General

Contract Coverage

Contracting Agency Requirements

Contractor Requirements

Enforcement

General

1 - Why is the Department of Labor issuing this final rule?

On November 18, 2021, President Biden signed Executive Order (E.O.) 14055, “Nondisplacement of Qualified Workers Under Service Contracts.” Executive Order 14055 directs the Secretary of Labor to issue regulations to implement the requirements of the E.O. This final rule implements the nondisplacement protections in E.O. 14055.

2 - Was a similar E.O. issued in the past?

Yes. Executive Order 13495 was issued by President Obama in 2009 and established a nondisplacement requirement for federal service contractors. However, E.O. 13495 was rescinded in October 2019. Executive Orders 13495 and 14055 have many similarities. Both Executive Orders require that contractors and subcontractors performing work on covered Federal service contracts must, in good faith, offer service employees employed under the predecessor contract a right of first refusal of employment on the successor contract, thereby promoting the retention of skilled workers in the federal services workforce. Among the differences, however, E.O. 14055 provides for broader coverage in certain circumstances. For example, unlike E.O. 13495, E.O. 14055 does not require that the performance of work be at the same location for the order’s requirements to apply to the successor contract, which means that nondisplacement rights may exist even when work under the predecessor and successor contracts is performed in different locations.

3 - Will the Wage and Hour Division be providing any compliance assistance training prior to implementation of the rule?

Yes. The Wage and Hour Division (WHD) has created a special website with compliance assistance information. All of our compliance assistance materials are located at www.dol.gov/whd/govcontracts/. In addition, WHD is in the process of developing an online video training that will present key aspects of the E.O. and the final rule. This compliance assistance video will be available online prior to the final rule implementation date.

4 - How will WHD address questions or complaints regarding E.O. 14055 and the final rule?

All complaints and inquiries will be processed by WHD field offices. Please call WHD at (866) 4US–WAGE ((866) 487-9243) or visit https://dol.gov/agencies/whd. You will be directed to the nearest WHD office for assistance.

5 - When will workers be entitled to the nondisplacement protections of E.O. 14055?

The E.O. applies to solicitations issued on or after the effective date of the final regulations issued by the Federal Acquisition Regulatory Council (FAR Council) under section 7 of E.O. 14055. Covered contracts awarded as a result of those solicitations will include the nondisplacement contract clause and contractors on those contracts will need to provide the right of first refusal of employment to workers on predecessor contracts.

6 - How will workers know about their nondisplacement rights under E.O. 14055?

Prior to the end of a contract, contractors must provide written notice to service employees of their possible right to an offer of employment on the successor contract. The notice of possible right to an offer of employment is required to be posted in a prominent and accessible place at the worksite and/or delivered to employees individually. A sample notice is set forth in Appendix B of the final rule.

If a contract location change is possible and an incumbent contractor’s employees are covered by collective bargaining agreement, incumbent contractors generally must provide employees with written notice of the possible location change and of their opportunity to provide information relevant to the location continuity analysis. The contractor must provide written notice directly to the employee’s representative in the same way the contractor usually communicates with the representative.

If a contracting agency grants an exception to a contract from the nondisplacement protections, then the contractor must notify affected workers and their collective bargaining representatives, if any, in writing of the contracting agency’s determination to grant an exception. In addition, there may be instances when a contracting agency must carry out a market analysis to grant an exception. In those cases, where an incumbent contractor’s employees are covered by a collective bargaining agreement, the contracting agency generally must include the employees’ representative in any market-research-related exchanges with industry that are specific to the nondisplacement requirement.

7 - If a worker is not offered a job, what can they do?

If a worker is not offered a job and believes the successor contractor has not complied with the requirements of E.O. 14055, they or their authorized representative may file a complaint with the WHD within 120 days from the first date of contract performance. A complaint may be filed directly with any office of the WHD. No particular complaint form is required. A complaint may be filed orally or in writing, and WHD will accept a complaint in any language.

Contract Coverage

8 - What types of contracts are covered by E.O. 14055 and these regulations?

E.O. 14055 and the Department’s final rule apply to any contract, contract-like instrument, or subcontract for services entered into by the Federal Government or its contractors that is covered by the Service Contract Act (SCA).

9 - What is a “contract or contract-like instrument”?

