies only to contracts awarded by the federal or District of Columbia governments. It does not apply to certain types of contractual services. These statutory exemptions include:

• Contracts for construction, alteration, and/or repair of public buildings or public works, including painting and decorating (those covered by the Davis-Bacon Act).
• Work required under the provisions of the Walsh-Healey Public Contracts Act.
• Contracts for transporting freight or personnel where published tariff rates are in effect.
• Contracts for furnishing services by radio, telephone, telegraph, or cable companies subject to the Communications Act of 1934.
• Contracts for public utility services.
• Employment contracts providing for direct services to a federal agency by an individual or individuals.
• Contracts for operating postal contract stations for the U.S. Postal Service.
• Services performed outside the U.S. (except in territories administered by the U.S., as defined in the Act).
• Contracts administratively exempted by the Secretary of Labor in special circumstances because of the public interest or to avoid impairment of government business.

The SCA provides covered service workers on federal service contracts the right to receive at least the locally prevailing wage rate and fringe benefits, as determined by the Department of Labor, for the type of work performed. The Wage and Hour Division accepts complaints of alleged SCA wage violations.

Every covered contract in excess of $2,500 contains a provision specifying the fringe benefits to be furnished to service employees and must be paid in addition to the minimum wage. The fringe benefit amount is listed in the wage determination. SCA makes no distinction, with respect to its compensation provisions, between temporary, part-time, and full-time employees. However, temporary and part-time employees are only entitled to an amount of the fringe benefits specified in an applicable determination which is proportionate to the amount of time spent in covered work.

Unless otherwise specified on the applicable wage determination, health and welfare payments are due for all hours, including paid vacation, sick leave, and holiday hours, up to a maximum of 40 hours per week and 2,080 hours per year on each contract.

Contractors may pay employees their fringe benefits in cash instead of furnishing the required fringe benefits. Fringe benefit obligations may be discharged by paying to the employee on his regular payday, in addition to the monetary wage required, a cash amount per hour in lieu of the specified fringe benefits, provided such amount is equivalent to the cost of the fringe benefits required. Records are kept separately showing the amounts to be paid for fringe benefits.

In addition, no part of the contract work may be performed in buildings, surroundings, or under working conditions that are unsanitary, hazardous, or dangerous to the safety and health of employees. Finally, employers must notify employees working in connection with the contract of the compensation due them under the wage and fringe benefits provisions of the contract.

Walsh-Healey Public Contracts Act (PCA)

• The Walsh-Healey Public Contracts Act (PCA) applies to contractors with contracts in excess of $10,000 for the manufacturing or furnishing of materials, supplies, articles, or equipment to the U.S. government or the District of Columbia.
• PCA provides employees under federal contract the right to be paid at least minimum wage for all hours worked, and time and a half for overtime.

The Walsh-Healey Public Contracts Act (PCA) applies to contractors with contracts in excess of $10,000 for the manufacturing or furnishing of materials, supplies, articles, or equipment to the U.S. government or the District of Columbia. The Act covers employees who produce, assemble, handle, or ship goods under these contracts.

The Act does not apply to executive, administrative, and professional employees, or to outside salespersons exempt from the minimum wage and overtime provisions of the Fair Labor Standards Act, nor does it apply to certain office and custodial workers.

Certain contracts are not covered by this Act. They include:

• Purchases of materials, supplies, articles, or equipment as may usually be bought in the “open market.”
• Purchases of perishables.
• Purchases of agricultural products from the original producers.
• Contracts made by the Secretary of Agriculture for the purchase of agricultural commodities or products.
• Contracts for public utility services and certain transportation and communication services.
• Supplies manufactured outside the U.S. (including Puerto Rico) or the Virgin Islands.

The PCA provides employees on covered federal contracts the right to be paid at least the minimum wage for all hours worked and time and one half their regular rate of pay for overtime hours. The Wage and Hour Division accepts complaints of alleged PCA violations.

The employers may pay special lower rates to apprentices, students in vocational education programs, and disabled workers only if they obtain special certificates from the Department of Labor.

