UPDATE: DOL Announces Final Overtime Rule

In our May 9, 2016 blog post we discussed the pendency of expected Department of Labor (DOL) regulations updating the Fair Labor Standards Act (FLSA), including overtime rules. This blog post updates our earlier post as yesterday, May 17, 2016, DOL announced its final rule.

The rule's effective date is December 1, 2016. Some highlights of the final rule that vary from the earlier notice expectations as provided by Vandeventer Black Labor Attorney Anne Bibeau are:

1. The new salary threshold is $913/week or $47,476/year.
2. The highly compensated employees total annual compensation exemption was raised to $134,000.
3. Those amounts will automatically increase every three (3) years beginning January 1, 2020.
4. The salary basis test has been amended to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10% of the new salary threshold.
5. There were no changes to the duties test.

For more information about the final rule, contact Anne (abibeau@vanblacklaw.com) or any of the other Vandeventer labor team or government contract team members. Contracts and more information on related issues are available at our website: www.vanblacklaw.com.

GSA Targets Schedule Contract Holders Regarding Countries of Origin for Products

The General Services Administration recently targeted nearly 3,000 GSA schedule contract holders earlier this month regarding the countries of origin for the schedule contract holders' offered products. This targeting comes after numerous congressional inquires and FOIA requests alleging product violations of both the Trade Agreements Act and the Buy American Act.

Schedule contract holders were given a very short 5 days to review their total offering of products, submit spreadsheets verifying the products' countries of origin, and provide copies of Certificates of Origin or other certification from manufacturers. GSA threatened severe penalties for non-compliance, including removal of the vendor's entire GSA Advantage file.

GSA has confirmed its targeting of those vendors based on the congressional and other complaints about those specific schedules and product. It seems likely, however, that GSA will continue to expand the scope of its targeting to all contractors.

County of origin law compliance entails an often complicated analysis of products' manufacturing processes, including for many products transformation analysis from product origin to the product's later actual commercial use. Despite such complications, both TAA and BAA compliance are vendor responsibilities.

To what extent GSA extends its targeting, and also to what extent other agencies take similar actions to insure TAA and BAA compliance by their vendors and contractors remain to be seen. Vendors and contractors should, however, consider GSA's warning letters as advance notice to evaluate their TAA and BAA compliance, take any necessary corrective actions discovered, and be prepared to promptly address similar future agency notices.

President Obama Signs Defend Trade Secrets Act

On May 11, President Obama signed the Defend Trade Secrets Act (DTSA), providing federal protection respecting trade secret misappropriation. Among key aspects of this new federal law:

1. Federal district courts are given jurisdiction for civil actions under DTSA, although not exclusive jurisdiction. In order for federal jurisdiction to lie, claimants need to show that the trade secret related to a product or service used in or intended for use in interstate or foreign commerce.
2. DTSA allows for ex parte seizure provisions, allowing courts to order the seizure of property if deemed necessary to prevent wrongful propagation or dissemination of the trade secret. However, the moving party has to demonstrate extraordinary circumstances warranting the seizure, and provides for defendants to seek damages for abusive or wrongfully-acquired seizure orders.
3. DTSA has whistleblower provisions precluding civil or criminal liability under any federal or state trade secret law for disclosures made "in confidence" to a federal, state or local government official, or to an attorney, if solely for the purposes of reporting or investigating suspected violations or in a complaint or other litigation document, if the filing is made under seal.
4. Employers are required to provide notice of DTSA's immunity provision in any contract or agreement with an employee that contains provisions governing the use of a trade secrete or other confidential information; applying to all contracts entered into or amended after May 11, 2016. Employee is broadly defined to include independent contractors and consultants.
5. DTSA includes provisions intended to address international trade secret theft, including private rights of action.
6. DTSA requires the Attorney General to biannually report to the House and Judiciary Committees on international trade secret theft affecting U.S. companies.

DTSA is sure to have immediate impacts. To what extent it helps deter trade secret theft will remain to be seen, but most immediately is certainly has important impacts upon companies' efforts to establish and maintain confidentiality policies and enforcement.

