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The employee non-competition agreement landscape continues to evolve rapidly, with several states enacting new limits on the use of non-competition agreements between employers and employees.  Once a valuable tool for employers to protect their businesses from unfair competition, loss of customers, or misuse of company confidential information, many states have increasingly limited the enforceability of such agreements.

The federal government is now weighing in on the appropriate use of non-competition agreements between employers and employees.  President Biden’s July 9, 2021 Executive Order asks the Federal Trade Commission (“FTC”) to limit such agreements—signaling a potential expansion of federal regulation of agreements between employers and workers.  And a pending Senate bill would ban most non-competition agreements.  Given these developments, government contractors and other employers should assess whether their use of these agreements with employees is consistent with recent state developments and aligned with the broader trend toward limiting the enforceability of these agreements.…

Continue Reading Recent Federal and State Laws Restrict Use of Employee Non-Competition Agreements by Government Contractors and Other Employers

Contractors sidelined by facility closures and stay-at-home orders in the wake of the COVID-19 pandemic may now have a new pathway to recovering idle labor costs.  The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act includes a provision, Section 3610, that provides a new form of relief for contractors facing delays and additional costs as a result of employees being unable to work due to quarantine restrictions.
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Continue Reading CARES Act Includes New Route to Recovery for Contractors Affected By COVID-19

Under a new FAR rule, standard language in confidentiality agreements could lead to disqualification from contracting or False Claims Act liability.
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Continue Reading New FAR Rule: Government May Disqualify Contractors Who Use Standard Confidentiality Language with Employees and Subcontractors

The Fourth Circuit recently held, in an unpublished opinion, that the anti-retaliation or “whistleblower” provisions of the False Claims Act (“FCA”) protect an individual’s efforts to stop a contractor from violating the FCA, even when there is no “distinct possibility” of litigation.  This “distinct possibility” standard was adopted prior to 2009 when the whistleblower provision protected employee activity that was in furtherance of an FCA action, “including investigation for, initiation of, testimony for, or assistance” in an FCA action.  Under that version of the whistleblower provision, courts had held that a retaliation suit under the FCA would only pass muster if “an employee engages in protected activity when litigation is a distinct possibility, when the conduct reasonably could lead to a viable FCA action, or when . . . litigation is a reasonable possibility.”  Amendments to the FCA in 2009 and 2010, however, broadened coverage of the whistleblower provision, creating two prongs of protected activity: (1) “lawful acts done by the employee . . . in furtherance of an action under [the FCA]”; and (2) “other efforts to stop 1 or more violations” of the FCA.  31 U.S.C. § 3730(h).  In this case, Carlson v. Dyncorp Int’l LLC, the Fourth Circuit held that the “distinct possibility” standard does not apply to the second prong of the whistleblower provision, as that prong was intended to be broader than the first prong. This case may open the door to broader liability for contractors who take adverse employment actions against employees who attempt to stop or prevent conduct that the employee reasonably believes to be in violation of the FCA.  Notably, in Carlson, the Fourth Circuit nevertheless affirmed the district court’s dismissal of plaintiff’s retaliation lawsuit because the plaintiff was alleging that his contractor-employer was under-billing the government and he could not reasonably believe that that practice would lead to a violation of the FCA. …
Continue Reading Employee Efforts to Stop Employer FCA Violation is Protected Activity Even When No Distinct Possibility of FCA Litigation, says Fourth Circuit

Just in time for Labor Day, the Labor Department and FAR Council issued a final rule and accompanying “Guidance” to implement the Fair Pay and Safe Workplaces Executive Order.  The new regulations will take effect on October 25, 2016.  The regulations—which run to nearly 900 pages—contain a number of changes from the proposed regulations to demonstrate that the Department listened to stakeholders during the lengthy comment period.

Despite some concessions to industry comments, the final regulations still establish substantial compliance obligations.  In light of those burdens, the contracting community is well advised to invest time to understand these provisions.  In this post, we summarize key changes and examine the way ahead for contractors. …
Continue Reading “Fair Pay and Safe Workplaces” Final Rule and Guidance Released

On May 4, the Labor Department and Federal Acquisition Regulatory (“FAR”) Council submitted to the White House Office of Management and Budget (“OMB”) their final versions of regulations and guidance (respectively) implementing Executive Order 13673, entitled “Fair Pay and Safe Workplaces” (“FPSW Order”).  The FPSW Order, which requires contractors bidding on government contracts to disclose past violations of any one of at least 14 federal labor laws and their state law counterparts, has been met with harsh criticism from contractors and members of congress since its July 2014 issuance by President Obama.  (See our blog post here for more analysis of the proposed regulations implementing the Order.)  The most recent attack occurred just one week prior to the Labor Department and FAR Council submissions: the House Armed Services Committee adopted an amendment that would exempt the entire Department of Defense (“DOD”) from the FPSW Order. …
Continue Reading Battle over “Blacklisting” Order: Obama Administration Moves Forward with Fair Pay Order as House Members Attempt to Exempt DOD

A draft executive order would require paid leave for employees of many federal contractors.  The “confidential” draft order, which was labeled “pre-decisional and deliberative,” was obtained and reported by The New York Times on August 5, 2015.
Continue Reading Administration Appears Poised to Issue Another Executive Order Affecting Contractors and Their Employees

“[W]e respectfully request that no further presidential directives primarily focused on government contractors be issued for the foreseeable future,” wrote four government contractor associations in a letter to the White House dated August 3, 2015. The letter was released publicly on Tuesday, August 11, 2015, and signed by representatives of the Aerospace Industries Association, the National Defense Industrial Association, the Professional Services Council, and the Information Technology Industry Council. The four associations argued that the president’s 12 executive orders pertaining to government contracting, resulting in 16 new regulations, have “significantly increase[d] the costs of doing business with the government.” Illustrating this point, the letter references an estimate that “nearly thirty cents of every contract dollar goes toward compliance with unique government regulations.”…
Continue Reading Contractors (Respectfully) Request that the President Stop Issuing Executive Orders Focused on Contractors

The key word is “suffer.”

Government contractors already face painful compliance burdens associated with the Fair Pay and Safe Workplaces Executive Order, the proposed implementing regulations, and the Labor Department’s “Guidance” amplifying the proposed regulations.  Last week, the Department added another layer of complexity when it issued an Administrator’s Interpretation of the Fair Labor Standards Act.  (Covington’s Employment group analyzed the Interpretation here.)  The fifteen-page Interpretation stems from the Department’s conclusion that companies are increasingly misclassifying employees as independent contractors.  It explains the Department’s view that the statutory definition of employ (“to suffer or permit to work”) informs the distinction between those classes of workers.  We hate to spoil an ending, but the bottom line is clear:  “most workers are employees.”

The Interpretation applies across a broad range of industries, but it presents special issues for government contractors.  Federal contracts in excess of $500,000 trigger obligations under the Paycheck Transparency provisions (section 5) of the Executive Order.  The proposed regulations require employers with covered contracts to provide each worker whom they classify as an independent contractor with “a document … informing the individual of that status.”  Contractors must look elsewhere for guidance on format and content of the document.…

Continue Reading Labor Department’s Interpretation of the FLSA’s “Suffer or Permit” Standard Triggers More Compliance Burdens for Government Contractors