The Act prohibits the employment of youths less than 16 years of age and convicts, except under certain conditions. Convicts do not include persons paroled, pardoned, or discharged from prison, or prisoners participating in a work-release program. It is also unlawful to carry out the contract work under working conditions that are unsanitary, hazardous, or dangerous to the health and safety of employees.

Administration and enforcement of these laws are by the Department of Labor’s Wage and Hour Division. The Office of Federal Contract Compliance Programs (OFCCP) administers and enforces three federal contract-based civil rights laws that require most federal contractors and subcontractors, as well as federally assisted construction contractors, to provide equal employment opportunity. The Office of the Assistant Secretary for Administration and Management’s (OASAM) Civil Rights Center administers and enforces several federal assistance-based civil rights laws requiring recipients of federal financial assistance from Department of Labor to provide equal opportunity.

Contract Work Hours and Safety Standards Act (CWHSSA)

• The CWHSSA applies to contractors and subcontractors with federal service contracts and federally funded and assisted construction contracts over $100,000.
• Contractors or subcontractors who violate the CWHSSA may be subject to fines, imprisonment, or both.

The Contract Work Hours and Safety Standards Act (CWHSSA) applies to contractors and subcontractors with federal service contracts and federally funded and assisted construction contracts over $100,000. Covered contracts include those entered into by the U.S., any agency or instrumentality of the U.S., any territory of the U.S., or the District of Columbia.

The Act also extends to federally assisted construction contracts subject to Davis-Bacon and Related Acts wage standards where the federal government is not a direct party, except those contracts where the federal assistance takes the form only of a loan guarantee or insurance.

Certain contracts are exempt from this Act. These include contracts for the following:

• Transportation by land, air, or water.
• Transmission of intelligence.
• Purchase of supplies, materials, or articles ordinarily available in the “open market.”
• Work required to be done according to provisions of the Walsh-Healey Public Contracts Act.

Employee rights and enforcement

The CWHSSA provides most workers on federal contracts the right to receive time and one-half for overtime hours worked on such contracts. The Wage and Hour Division accepts complaints of alleged CWHSSA wage violations.

The Wage and Hour Division enforces the compensation requirements of this Act, while the Occupational Safety and Health Administration enforces the safety and health requirements.

Relation to state, local, and other federal laws

The provisions of this Act also apply to Davis-Bacon and Related Acts contracts where the contract is financed in whole or in part by grants or loans from the U.S. government, or loans insured or guaranteed by the U.S. government, except where the federal assistance is only in the nature of a loan guarantee or insurance.

Regulations found in Title 48, Federal Acquisition Regulations System (FAR) also affect the CWHSSA. These regulations control the actual contract documents and designate required information that goes into a contract.

Penalties/Sanctions

Contractors or subcontractors who violate this Act may be subject to fines, imprisonment, or both. Intentional violations may be punished by a fine not to exceed $1,000 or by imprisonment for not more than six months, or both. Overtime wage violations may result in the assessment of liquidated damages in the sum of $10 for each calendar day an employee is allowed to work in excess of a 40-hour workweek without payment of the required overtime compensation.

Accrued contract amounts may also be withheld in sums necessary to satisfy the liability for unpaid wages and liquidated damages.

Contractors or subcontractors found to have committed willful or aggravated violations of the overtime requirements may have their contracts terminated and may be declared ineligible to receive future contracts for a period not to exceed three years.

Copeland Anti-Kickback Act

• The Anti-Kickback section of the Copeland Act precludes a contractor or subcontractor from inducing an employee to give up any part of the compensation to which the employee is entitled under contract of employment.
• Any contractor who violates the Act is subject to fines, imprisonment, or both.

The “Anti-Kickback” section of the Copeland Act applies to all contractors and subcontractors performing on any federally funded or assisted contract for the construction, prosecution, completion, or repair of any public building or public work, except contracts for which the only federal assistance is a loan guarantee. This provision applies even where no labor standards statute covers the contract.

The regulations pertaining to the Copeland Act payroll deductions and submittal of the weekly statement of compliance apply only to contractors and subcontractors performing on federally funded contracts in excess of $2,000 and federally assisted contracts in excess of $2,000 that are subject to federal wage standards.

