President Obama Signs Executive Order Prohibiting Federal Contractors from Discriminating Based on Sexual Orientation and Gender Identity

Frustrated with Congress's failure to pass the Employment Non-Discrimination Act (ENDA) and consistent with his recent Executive Order to raise the minimum wage to $10.10 per hour for employees of federal contractors, President Obama once again signed an Executive Order on Monday amending Executive Order 11246 to include "sexual orientation" and "gender identity" in the list of protected classes federal contractors may not discriminate against.

In light of the President's action, Executive Order 11246, originally issued by President Lyndon Johnson, will now prohibit federal contractors from discriminating "against any employee or applicant for employment because of race, color, religion, sex, sexual orientation, gender identity, or national origin.” The Executive Order is not as broad as the proposed Employment Non-Discrimination Act, a law that would prohibit discrimination in employment based on sexual orientation or gender identity for all employers with 15 or more employees. There is no indication that Congress will act anytime soon to enact nationwide legislation prohibiting private employers from discriminating in hiring and employment on the basis of sexual orientation or gender identity.

Notably, the Executive Order does not contain any type of "religious exemption" meaning that religiously affiliated federal contractors and subcontractors must abide by the Executive Order. Under an Amendment to the Order issued by President George W. Bush, religiously affiliated contractors may favor individuals of a particular religion when making employment decisions. However, President Obama's Order does not allow religious organizations with federal contracts or subcontracts to consider sexual orientation or gender identity when making employment decisions. Federal law already prohibits discrimination against federal employees based on sexual orientation and President Obama's Order extends that protection to discrimination on the basis of gender identity.

What does this mean for many Pennsylvania employers? Frankly, not much. The Executive Order only applies to federal contractors and subcontractors. Unlike 18 other states and the District of Columbia, Pennsylvania does not have a law prohibiting employment discrimination based on sexual orientation or gender identity—however many of the Commonwealth's largest cities including Pittsburgh, Harrisburg, and Philadelphia do. While Pennsylvania employers are free to include sexual orientation and gender identity in the list of protected classes guarded by their discriminatory harassment policies, they are under no legal obligation to do so unless they are a federal contractor or subcontractor or covered by a local ordinance. Furthermore, according to the White House, 91% of Fortune 500 companies already prohibit discrimination based on sexual orientation; and 61% already prohibit discrimination based on gender identity.

The President's Executive Order requires the Department of Labor to prepare regulations to implement the requirements of his Order within 90 days. We will update you again when proposed regulations are released in mid-October.

New Regulations Governing Affirmative Action Requirements for Individuals with Disabilities and Protected Veterans Go Into Effect TODAY!

Beginning today, March 24, 2014, federal contractors and subcontractors have a number of new responsibilities. Contractors already have the existing obligation to collect demographic data regarding race and gender and take affirmative action to recruit, hire, and retain qualified minorities, women, individuals with disabilities, and protected veterans. Now contractors must take additional steps to recruit and hire individuals with disabilities and protected veterans, including the collection of data related to the status of applicants and employees as protected veterans and individuals with disabilities.

Specifically, federal contractors and subcontractors are required to:
• Invite applicants and employees to self-identify as individuals with disabilities or protected veterans;
• Track and analyze data related to applicants and employees who are individuals with disabilities and/or protected veterans;
• Notify subcontractors and vendors (and labor unions, if applicable) of their Affirmative Action requirements;
• Conduct written effectiveness evaluations to determine whether efforts to reach out to individuals with disabilities and protected veterans have been successful;
• Establish a 7% utilization goal for individuals with disabilities to measure the efficacy of affirmative action steps;
• Establish a hiring benchmark for protected veterans or adopt the 7.2% national benchmark to measure the efficacy of affirmative action steps; and
• much more!

Additionally, for the first time ever, construction contractors will be required to have written affirmative action plans for individuals with disabilities and protected veterans. While some in the construction industry were hopeful that the new regulations impacting individuals with disabilities would not apply to them, on Friday, the United States District Court for the District of Columbia rejected the Associated Builders and Contractors, Inc. challenge to the validity of the regulations. The Court concluded that the new rules are valid and the Office of Federal Contract Compliance Programs (OFCCP) has broad authority to interpret what it means to "take affirmative action."

Between these new rules and President Obama's Executive Order to raise the minimum wage for employees of federal contractors, federal contractors are facing an onslaught of new regulatory requirements.

Stay tuned to the blog for more updates on issues that impact federal contractors, subcontractors, and all employers. Please feel free to contact me, Schaun Henry or any other McNees Labor & Employment attorney if you have any questions about how these new regulations may impact your business.

State Supreme Court Extends Workers' Compensation Liability to Subcontractor's Employees

Under the Pennsylvania Workers’ Compensation Act (“Act”), employers are required to maintain workers’ compensation insurance coverage. Generally, the employer’s obligation extends only to maintaining coverage for its employees, as that term is defined by law. Independent contractors are not eligible for workers’ compensation benefits under the Act.

