Government Contractors: Time to Ditch Those Confidentiality Agreements 2017-01-20T16:57:58-07:00

Posted on January 20, 2017

On January 19, 2017, a new Federal Acquisition Regulation (“FAR”) went into effect prohibiting the government from contracting with companies that utilize confidentiality agreements that restrict employees or subcontractors from lawfully reporting waste, fraud, or abuse to a federal agency’s Office of Inspector General.

The FAR applies to all solicitations and contracts, including contracts for Commercial Off-the-Shelf items, using funds from fiscal year 2015 or after. In connection with new contract bids or maintenance of existing contracts, contractors will be required to affirmatively represent that they do not have and will not enter into any non-compliant confidentiality agreements. A contractor with non-compliant agreements will not be eligible for a new contract. Confidentiality agreements arising out of civil litigation (such as those commonly included in settlement agreements) or that are federally mandated, are exempted.

If you contract with the government, now is the time to review any confidentiality agreements that you have with employees and subcontractors and take steps to cancel or rescind any non-compliant agreements.

Government Contractors Pay 56 PTO Hours 2016-09-30T10:59:31-06:00

Posted on September 30, 2016

By Bill Wright

The U.S. Department of Labor has issued its final rule on paid leave for employees working on or in connection with government contracts. Contractors will be required to allow employees to accrue at least 1 hour of paid leave for each 30 hours worked on or in connection with government contracts. Only contractors who use the accrual method may cap accrual at 56 hours.

Employees may use the paid leave for the employee’s own illness, injury, or medical condition; visits to medical providers, care for child, spouse, parent, domestic partner, or relation; or to obtain counseling, relocate, or obtain assistance with regard to domestic violence, sex assault, or stalking. Existing policies that provide at least 56 hours of paid leave for these reasons may satisfy the rule. The employer may request certification of the need for the leave, but, in most cases, a statement from the employee is all that is required.

Interference and retaliation are banned, and the Wage & Hour Division will investigate complaints. Failure to comply may result in debarment from government contracts. Links to additional information are available here. https://www.dol.gov/newsroom/releases/whd/whd20160929.

One More Reason Misclassification Kills 2016-09-15T14:38:14-06:00

Posted on September 15, 2016

By John Alan Doran

You’ve heard plenty about the evils of misclassifying employees as independent contractors. And, according to the DOL, among others, you’re still doing it wrong. The NLRB doubled down on this recently when the NLRB General Counsel released an advice memorandum stating that an employer’s misclassification of employees as independent contractors also violates the National Labor Relations Act.

In a nutshell, a freight cargo employer informed its drivers that they were all independent contractors and therefore the company’s recent settlement of unfair labor practice charges did not apply to the drivers. The NLRB General Counsel took umbrage with this position and concluded that an employer’s misclassification of employees as independent contractors “chills” employees’ exercise of Section 7 rights under the NLRA. The General Counsel found that there could be no conceivable reason why an employer would treat employees as independent contractors other than to chill Section 7 rights. Really?

So, add the NLRA and potential unfair labor practice charges to the “parade of horribles” employers face when they misclassify employees as independent contractors. And, add misclassification as another attempt by the NLRB to grossly expand its own jurisdiction under the NLRA.

5 Keys to New AZ IC Law 2016-08-05T16:20:49-06:00

Posted on August 5, 2016

By John Alan Doran

We have repeatedly blogged on the Pushmi-Pullyu world of independent contractor relationships, a world in which employers can do no right. (DOL Says Employers Are Morons) Well, Arizona recently enacted a law providing at least some level of clarity to independent contractor status. HB 2114 creates a purely voluntary mechanism through which a service provider can self-identify as an independent contractor to a hiring entity. Once the service provider fulfills the self-identification requirements, there is a rebuttable presumption that an independent contractor relationship exists. The rebuttable presumption is a huge help to hiring entities in Arizona, who would otherwise bear the burden of proving “by clear and convincing evidence” that an independent contractor relationship exists. The voluntary self-identification process requires the service provider to sign a Declaration that contains certain requirements and typical indices of independent contractor status, all of which is specifically laid out in HB 2114.

There are 5 points of note with respect to HB 2114.

Once again, it is purely voluntary—you don’t have to have a Declaration in place, and the lack of a Declaration will not be used against you when determining whether an independent contractor relationship exists. But, you lose the rebuttable presumption if you don’t have one.
It only applies to compliance with Arizona laws. It does not trump independent contractor tests from the IRS, DOL, NLRB, etc., nor does it help you in other states in which you do business.
You must actually comply with the terms of the Declaration. It is not a mere paper hurdle. If the reality of the relationship does not align with the representations in the Declaration, you will lose the rebuttable presumption.
HB 2114 throws hiring entities (particularly staffing agencies and PEOs) a bone by providing that any supervision or control of the contracting party by the hiring party that occurs because it is required by law or a licensing requirement cannot be considered when determining whether an independent contractor relationship exists.
Finally,
HB 2114 takes effect tomorrow, so the time to get your independent contractor relationships in proper working order with respect to Arizona law is now.

SCOTUS Gives Fed Contractors Mixed Bag 2016-06-22T14:33:14-06:00

Posted on June 22, 2016

By John Alan Doran

Last week the U.S. Supreme Court issued an opinion that refines and re-defines liability for contractors accused of defrauding the Federal Government under the False Claims Act (“FCA”) in Universal Health Services, Inc. v. U.S. The FCA creates broad, punitive remedies against contractors who defraud the Federal Government by seeking payment under government programs in a fraudulent manner. In this case, UHS allegedly obtained Medicaid reimbursements for services that were provided by unlicensed or under-licensed health practitioners, in violation of Medicaid requirements. UHS claimed that it could not be liable under the FCA because it never made any false statements to the Government about the licenses of its providers. An appellate court disagreed, holding that every time a contractor submits a bill to the Federal Government, it impliedly certifies that it is in compliance with all applicable laws, rules, and regulations. Thus, if a contractor is not in compliance, its implied certification that it is in compliance constitutes unlawful fraud under the FCA.