The Anti-Kickback section of the Act precludes a contractor or subcontractor from in any way inducing an employee to give up any part of the compensation to which the employee is entitled under the contract of employment. The Act and implementing regulations require a contractor and subcontractor to submit a weekly statement of the wages paid to each employee performing on covered work during the preceding payroll period. The regulations also list payroll deductions that are permissible without the approval of the Secretary of Labor and those deductions that require consent of the Secretary of Labor.

Employee rights and enforcement

The Anti-Kickback provisions of the Copeland Act give covered workers on subject federal contracts the right to receive the full pay to which they are entitled for the work they perform. The Act also gives such workers the right to receive pay on a weekly basis. The Wage and Hour Division accepts complaints of alleged Copeland Act wage violations.

The Wage and Hour Division enforces the Act and implementing regulations.

Relation to state, local, and other federal laws

The Anti-Kickback provisions apply to any contract assisted in whole or in part by loans or grants from the federal government, except those contracts where the only federal assistance is a loan guarantee. The provisions of the Act and the regulation pertaining to the weekly statement of wages and payroll deductions apply to federally assisted contracts that are subject to federal wage standards.

Penalties/Sanctions

Any contractor or subcontractor who induces an employee working on a covered contract to give up any part of the compensation to which the employee is entitled is subject to a $5,000 fine, or imprisonment for up to five years, or both. Willful falsification of the statement of compliance may subject the employer to civil or criminal prosecution and may be cause for contract termination or debarment.

Other acts and regulations

• Other agencies and individual states may have additional regulations that affect federal contract work.

In addition to the Department of Labor, the Office of Federal Contract Compliance Programs (OFCCP) and Wage and Hour Division, other agencies and their associated laws and regulations may need to be considered. This could include the federal Equal Employment Opportunity Commission in relation to discrimination on the basis of protected status, as well as any applicable Executive Order or state laws.

Enforcement and recordkeeping

• The Davis-Bacon Act is enforced by the Wage and Hour Division.
• Contractors must maintain payroll and other employment-related records during the course of the work, and preserve the records for three years thereafter.

The Wage and Hour Division administers and enforces the Davis-Bacon Act.

Payrolls and basic related records must be maintained by the contractor during the course of the work and preserved for three years thereafter for all laborers and mechanics working at the site of the work (or under the United States Housing Act of 1937, or under the Housing Act of 1949, in the construction or development of the project).

Such records must contain the name, address, and Social Security number of each such worker, the worker’s correct classification, hourly rates of wages paid (including rates of contributions or costs anticipated for bona fide fringe benefits or cash equivalents), daily and weekly number of hours worked, deductions made, and actual wages paid. The requirements outlined below can be found in 29 CFR Part 5, Subpart A, Section 5.5, Contract provisions and related matters.

Postings and forms/reporting

• Federal contractors must submit payroll records to the appropriate federal agency if that agency is a party to the contract, or to the applicant, sponsor, or owner for transmission to the appropriate agency.
• The Report of Construction Contractor’s Wage Rates (WD-10) is an optional form to ensure consistency in submission of wage data.

Every employer performing work covered by the labor standards of the Davis-Bacon and Related Acts shall post a notice (including any applicable wage determination) at the site of the work in a prominent and accessible place where it may be easily seen by employees.

The contractor must submit weekly for each week in which any contract work is performed, a copy of all payrolls to the appropriate federal agency if the agency is a party to the contract. If the agency is not such a party, the contractor must submit the payrolls to the applicant, sponsor, or owner, as the case may be, for transmission to the appropriate agency. The payrolls submitted must set out accurately and completely all of the information required to be maintained under 5.5(a)(3)(i) of 29 CFR Part 5. This information may be submitted in any form desired. Optional Form WH-347 is available for this purpose. The prime contractor is responsible for the submission of copies of payrolls by all subcontractors.

Each payroll submitted must be accompanied by a “Statement of Compliance,” signed by the contractor or subcontractor (or the agent who pays or supervises the payment of the persons employed under the contract) and must certify the following:

1. That the payroll contains the information required and that such information is correct and complete;
2. That each laborer or mechanic (including each helper, apprentice, and trainee) employed on the contract during the payroll period has been paid the full weekly wages earned, without rebate, either directly or indirectly, and that no deductions have been made either directly or indirectly from the full wages earned, other than permissible deductions as set forth in Regulations, 29 CFR Part 3;
3. That each laborer or mechanic has been paid not less than the applicable wage rates and fringe benefits or cash equivalents for the classification of work performed, as specified in the applicable wage determination incorporated into the contract.