Important Changes Pending to FLSA Exempt Status and Overtime Regulations

The Vandeventer Black Construction and Government Contracts and Labor and Employment Law Groups have noted some important pending changes to the FLSA Exempt Status and Overtime Regulations.

The Changes:
The U.S. Department of Labor (DOL) is issuing regulations updating the Fair Labor Standards Act (FLSA). We anticipate that the final regulations will be issued this summer, likely with a 60-day compliance requirement. Under the proposed new regulations, any employee who is paid less than $50,440 per year will be entitled to overtime pay. This change will have a major impact on overtime pay obligations. Companies need to review current policies and procedures now to prepare for timely compliance, and to limit the cost impact of the new regulations.

The FLSA provides for a federal minimum wage, a standard 40-hour workweek, and pay at time-and-a-half for all overtime hours.  The law also includes several exemptions under which certain employees are not entitled to overtime pay. Currently, for most exemptions, in addition to meeting a duties test an employee must be paid on a salary basis at least $455 per week ($23,600 annually). The proposed regulations will more than double that minimum salary to approximately $970 per week ($50,440 annually).  Likewise, the minimum annual compensation for the “highly compensated” exemption will increase from $100,000 to $122,148. These amounts will be adjusted annually.

Common Exemption Misconceptions:

There is a common misconception that payment of a salary is the only requirement to avoid overtime pay obligations. This is wrong as there are other mandatory requirements: in order to be exempt from overtime, the employee also must perform duties that meet certain tests set forth by the DOL.

For example, to qualify as an exempt “executive” an employee, in addition to being paid a salary, must (i) have the primary duty of management of the business or a department, (ii) customarily and regularly supervise at least two other full-time employees, and (iii) have authority or significant influence over decisions to hire or fire.

Under current economic conditions many employers have reduced staff without consideration of the requirement that the exempt employee must supervise at least two other full-time employees. Supervision of workers furnished by a temporary labor agency or workers from another company, such as a subcontractor, does not meet the requirement.

Another common misconception is that payment of a minimum wage under a Davis Bacon Act or Service Contract Act wage determination is sufficient. However, all employers—even those with federal contracts—must comply with the FLSA.

 

 

 

GAO Proposing Fee for E-Filing Protests

This post provides a summary of a new GAO rule change proposal prepared by Vandeventer Black Construction and Government Contracts Team attorney Blake Christopher.

Dissatisfied bidders and offerors can currently file protests for free electronically, but the General Accountability Office (GAO) is now proposing a $350 fee. The reasons given for the change are to finance the program, including a new system, and seemingly to discourage what the GAO’s considers unnecessary filings that result from the current free and easy to use system.

 

2,639 protests were filed last year, and the GAO argues many of them unnecessary. Critics of the proposal note that the current system allows access regardless of financial circumstances, and that charging a fee will discourage protests. While the U.S. Court of Federal Claims charges a fee for protests, it has a program in place that considers ability to pay when collecting its filing fee; and it is unknown whether the GAO will do the same.

 

The GAO determined the proposed fee level, in part, by figuring the price of building and running a new filing system called the Electronic Protest Docket System (EPDS). Separate from the proposed filing fee there are additional concerns that EPDS will be publicly available, meaning every document filed in the system could be accessed by the general public. This would require contractors and attorneys to redact a greater amount of material, further increasing filing costs and affecting filing strategies. GAO has not yet addressed the EPDS confidentiality concerns.

 

Copy of the April 16, 2016 proposed rule is available at the following Federal Register website:

https://www.federalregister.gov/articles/2016/04/15/2016-08622/government-accountability-office-administrative-practice-and-procedure-bid-protest-regulations

 

The new rule is not officially subject to a comment period, but the GAO is accepting comments to the proposed through May 16, 2016.

 

For more information on the proposed rule changes, contact Blake Christopher (bchristopher@vanblacklaw.com) or any of the other Construction and Government Contracts Team members at Vandeventer Black (www.vanblacklaw.com).