Publication

30 January 2024

A Valentine’s Gift from the DOL: Non-Displacement of Qualified Workers Under Service Contracts

Last month the U.S. Department of Labor (DOL) issued a final rule (Rule) implementing Executive Order 14055:  Non-displacement of Qualified Workers Under Service Contracts.

This Rule is generally a return to the prior non-displacement rule (implemented in 2009 but revoked in 2019) with a few key differences. Most significantly, the new Rule may apply even where a contract location changes, and requires an application analysis whenever a location change is possible.  The 2009 rule only made the non-displacement requirements applicable where contract performance of the same or similar services would take place in the “same location.”

The new Rule from the DOL generally requires contractors to give service employees from a predecessor contract the right of first refusal for employment under new Service Contract Act (SCA)-covered contracts or subcontracts for the same or similar work.  These offers to service employees must be made before the contractor makes offers to other workers.  The Rule will go into effect on February 12, 2024.

The Rule outlines required actions for both predecessor and successor contractors. Predecessor contractors on SCA-covered contracts are required to:

  • Not less than 30 calendar days before performance of services on a contract is complete, give the contracting officer a certified list of the names, mailing addresses, anniversary dates of employment, 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.
  • Before contract completion, provide service employees with a written notice of their possible right to an offer of employment on a successor contract.  This must either be posted in a conspicuous place at the worksite or delivered to employees individually.
  • If an exception to the Rule applies, the predecessor may be required to notify service employees of that exception.

Successor contractors on SCA-covered contracts are required to:

  • Ensure a covered contract contains the non-displacement contract clause and notify the contracting officer if it appears that the clause was mistakenly omitted.
  • Make written, bona fide, express job offers to service employees of the predecessor contract. Offers must state the timeframe for acceptance, which must be at least 10 business days after issuance of the offer. The offer does not need to be for a position similar to the one the employee previously held, as long as 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.
  • Accept other reliable evidence of a worker’s right to receive a job offer, if the successor contractor does not receive a certified list of predecessor contract service employees from the contracting agency or information on that list is incorrect.
  • Abide by recordkeeping obligations for employment offers, exceptions, and payments.

If you would like additional resources, the DOL has published answers to Frequently Asked Questions on this Executive Order.

We’ll keep you updated as the new Rule is implemented.