Service Contractors’ Opportunity to Comment on Proposed Rule Requiring Hiring of Qualified Workers When Taking Over Government Contracts

Cameron Baker, Associate Attorney

The U.S. Department of Labor issued a rule proposal that requires incoming or successor contractors to hire qualified workers from the prior contractor. [1]  The objective is to ensure efficiency and continuity in covered contracts through the retention of experienced workers[2], reducing disruption to the workforce, maintaining physical and information security, and supplying the federal government with an experienced and well-trained work force by ensuring those workers with job security with new contractors.[3]

This process of new service contractors retaining the prior contractors’ employees is not a new concept since many incoming contractors look to the prior contractor’s workforce for potential employees. If the proposed rule passes, however, failure to provide the first right of refusal for employment with the new contractor to the prior contractors’ qualified workers could now result in sanctions against the new contractor, including possible suspension of bid rights on future contracts for up to three years.[4]

Companies interested in providing comments on the proposed rule may submit them by August 15, 2022 through the following link: https://www.regulations.gov/document/WHD-2022-0002-0001. Campbell Litigation will continue to monitor the proposed rule through the comment period.

[1] Press Release, U.S. Department of Labor, Wage and Hour Division (July 14, 2019), https://www.dol.gov/newsroom/releases/whd/whd20220714.

 [2] The rule aims to prevent the displacement of skilled workers in the federal services workforce. According to the Department of Labor, the rule would affect service workers on approximately 119,700 federal contracts, up to 449,200 companies when taking into account those who have bid on such contracts or are considering future bids, and as many as 1.4 million workers, but would not apply to contracts worth less than $250,000. Id.

[3] Id.

 [4] Nondisplacement of Qualified Workers Under Service Contracts, 86 FR 66397, at § 8 (available online at https://www.federalregister.gov/documents/2021/11/23/2021-25715/nondisplacement-of-qualified-workers-under-service-contracts).