Developments of Note for Federal Contractors

May 27, 2010

There have been two recent developments that may be of interest to federal contractors.

First, on May 20, 2010, the U.S. Department of Labor published a final rule requiring certain federal contractors to notify their workforces of rights under the National Labor Relations Act. See Fact Sheet. “Government contract” for this purpose is defined as follows:

Government contract means any agreement or modification thereof between any contracting agency and any person for the purchase, sale, or use of personal property or non-personal services. The term ``personal property,'' as used in this section, includes supplies, and contracts for the use of real property (such as lease arrangements), unless the contract for the use of real property itself constitutes real property (such as easements). The term ``non-personal services'' as used in this section includes, but is not limited to, the following services: utilities, construction, transportation, research, insurance, and fund depository. The term Government contract does not include: (1) Agreements in which the parties stand in the relationship of employer and employee; and (2) Federal financial assistance, as defined in 29 CFR 31.2.

There are certain exceptions based on the size of the government contract. The rule goes into effect on June 21, 2010. The National Labor Relations Act is the federal law granting private sector employees the right to unionize and collectively bargain with their employers. It is unclear why employers are being required to inform employees of their right to organize, but that is the effect of the rule.

Second, U.S. Citizenship and Immigration Services has issued updated guidance on E-Verify which could raise an issue as to whether the definition of “government contract” now includes grant funding for this purpose. See FAQ.

If my organization accepts grant monies from the Federal government, am I required to use E-Verify? Do Medicaid and Medicare programs also have to use E-Verify?

You must use E-Verify if the terms and conditions of your contract or grant include the FAR E-Verify clause. Review your contract or grant for the FAR E-Verify clause and check with your contracting official if you have questions.

Aside from being unhelpful, the above obviously does not answer the question posed. In prior interpretations, at least in the Affirmative Action context, grant monies and grant funding were not considered government contracts by OFCCP. It is unclear at this point whether the federal government is now interpreting this definition more broadly but it is something for employers which do business with the federal government to monitor closely.

Please contact Matt Raynes at our Bangor, Maine office with questions.

This alert is provided as general information, and is not a substitute for legal or other professional advice.