In a complicated decision, a unanimous Supreme Court agreed, but only somewhat. The Court held that: (1) a contractor violates the FCA when it submits a claim but fails to disclose its noncompliance with material program requirements that make the submission misleading with respect to the services the contractor provided; (2) this holds true regardless of whether or not compliance with the program requirements is expressly described as a condition of payment by the Federal Government; (3) only material misrepresentations are actionable under the FCA, and the materiality standard is a “rigorous” one that does not turn on the mere fact that a specific program violation would entitle the Government to refuse payment. Thus, while the Court embraced the “implied certification” doctrine, it did narrow it somewhat, it strongly reinforced the FCA’s materiality standard, and it explicitly reaffirmed the notion that materiality questions can be addressed through motions to dismiss and summary judgment motions. Overall, not a bad day for contractors, but not a great one.

Federal Contractors Beware – Part 8 2015-09-23T14:15:08-06:00

Posted on September 23, 2015

By Lori Wright Keffer

On September 7, 2015, President Obama issued an executive order that will require federal contractors and subcontractors to provide their employees with up to seven or more paid sick leave days a year. The Order gives requirements for accrual, carryover, and payout of the leave, including that: (i) employees must accrue at least 1 hour of paid sick leave for every 30 hours worked (up to at least 56 accrued hours); (ii) unused paid sick leave hours carry over to the next year; but (iii) employers don’t have to pay employees for unused accrued sick leave upon termination. Employees may use the leave to care for themselves, a family member, or even a loved one, or for absences resulting from stalking, sexual assault, or domestic violence. For additional information regarding the specific requirements and conditions of the Order, see https://www.whitehouse.gov/the-press-office/2015/09/08/executive-order-establishing-paid-sick-leave-federal-contractors.

Stay tuned for the details. The Secretary of Labor will issue regulations by September 30, 2016 and the Order is to apply to federal contracts entered into after January 1, 2017. Non-federal contractors should also beware, as this looks like another example of the Administration laying the groundwork to expand federal contractor requirements to all employers over time.

See our other previous posts warning Federal Contractors:

Federal Contractors Beware – Part 1
Federal Contractors Beware – Part 2
Federal Contractors Beware – Part 3
Federal Contractors Beware – Part 4
Federal Contractors Beware – Part 5
Federal Contractors Beware – Part 6
Federal Contractors Beware – Part 7

Uber Driver Gets Tips and Tolls 2015-06-24T13:44:22-06:00

Posted on June 24, 2015

By Doug Towns

Employers that rely primarily on independent contractors continue to come under scrutiny. Recently, an Uber driver, Barbara Anna Berwick, brought a suit under California law arguing that she should be reimbursed for various expenses, including tolls and parking tickets, associated with her personal car that she used to carry Uber customers. Contending that the driver was an independent contractor, not an employee, Uber argued it did not have to reimburse her for these expenses. Ultimately, a California Hearing Officer concluded that the driver was an employee, at least for purposes of getting reimbursement. Uber Technologies, Inc. v. Berwick, No. 11-46739 (Cal. Lab. Comm’n June 3, 2015). The key fact was that the driver provided the very service that Uber provides – transportation.

Click here for additional information about the case.

NLRB Rejects Opportunity 2014-10-03T13:27:12-06:00

Posted on October 3, 2014

By Patrick Scully

On September 30, 2014, the NLRB rejected the opinion of the District of Columbia Circuit in FedEx Home Delivery v. NLRB, 563 F.3d 492 (D.C. Cir. 2009) and found that an individual’s entrepreneurial opportunity for gain or loss IS NOT an animating factor in determining whether that individual is an independent contractor. Accordingly, the NLRB found that FedEx Home Delivery’s Hartford, Connecticut drivers are employees eligible to be organized by the International Brotherhood of Teamsters. FedEx Home Delivery, 361 NLRB No. 55 (September 30, 2014). Although the NLRB majority indicated that entrepreneurial freedom “remains a relevant consideration”, it appears that this NLRB has no intent of considering such freedom as a counterweight to what the NLRB regards as “employer control” in these circumstances. Given that the NLRB generally concludes that business contracts entered into by independent contractors are evidence of “pervasive control” by an employer, this decision will likely be the first of many in which the NLRB converts independent contractors to “employees” covered by the NLRA. The only good news is that FedEx has a right to appeal the NLRB’s decision to the District of Columbia Circuit.

Thumbs Up/ Thumbs Down, Still FCRA 2014-09-29T12:26:54-06:00

Posted on September 29, 2014

By Bill Wright

Does your business use a contractor to provide in-home services to your customers? If so, you probably want the contractor to conduct background checks on its employees. You want the contractor to screen out people who pose high risk to your customers. But, if you get a summary of the background reports, just to make sure the contractor is complying with your requirements, you might have to comply with the Fair Credit Reporting Act. In a recent case, a business designed the background check it wanted its contractors to use and designated what kind of criminal and driving violations would disqualify the employees from assignment to the business’ customers. The consumer reporting agency also sent the business a summary of the background checks, indicating that the check had been done, who had been the subject of the check, and whether the person was high risk. That was enough to make the business a recipient of a credit report for employment purposes and subject to the FCRA. Ernst v. Dish Network, LLC, 12-Civ-8794 (LGS) (S.D.N.Y. September 22, 2014).

If you use contractors, think about how you are using credit check information.

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