The Report of Construction Contractor’s Wage Rates (WD-10) is an optional form to ensure consistency in submission of wage data. Respondents may use an alternate form if the information requested is included.

Penalties/Sanctions

• Contractors or subcontractors who disregard or violate the Davis-Bacon Act may be subject to contract termination, debarment from future contracts, fines, and/or criminal or civil prosecution.

Contractors or subcontractors found to have disregarded their obligations to employees, or to have committed aggravated or willful violations while performing work on Davis-Bacon covered projects, may be subject to contract termination and debarment from future contracts for up to three years. In addition, contract payments may be withheld in sufficient amounts to satisfy liabilities for unpaid wages and liquidated damages that result from overtime violations of the Contract Work Hours and Safety Standards Act.

Falsification of certified payroll records or the required kickback of wages may subject a contractor or subcontractor to civil or criminal prosecution, the penalty for which may be fines and/or imprisonment.

Enforcement and penalties/sanctions

• The Wage and Hour Division enforces the wage and hour requirements of the Act. OSHA enforces its safety and health requirements.
• Violations of SCA may result in contract termination and liability for any resulting costs to the government, withholding of contract payment, and other penalties.

The Wage and Hour Division enforces the wage and hour requirements of the Act, while the Occupational Safety and Health Administration (OSHA) enforces its safety and health requirements.

Violations of the SCA may result in contract terminations and liability for any resulting costs to the government, withholding of contract payments in sufficient amounts to cover wage and fringe benefit underpayments, legal action to recover the underpayments, and debarment from future contracts for up to three years.

Contractors and subcontractors may challenge determinations of violations and debarment before an administrative law judge. Contractors and subcontractors may appeal decisions of administrative law judges to the Administrative Review Board. Final Board determinations on violations and debarment may be appealed to and are enforceable through the federal courts.

Enforcement and relation to state, local, and other federal laws

• The Wage and Hour Division enforces the requirements of PCA. OSHA and/or the Mine Safety and Health Administration enforce the safety and health requirements.
• State and local laws regarding wages and hours may also apply; in that case, the employer must observe whichever law sets the stricter standard.

The Wage and Hour Division enforces the requirements of the Act. Depending on the type of contract, the Occupational Safety and Health Administration (OSHA) and the Mine Safety and Health Administration (MSHA) enforce the safety and health requirements.

State and local laws regulating wages and hours of work may also apply to employment subject to this Act. When this happens, the employer must observe the law setting the stricter standard. Compliance with the regulation’s safety and health standards will not relieve anyone of any obligation to comply with stricter standards from another source.

The Walsh-Healey Public Contracts Act and the Fair Labor Standards Act may apply simultaneously to the same employer.

Postings and penalties/sanctions

• Contractors who violate the PCA may be subject to withholding of contract payments, fines, legal action, and more.

Employers must post the “Notice to Employees Working on Government Contracts.”

Contractors and subcontractors who violate the Act may be subject to a variety of penalties. The underpayment of wages and overtime pay may result in the withholding of contract payments in amounts sufficient to reimburse the underpayment. The penalty for employing underage minors or convicts is $10 per day per person, for which contract payments may also be withheld.

The Department may also bring legal action to collect wage underpayment and fines for illegally employing minors and convicts. Willful violations may subject the employer to cancellation of the current contract and debarment from future federal contracts for a three-year period.

Prevailing wages

• A “wage determination” is the listing of wage rates and fringe benefit rates for each classification of laborers and mechanics which the Wage and Hour Division has determined to be prevailing in a given area for a particular type of construction.
• The wage determination must be posted at all times by the contractor and its subcontractors at the site of the work.

Under the provisions of Acts such as the Davis-Bacon Act, the Walsh-Healey Public Contracts Act, and the McNamara-O’Hara Service Contract Act, contractors or their subcontractors are to pay workers employed directly upon the site of the work no less than the locally prevailing wages and fringe benefits paid on projects of a similar character.