However, Section 302(a) of the Act provides that an entity may be deemed a “statutory employer” as to independent contractors of a subcontractor who fails to maintain workers’ compensation insurance. Specifically, an entity that engages a subcontractor to perform work regularly a part of the entity’s business is secondarily liable for the payment of workers’ compensation benefits to the subcontractor’s employees.

Earlier this year, the Pennsylvania Supreme Court issued an opinion expanding the scope of statutory employer liability under the Act. The case was Six L’s Packing Company v. Workers’ Compensation Appeal Board (Williamson) (opinion).

The employer in that case was Six L’s, a Pennsylvania company in the business of growing, processing, and distributing tomatoes. The Company’s tomatoes are grown on farms in Pennsylvania and processed at plants in Maryland. Six L’s contracts with F. Garcia and Sons to transport the tomatoes by truck from the Pennsylvania farms to the Maryland processing facilities. Claimant worked for Garcia as a truck driver. On a Pennsylvania highway during one such trip transporting tomatoes, Claimant was involved in a vehicle accident and sustained injuries. Claimant filed a workers’ compensation claim against both Garcia and Six L’s. After it was discovered that Garcia did not maintain workers’ compensation insurance for its employees, the question became whether Six L’s was liable for payment of benefits as Claimant’s statutory employer.

Six L’s argued that it was not Claimant’s employer for workers’ compensation purposes. Specifically, Six L’s put forth two arguments: (1) it did not own trucks or employ drivers, but rather used independent contractors to provide transportation services; and (2) while it owned the tomato fields and processing facility, it did not own or control the public highway where Claimant sustained his injuries.

Ultimately, though, the Supreme Court rejected these arguments. The Court held that Section 302(a) is not limited in application only to injuries occurring on premises occupied or controlled by the statutory employer. Instead, the statute extends the entity’s liability to any instance in which the entity subcontracts for services or work “of a kind which is a regular or recurrent part of the entity’s business.” Finding that transportation of tomatoes between the two facilities was a regular and recurrent part of the Company’s business, the Supreme Court concluded that Six L’s was Claimant’s statutory employer. Consequently, Six L’s was liable for payment of the workers' compensation benefits to which Claimant was entitled.

In light of the Court’s decision in Six L’s, employers who use subcontractors must require the subcontractor to carry workers’ compensation insurance for all of its own workers and should obtain proof of such insurance coverage. If not, the employer may find itself to be viewed as a statutory employer and assume secondary liability for benefits to individuals over whom it has no authority and exercises no control.

New Law to Mandate Use of E-Verify by Public Works Contractors and Subcontractors

On July 5, 2012, Pennsylvania Governor Tom Corbett signed into law the Public Works Employment Verification Act (“Act”), which requires state public works contractors and subcontractors to use the E-Verify program operated by the Department of Homeland Security. The E-Verify program is a free online system that compares information from an employee's Form I-9, Employment Eligibility Verification, to government records to instantly confirm employment eligibility.

Under the Act, a contractor must, as a precondition of being awarded a contract for a public work, submit verification that it checked the status of all new employees with the E-Verify program and that, according to the program, such employees are legally permitted to work in the United States. Subcontractors who perform work for public works contractors must provide the same verification prior to starting subcontracting work. Material suppliers are not subject to the Act. 

For purposes of the new law, public works projects are those covered under the Pennsylvania Prevailing Wage Act—construction, reconstruction, demolition, alteration and/or repair work, other than maintenance work, done under contract, and paid for in whole or in part by state, municipal, or county funds where the estimated cost of the total project is in excess of $25,000.

Contractors and subcontractors who fail to verify the employment eligibility of their new employees through the E-Verify program will face sanctions, which range from a warning for a first offense to a ban from publicly funded projects for up to three years for willful violations. In addition, contractors and subcontractors who fail to submit the verification will face fines of up to $1,000. The Department of General Services is tasked with creating a verification form, enforcing the Act, investigating complaints, and conducting complaint-based and random audits of contractors and subcontractors. 

The Act goes in to effect on January 1, 2013; public works contracts executed after the effective date will be subject to the verification requirements. 

For state contractors and subcontractors, as well as other employers, who do not already use the E-Verify program, the Labor and Employment Group at McNees Wallace & Nurick is available to provide additional guidance concerning the process.

E-Verify Rule for Federal Contractors Delayed until September 8, 2009

U.S. Citizenship and Immigration Services’ (USCIS) announced the third postponement of the implementation of the final rule requiring federal contractors and subcontractors to begin using E-Verify system which is now delayed until Sept. 8, 2009.

