Department of Labor Issues Final Rule Implementing Executive Order Requiring Service Contract Act Contractors to Hire Predecessor Employees

On August 29, 2011, the Department of Labor’s Wage and Hour Division (“WHD”) issued a final rule to implement President Obama’s Executive Order 13495, Nondisplacement of Qualified Workers Under Service Contracts (the “Executive Order”).  The Executive Order requires federal contractors and subcontractors that are successors to certain government contracts to offer employment on a “first right of refusal” to employees (not including managerial or supervisory employees) employed under the predecessor contract, whose employment would be otherwise terminated at the end of the predecessor contract.  

The Order applies to federal contracts and subcontracts that: 

1. involve amounts that exceed the simplified acquisition threshold (currently $150,000) and
2. are covered by the Service Contract Act (“SCA”).  The WHD will announce the effective date of the final rule after the Federal Acquisition Regulatory Council issues its own regulations on the Executive Order. 

Continue reading this entry at Cooley’s Client Alerts.