A “wage determination” is the listing of wage rates and fringe benefit rates for each classification of laborers and mechanics which the Administrator of the Wage and Hour Division has determined to be prevailing in a given area for a particular type of construction (e.g., building, heavy, highway, or residential).

The Wage and Hour Division issues two types of wage determinations:

• General determinations, also known as area determinations, and
• Project determinations.

A general wage determination reflects those rates determined by the Wage and Hour Division to be prevailing in a specific geographic area for the type of construction described.

A project wage determination is issued at the specific request of a contracting agency (using a Standard Form (SF) 308); is applicable to the named project only; and expires 180 calendar days from the date of issuance unless an extension of the expiration date is requested by the agency and approved by the Wage and Hour Division.

The wage determination (including any additional classifications and wage rates conformed) and a Davis-Bacon poster (WH-1321) must be posted at all times by the contractor and its subcontractors at the site of the work in a prominent and accessible place where it can be easily seen.

Employee Polygraph Protection Act

• While there are limits to how employers can administer lie detection tests, the federal government can administer lie detector tests to contractors and their employees for national defense and security purposes.

In general, the Employee Polygraph Protection Act (EPPA) puts limits on how employers can administer lie detection tests to employees. However, certain government contractors are exempt from the Act’s provisions.

The federal government can administer lie detector tests to contractors and their employees under the Act’s National Defense and Security Exemption.

Under the exemption, the law puts little restriction on how the federal government can use lie detector tests for the previously mentioned national defense and security reasons. The federal government can use any type of lie detector (deceptograph, voice stress analyzer, psychological stress evaluator, or any similar device). The government is not limited to using polygraphs.

Discrimination

Federal contractors may not discriminate on the basis of sexual orientation, gender identity, disability, or status as a protected veteran.

Federal contractors are prohibited from discriminating against both applicants and employees by the same laws that apply to employers that aren’t federal contractors.

In addition to other discrimination laws that apply to a more general employer population, federal contractors may not discriminate on the basis of sexual orientation, gender identity, disability, or status as a protected veteran. Federal contractors also may not take action against employees or applicants because they asked about or discussed their pay or the pay of their coworkers. Complaints about discrimination against federal contractors based on these specific categories would be filed with the Office of Federal Contract Compliance Programs (OFCCP).

Rehabilitation Act, Section 503

• Under Section 503, covered employers with federal contracts or subcontracts must take steps to employ qualified individuals with disabilities.

Under Section 503 and its implementing regulations, covered employers with federal contracts or subcontracts must take affirmative steps to employ qualified individuals with disabilities, including recruitment, hiring, rates of pay, upgrading, and selection for training. All covered contractors and subcontractors must also include a specific equal opportunity clause in each of their nonexempt contracts and subcontracts.

In addition, covered federal contractors and subcontractors must make reasonable accommodations for the known physical or mental limitations of qualified individuals with disabilities, unless providing an accommodation would create an undue hardship. Furthermore, covered contractors and subcontractors are required to take all necessary actions to ensure that no one attempts to intimidate or discriminate against any individual for filing a complaint or participating in a proceeding under Section 503.

Affirmative action in government contracting

• Government contractors with 50 or more employees and a contract exceeding a certain dollar amount must comply with affirmative action regulations.
• There are three levels of participation required, depending on the dollar amount of the contract.

When a government contractor has 50 or more employees and a contract exceeding a certain dollar amount, the contractor must follow certain steps under the affirmative action regulations. The regulations establish different provisions for non-construction (e.g., service and supply) contractors and for construction contractors.

Generally, there are three levels of participation required, depending on the size of the contract, as follows:

• If an employer has a contract of less than $10,000, none of the affirmative action plan regulations apply UNLESS the employer has multiple contracts with a total value in excess of $10,000.
• If an employer has a contract in excess of $10,000 (or multiple contracts which exceed this amount), but less than $50,000, then the employer must follow the equal opportunity (EO) requirements. This means that the employer must include EO clauses in contracts, maintain certain employment records, and follow the non-discrimination provisions.
• If an employer has a contract of $50,000 or more, the employer must follow the EO requirements and prepare a written affirmative action plan. The plan must cover females and minorities and individuals with disabilities. Employers with a federal contract of $100,000 or more must also include protected veterans in a written affirmative action plan.