The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (collectively known as the Federal Acquisitions Regulatory Councils) will published an amendment in the Federal Register on June 5, 2009, postponing the applicability of the final rule until Sept. 8, 2009. The rule was first published on Nov. 14, 2008 requiring federal contractors and subcontractors to agree to electronically verify the employment eligibility of their employees. I previously summarized the rule in "E-Verify Final Regulations Issued Requiring Government Contractors and Subcontractors to Verify Employment for New and Existing Employees who Perform Contract Work."

E-Verify Federal Contractor Rule Delayed until June 30, 2009

The applicability date of the final rule requiring federal contractors and subcontractors to begin using U.S. Citizenship and Immigration Services’ (USCIS) E-Verify system has been pushed back by six weeks to June 30, 2009, with hint that it may be abandoned or revised. The USCIS website contains the following notice:

The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (collectively known as the Federal Acquisitions Regulatory Councils) will publish an amendment in the Federal Register tomorrow postponing the applicability of the final rule until June 30, 2009. The rule requiring federal contractors and subcontractors to agree to electronically verify the employment eligibility of their employees was first published on Nov. 14, 2008, and went into effect on Jan 19, 2009.

The extension provides the Administration an adequate opportunity to review the entire rule prior to its applicability to federal contractors and subcontractors.

My previous posts on the E-Verify rule are here:

E-Verify Final Regulations Issued Requiring Government Contractors and Subcontractors to Verify Employment for New and Existing Employees who Perform Contract Work

Mandatory use of E-Verify for Government Contractors delayed again to May 21, 2009

Good News: SHRM reports delay in E-Verify Regulations' Effective Date until February 20, 2009

Mandatory use of E-Verify for Government Contractors delayed again to May 21, 2009

The Chamber of Commerce reports another delay in the implementation of Federal Acquisition Regulations that require mandatory use of the E-verify system by government contractors. An agreement was reached in the pending litigation for the purpose of allowing the Obama Administration an opportunity to review pending regulatory actions left over from the Bush Administration.  The new effective date is May 21, 2009.  Our prior post outlines the requirements:  E-Verify Final Regulations Issued Requiring Government Contractors and Subcontractors to Verify Employment for New and Existing Employees who Perform Contract Work

Good News: SHRM reports delay in E-Verify Regulations' Effective Date until February 20, 2009

SHRM is reporting the delay of E-verify regulations until February 20, 2009. There is no such report on the Homeland Security or Dept of Justice websites. Stay tuned.  A previous post discusses the regulations: E-Verify Final Regulations Issued Requiring Government Contractors and Subcontractors to Verify Employment for New and Existing Employees who Perform Contract Work

UPDATE: Mandatory use of E-Verify for Government Contractors delayed again to May 21, 2009

 

E-Verify Final Regulations Issued Requiring Government Contractors and Subcontractors to Verify Employment for New and Existing Employees who Perform Contract Work

Federal government contractors and subcontractors will be required to begin using the U.S. Citizenship and Immigration Services’ E-Verify system starting Jan. 15, 2009 (now 5/21/09), to verify their employees’ eligibility to legally work in the United States.  The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council amended the Federal Acquisition Regulation (FAR) to reflect this change.  E-Verify must be used to verify all new employees and all employees who work on the covered government contract unless the employees were previously verified or commenced work for the employer before the June 6, 1986 the effective date of the Immigration Reform and Control Act.  Contract Officers will insert clauses in new contracts and solicitations.  In addition, certain existing government contracts may be amended to include the requirements.

E-verify provisions on covered contracts apply to all government contractors and subcontractors with limited exceptions detailed in the final regulations. Each covered contractor and subcontractor must: 

  • Enroll in the E-Verify Program within 30 days of the award of a contract, if not already enrolled.
  • Those employers already enrolled in E-Verify for 90 days as of the effective date of the new regulations must verify all new employees with 3 days of hire.
  • Those employers not enrolled in E-Verify must begin to verify all new employees within 90 calendar days of E-Verify enrollment whether or not such employee performs work on the government contract or subcontract within 3 days of the date of hire.
  • Verify each existing employee assigned to the contract within the later of 90 calendar days of E-Verify enrollment or 30 calendar days after the employee's assignment to the contract
  • Employees previously verified through E-Verify are exempt.
  • Elect to verify all employees hired after June 6, 1986 whether or not assigned to the contract.
  • The phrase “employee assigned to the contract” refers to individuals who were hired after June 6, 1986 who are “directly performing work under the contract,” and to exclude employees who normally perform support work, or who do not perform any substantial duties applicable to an individual contract.
  • Subcontracts must include a clause requiring compliance by the subcontractor.
  • A new Memorandum of Understanding (MOU) will be published shortly.

The Final Regulations are summarized by the Office of Acquisition Policy and appear on the DHS website with a Small Entity Compliance Guide.

Final Regulations in .pdf: FAR Employment Eligibility Verification

DHS Website: Frequently Asked Questions: Federal Contractors and E-Verify

 

UPDATE:  Mandatory use of E-Verify for Government Contractors delayed again to May 21, 2009