As provided in § 9.2 of the final rule, a “contract or contract-like instrument” is an agreement between two or more parties creating obligations that are enforceable or otherwise recognizable by law. This definition includes, but is not limited to, a mutually binding legal relationship obligating one party to furnish services and another party to pay for them. The term “contract” includes all contracts and any subcontracts of any tier thereunder, whether negotiated or advertised, including any procurement actions, cooperative agreements, provider agreements, intergovernmental service agreements, service agreements, temporary interim contracts, licenses, permits, or any other type of agreement, regardless of name, type, or particular form, and whether entered into verbally or in writing, to the extent such contracts and subcontracts are subject to the SCA. Contracts may be the result of competitive bidding or awarded to a single source under applicable authority to do so. In addition to bilateral instruments, contracts include, but are not limited to, awards and notices of awards; job orders or task letters issued under basic ordering agreements; letter contracts; orders, such as purchase orders, under which the contract becomes effective by written acceptance or performance; and bilateral contract modifications.

10 - Do the nondisplacement requirements apply to subcontracts?

The final rule provides that the nondisplacement requirements apply to subcontracts of any tier below a covered prime contract and their employees. The prime contractor is responsible for compliance of any subcontractor or lower-tier subcontractor with the nondisplacement contract requirements. A new prime contractor must ensure that employees of subcontractors on a predecessor contract are provided employment offers on the new contract, whether direct offers from the new prime contractor itself or offers from subcontractors of the new prime contractor.

11 - Are any contracts excluded from the E.O. and the final rule?

Yes. E.O. 14055 and the final rule do not apply to prime contracts under the simplified acquisition threshold set by the Office of Federal Procurement Policy Act, as amended (41 U.S.C. 134), and any subcontracts of any tier under such prime contracts. 

12 - Can contracts be excepted from the requirements of the E.O. and the final rule?

Yes. A contracting agency may waive the application of some or all of the requirements of the E.O. and the final rule as to a prime contract if the senior procurement executive within the agency issues a written determination that at least one of the following circumstances exists with respect to that contract:

  • Adhering to the requirements of the E.O. or the final rule would not advance the Federal Government’s interest in achieving economy and efficiency in federal procurement;
  • Based on a market analysis, adhering to the requirements of the E.O. or final rule would substantially reduce the number of potential bidders so as to frustrate full and open competition and not be reasonably tailored to the agency’s needs for the contract; or
  • Adhering to the requirements of the E.O. or final rule would otherwise be inconsistent with statutes, regulations, Executive Orders, or Presidential Memoranda.

Contracting agencies will publish written determinations of agency exceptions on a publicly available centralized website.

Contracting Agency Requirements

13 - What are the responsibilities of contracting agencies in implementing E.O. 14055?

In implementing the E.O., contracting agencies’ responsibilities are:

  • Determining whether a solicitation is covered by the E.O.
  • Deciding whether to exercise authority under Section 6 of the E.O. to grant an exception from the E.O. requirements for a solicitation that would otherwise be covered.
  • Conducting a “location continuity” analysis to consider whether to include a location-continuity requirement or preference in a covered solicitation.
  • If the agency decides no exception is warranted for that contract, then the agency must insert the contract clause into the solicitation and contract.
  • Ensuring that contractors provide required notices regarding exceptions and location continuity determinations.
  • Within the last month of contract completion, sending to the successor contractor (meaning, contractors awarded contracts that follow another contract for the same or similar work) a certified list of names (provided to the agency by the predecessor contractor) of all the employees working under the prime contract and any subcontract.

14 - What must an agency consider in determining whether to include a requirement or preference in the solicitation for performance of the contract in the same locality or localities?

The final rule provides that in determining whether performance of the work in the same locality or localities in which the contract is currently being performed is reasonably necessary to ensure economical and efficient provision of services, an agency’s analysis must include, but is not limited to, the following factors:

  • Whether factors specific to the contract at issue suggest that the employment of a new workforce at a new location would increase the potential for disruption to the delivery of services during the period of transition between contracts (e.g., the large size of workforce to be replaced or the relatively significant level of experience or training of the predecessor workforce);
  • Whether factors specific to the contract at issue suggest that the employment of a new workforce at a new location would unnecessarily increase physical or informational security risks on the contract (e.g., whether workers on the contract have had and will have access to sensitive, privileged, or classified information);
  • Whether the workforce on the predecessor contract has demonstrated prior successful performance of contract objectives so as to warrant a preference to retain as much of the current workforce as possible; and
  • Whether program-specific statutory or regulatory requirements govern the method through which the location of contract performance must be determined or evaluated, or other contract-specific factors favor the performance of the contract in a particular location.