Affirmative action requirements also apply to construction contractors and subcontractors that hold any federal or federally assisted construction contract in excess of $10,000. However, the goals are established by the government based on the region in which the work is performed.

Affirmative action regulations for non-construction (service and supply) contractors are found at 41 CFR 60-2. Requirements for construction contractors are found at 41 CFR 60-4.

Drug-Free Workplace Act

• Federal contractors with a single contract of $100,000 or more must comply with the requirements of the Drug-Free Workplace Act.

The Drug-Free Workplace Act of 1988 requires some federal contractors and all federal grantees to agree that they will provide drug-free workplaces as a precondition of receiving a contract or grant from a federal agency.

Generally, federal contractors with a single contract of $100,000 or more must comply with the requirements of the Drug-Free Workplace Act. These include the following:

1. Publish and provide a policy statement to all covered employees informing them that the unlawful manufacture, distribution, dispensation, possession, or use of a controlled substance is prohibited in the covered workplace and specifying the actions that will be taken against employees who violate the policy.
2. Establish a drug-free awareness program to make employees aware of a) the dangers of drug abuse in the workplace; b) the policy of maintaining a drug-free workplace; c) any available drug counseling, rehabilitation, and employee assistance programs; and d) the penalties that may be imposed upon employees for drug abuse violations.
3. Notify employees that, as a condition of employment on a federal contract or grant, the employees must a) abide by the terms of the policy statement; and b) notify the employer, within five calendar days, if they are convicted of a criminal drug violation in the workplace.
4. Notify the contracting agency within 10 days after receiving notice that a covered employee has been convicted of a criminal drug violation in the workplace.
5. Impose a penalty on — or require satisfactory participation in a drug abuse assistance or rehabilitation program by — any employee who is convicted of a reportable workplace drug conviction.
6. Make an ongoing, good faith effort to maintain a drug-free workplace by meeting the requirements of the Act.

E-Verify® system

• Federal contractors who received qualifying contracts on or after September 8, 2009, must participate in the E-Verify program to ensure that the employees who work under the contract are legally eligible for employment.

For most employers, use of the E-Verify® system is voluntary, but an Executive Order requires federal contractors who receive qualifying contracts on or after September 8, 2009, to participate in the E-Verify program. This requirement is meant to ensure that the federal government only does business with companies that have a legal workforce.

Qualifying contracts are those with a contract length longer than 120 days and a value above $100,000. Such contracts will include a clause committing the contractor to use E-Verify. Such a clause will also be required in subcontracts over $3,000. Though the requirement to use E-Verify will mainly affect new contracts entered into on or after September 8, 2009, previously established contracts that are modified may also contain this clause.

Federal contractors who are required to use E-Verify must use the system to verify the employment eligibility of:

• All new hires, and
• Employees assigned to work on the federal contract within the United States.

The requirement for federal contractors to use E-Verify to check the work eligibility of existing employees is a departure from the typically allowed use of the E-Verify system, which otherwise only allows for the verification of newly hired employees. “Employees assigned to work on the federal contract” does not include employees who normally perform support work, such as indirect or overhead functions, if they do not perform any substantial duties under the contract. However, it does include all employees who work directly on the contract, even if only for a limited amount of time or on an intermittent basis.

Under Executive Order 13465, federal contractors who are awarded a qualifying contract on or after September 8, 2009, also have the option of using E-Verify to verify their entire workforce (both new hires and current employees), regardless of whether the employees will be working on the qualifying federal contract. Note that this option is only available to contractors who are awarded a qualifying contract on or after September 8, 2009. Federal contractors who were using E-Verify before that date may not use E-Verify to verify their entire workforce unless they receive a federal contract with the E-Verify clause in it on or after that date.

Timeframes

An organization must enroll in E-Verify within 30 days of being awarded a qualifying contract, and it has 90 days from the date of enrollment to initiate verification of current employees assigned to work on the applicable federal contract. After that same 90-day period, contractors will also be required to verify newly hired employees within three business days after their start dates and must continue to verify new employees for the life of the federal contract.

