Michael Greene’s article “READ THE FINE PRINT – Why Some Employers May Unknowingly Be Subject to the $10.10/hr Minimum Wage” was featured in CRI on May 8, 2015.
Imagine your company receives a letter asserting it should be paying its minimum wage employees nearly $3 more per hour. For many employers the acronyms OFCCP, AAP, and E.O. 11246 mean very little when, in fact, they should be the equivalent of a warning siren. So what do these acronyms mean? What do they have to do with increased minimum wages? And why should employers read the fine print in contracts?
In 1965, President Lyndon Johnson signed Executive Order 11246 (“E.O. 11246”) which requires some federal contractors to implement Affirmative Action Plans (“AAP”). The executive order also gave life to the Office of Federal Contract Compliance Programs (“OFCCP”), which is the federal agency charged with policing federal contractors and their compliance with E.O. 11246. Throughout its life, E.O. 11246 has been amended and augmented by other executive orders and various statues – like Section 503 of the Rehabilitation Act and the Vietnam Era Veterans’ Readjustment Act – to include comprehensive protections for women, minorities, veterans, disabled individuals, and, most recently, LGBT individuals. As part of maintaining AAPs, contractors must keep detailed employment records (hire, promotions, demotions, wages, transfers, training, etc.) of data about every applicant and employee, as well as about their outreach efforts to protected groups. Last year, President Obama issued E.O. 13658 to increase minimum wage employees’ pay from $7.25/hr to $10.10/hr for most contractors and subcontractors that receive federal money under the Davis-Bacon Act, the Service Contract Act, or in connection with federal property or lands. Suffice it to say, the time and financial obligations federal contractors commit themselves to are demanding and expensive.
In the article, Michael Greene discusses the importance of understanding the Executive Order 11246 and reading the fine print.
The OFCCP estimates there are approximately 200,000 employers with 50 or more employees that have more than $50,000 in federal contracts. When an employer crosses this threshold, it subjects itself to the demanding requirements above. Clearly, an employer that knowingly enters a contract with the federal government is aware of the obligations. What many employers may not be aware of is that acting as a supplier, provider, partner, or sister-company of a federal contractor, the employer may transform into a federal subcontractor that is subject to the demands of E.O. 11246. It is this less direct relationship with the federal government that could create financial liabilities for employers, while simultaneously kicking the door wide open for thorough government investigations.
Michael states that despite miles of red tape, the burdens of federal contract work can be softened if employers read the fine print before signing a contract. As long as employers are aware of their obligations and plan accordingly, they can be profitable all while complying with the numerous rules and regulations of the OFCCP.
To read the full article, please visit CRI.
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