Contractor Requirements

15 - What are the responsibilities of predecessor contractors in complying with E.O. 14055?

Not less than 30 calendar days before completion of the predecessor contractor’s performance of services on a contract, the predecessor contractor must furnish the contracting officer with a certified list of the names, mailing addresses, and if known, phone numbers and email addresses of all service employees working under the contract and its subcontracts at the time the list is submitted. The list must also contain anniversary dates of employment of each service employee under the contract and its predecessor contracts with either the current or predecessor contractors or their subcontractors. Note that submitting this list allows a contractor to also satisfy the requirements of the SCA contract clause specified at 29 CFR 4.6(l)(2), assuming there are no changes to the workforce before the contract is completed.

If changes to the contractor’s workforce are made after submitting the certified list, the contractor must, not less than 10 business days before completion of the contractor’s performance of services on a contract, furnish the contracting officer with an updated certified list of names, mailing addresses, anniversary dates, and if known, phone numbers and email addresses of all service employees.

Before contract completion, the contractor must also provide written notice to service employees employed under the contract of their possible right to an offer of employment on the successor contract. Such notice must either be posted in a conspicuous place at the worksite or delivered to the employees individually. Where the workforce on the predecessor contract is comprised of a significant portion of workers who are not fluent in English, the notice must be provided in both English and a language in which the employees are fluent. Multiple language notices are required where significant portions of the workforce speak different languages and there is no common language. Contractors may provide the notice set forth in Appendix B of the final rule in either a physical posting at the job site or in another manner that effectively provides individual notice such as individual paper notices or effective email notification to the affected employees. However, another form with the same information can be used. To be effective, email notification must result in an electronic delivery receipt or some other reliable confirmation that the intended recipient received the notice.

The predecessor contractor also may be required, in the timeframes requested by the contracting agency, to notify employees under the contract, and their representatives, if any, of any agency determination to except a successor contract from the nondisplacement requirements, and to notify collective bargaining representatives of the opportunity to provide information relevant to the contracting agency’s location continuity determination in the solicitation for a successor contract.

16 - What are the responsibilities of successor contractors in complying with E.O. 14055?

On service contracts covered by the E.O., successor contractors must make job offers to service employees who were employed under the predecessor contract. These offers must be in writing. The contractor must offer employment even if it does not receive a list of workers on the predecessor contract. When a contractor does not receive a certified list, it is required to accept other reliable evidence of a worker’s right to receive a job offer. This would include, for example, a worker’s assertion of an assignment to work on the contract during the predecessor’s last month of performance, coupled with verification by the contracting agency staff. Contractors and subcontractors have an affirmative obligation to ensure a covered contract contains the nondisplacement contract clause and must notify the contracting officer if it appears the clause was mistakenly omitted.

17 - What are the successor contractor’s requirements for making offers of employment?

The successor contractor and its subcontractors must not fill any employment opening for positions subject to the SCA under the contract before making a bona fide, express offer of employment in writing to each service employee for a position for which the employee is qualified. The offer must state the time within which the employee must accept such offer, and the contractor must give an employee at least 10 business days to consider and accept the offer of employment.

Where written offers are not delivered in person, the offers should be sent by registered or certified mail to the employees’ last known address or by any other means normally ensuring delivery. Examples of such other means include, but are not limited to:

  • Email to the last known email address;
  • Delivery to the last known address by commercial courier or express delivery services; or
  • By personal service to the last known address.

The offer does not need to be for a position similar to the one the employee previously held, as long it is for a position for which the employee is qualified.

The employment offer may include different employment terms and conditions, including changes to pay, benefits, or the option of remote work, as long as the different terms are not offered to discourage the employee from accepting the offer.

Where the successor contractor has or will have any employees in the same or similar occupational classifications on the contract who work or will work entirely in a remote capacity, the successor contractor generally must offer employees of the predecessor contractor the option of remote work under reasonably similar terms and conditions.