Contractors already using E-Verify

Since any employer (regardless of federal contractor status) can use E-Verify voluntarily, some employers may have already been participating. Where this is the case, employers should only run employees through the E-Verify system once. If an employee has already been verified, an employer does not need to re-verify that employee upon receipt of a qualifying federal contract.

During the E-Verify enrollment process, the employer will be asked to identify whether or not it is a federal contractor. Employers who are already using E-Verify and become a federal contractor after June 30, 2009, do not need to re-enroll in E-Verify, but do need to update their company profile to indicate their federal contractor status.

At the end of a federal contract, an employer may choose to continue to use E-Verify but should update its company profile to indicate that it is no longer a federal contractor. Such employers will no longer be able to confirm existing employees through E-Verify. A company that no longer wishes to participate in the E-Verify program at the end of a federal government contract must officially terminate their involvement in the program by selecting the “request termination” link in the E-Verify system.

Federal contractors and sick leave

• Federal contractors with covered contracts awarded on or after January 1, 2017, must provide employees with up to seven days of sick leave per year.

Executive order 13706 and its implementing regulations require federal contractors (with covered contracts solicited and awarded on or after January 1, 2017), to provide up to seven days per year of paid sick leave to employees.

Contractors are not required to amend their existing paid time off (PTO) policies if they provide employees with at least the same rights and benefits as required by the regulations. For instance, if a contractor’s policy provides employees with 100 hours of PTO that can be used for any purpose, separate paid sick leave need not be required.

Accrual

Employers with covered contracts must provide:

• One hour of paid sick leave for every 30 hours worked on or in connection with a covered federal contract; OR
• At least 56 hours of paid sick leave at the beginning of each accrual year.

Hours worked

Employers may assume, where records of employees’ hours are not required to be kept (such as in the case of employees exempt from overtime), that such employees are working on or in connection with the federal contract for 40 hours each week. Estimates of hours worked are also acceptable, as long as they are reasonable.

Notification

Employees must be notified in writing of the amount of paid sick leave they have available at the end of each pay period or each month (whichever is shorter).

Limits on leave

Contractors may limit the accrual of leave to 56 hours each year, but must allow accrued, unused leave from one year to the next. Contractors may also cap leave at 56 hours.

Employees must be allowed to use leave in increments as small as one hour.

Rehired employees

Where an employee leaves employment but is rehired within 12 months, the contractor must reinstate the employee’s accrued, unused paid sick leave if rehired (by the same contractor) within 12 months after job separation. This requirement does not apply if the contractor paid the employee out for accrued, unused paid sick leave upon separation.

Reasons for leave

Contractors must allow the use of leave for the following reasons related to the employee or the employee’s child, parent, spouse, domestic partner, or any other individual related by blood or whose close association with the employee is the equivalent of a family relationship:

• Physical or mental illness, injury, or medical condition of the employee;
• To obtain diagnosis, care, or preventive care from a health care provider by the employee;
• Reasons related to domestic violence, sexual assault, or stalking, including obtaining counseling, seeking relocation, taking legal action, or the purposes described in (1) and (2).

Privacy training required

• Federal contractors whose employees have access to or work with personally identifiable information (PII) must be properly trained in how to safeguard such information. Employees who do not complete the appropriate training may not handle PII.

The Federal Acquisition Regulation 24.301 requires federal contractors to provide training to employees who:

• Have access to records under the control of a federal agency where information is retrieved by the name of the individual or by some identifying number, symbol, or other identifying item assigned to an individual;
• Create, collect, use, process, store, maintain, disseminate, disclose, dispose, or otherwise handle PII on behalf of the federal agency; or
• Design, develop, maintain, or operate a system of records as part of work for a federal agency.

This training must help employees understand how to safeguard personally identifiable information (PII) and must be tailored to the roles of individual employees. Such training must address:

• The provisions of the Privacy Act of 1974, including penalties for violating the Act;
• How to appropriately handle PII;
• What constitutes authorized and unauthorized use of applicable records and PII; and
• Procedures to be followed if a data breach is suspected or confirmed.

Employees of federal contractors who do not complete this training may not handle PII or design, maintain, or operate a system of records. The training must be provided for newly hired employees and annually thereafter.