18 - What are the recordkeeping requirements for contractors?

There are several recordkeeping requirements for contractors. The contractor must maintain the following records:

  • Copies of written offers of employment, including the date of the offer;
  • A copy of any record that forms the basis for any exclusion or exception claimed; and
  • Copy of the employee list received from the contracting agency and the employee list provided to the contracting agency.

Every contractor that makes retroactive payment of wages or compensation under the supervision of the Administrator pursuant to 29 CFR 9.23(b), must record and preserve, as an entry on the pay records:

  • The amount of such payment to each employee;
  • The period covered by such payment; and
  • The date of payment.

When a contractor makes retroactive payments of wages, the contractor must prepare a report of each payment on a receipt form provided by or authorized by the Wage and Hour Division, and preserve a copy as part of the records, deliver a copy to the employee, and file the original, as evidence of payment by the contractor and receipt by the employee, with the Administrator within 10 business days after payment is made.

The contractor must maintain evidence of any notices that they have provided to workers, or workers’ collective bargaining representatives, to satisfy the requirements of the E.O. or the final rule, including:

  • Notices of the possibility of employment on the successor contract as required under the final rule;
  • Notices of agency exceptions that a contracting agency requires a contractor to provide under the E.O. and the final rule; and
  • Notices to collective bargaining representatives of the opportunity to provide information relevant to the contracting agency’s location continuity determination in the solicitation for a successor contract pursuant to the final rule.

There is no required order or form of records for contractors. A contractor may use records developed for any purpose provided the records are fully accessible and meet the requirements and purposes of the E.O. and the final rule. Every contractor must retain records prescribed by the final rule for not less than a period of 3 years from the date the records were created.

Enforcement

19 - How will the Department enforce the provisions of E.O. 14055?

The E.O. authorizes the Department to enforce the provisions of the E.O. The final rule established remedies for violations of E.O. 14055 that are consistent with the remedies under the SCA, Davis-Bacon Act, and/or the Fair Labor Standards Act (FLSA), including payment of back wages, front pay, offer of employment, reinstatement, and debarment, as appropriate.

20 - How are complaints addressed and investigations conducted by the Department?

Workers may file a complaint with any WHD office within 120 days from the first date of contract performance. After receipt of the complaint, WHD may initiate an investigation as the result of the complaint and may also seek to resolve the complaint through conciliation.

In an investigation, WHD may inspect relevant records (e.g., contracts, offers of employment, and payroll), as well as interview the contractor. The agency may also interview the contractor’s workers at the worksite during normal work hours. Contracting agencies and contractors are required to cooperate with authorized representatives of WHD in all aspects of the investigation. WHD will keep the complainant(s) information confidential to the maximum extent possible under existing law.

21 - What happens if a contractor is found to be in violation of the E.O. 14055?

If WHD finds that a contractor has not complied with the requirements of the E.O. and the final rule, WHD will request that the contractor remedy the violation. WHD may also direct the contracting agency to withhold payments due to the contractor in order to ensure funds are available to pay workers the full amount of lost wages due under E.O. 14055. Upon the conclusion of administrative proceedings, the Department may order the contractor to hire the affected employee(s), together with compensation (including lost wages and interest) as well as other terms, conditions, and privileges of that employment. In addition, contractors found to be in violation of E.O. 14055 may be subject to debarment from future contracts for a period up to three years.

22 - Is there an appeals process if a party is found to be in violation of E.O. 14055?

After completion of an investigation, the WHD Administrator will issue a written determination of whether a violation occurred. The determination will be sent to the complainant(s); employee representative(s); contractor, including the prime contractor if a subcontractor is implicated; and contractor representatives). Any party will be provided an opportunity to request a hearing with the Department of Labor’s Office of Administrative Law Judges. After the Administrative Law Judge issues an order, any party may appeal that order to the Administrative Review Board.

23 - What protections exist for workers who attempt to assert their rights under E.O. 14055?

The final rule incorporates the same broad prohibition against retaliation that exists to protect workers under the FLSA. An employer may not discharge or discriminate against a worker who files a complaint related to E.O. 14055 or its implementing regulations. Employers also cannot retaliate against a worker who causes a proceeding, or testifies against the employer in a proceeding, related to E.O. 14055.