• Service Contract Act Employees Now Have Right of First Refusal For Employment With Successor Contractor
  • February 13, 2013
  • Law Firm: Shulman Rogers Gandal Pordy Ecker P.A. - Potomac Office
  • Government contractors take note:  The final rule implementing the President’s Executive Order which provides service contract employees with a right of first refusal of employment with a successor contractor went into effect on January 18, 2013.

    Successor contractors who provide services pursuant to the Service Contract Act are required to give the predecessor’s employees a right of first refusal of positions for which they are qualified under the successor contract.  This right of first refusal must remain open for at least 10 days. The successor contractor may not hire new employees to replace any predecessor employees until the right of first refusal has been offered to each qualified employee of the predecessor contractor.

    The rule has certain exceptions.  For example, the rule does not apply to: (i) contracts or subcontracts under the Simplified Acquisition Threshold (currently $150,000 in most cases); (ii) employees who split their time between Service Contract Act covered contracts and other commercial, non-federal government contracts; (iii) employees under the predecessor contractor who are exempt under the Fair Labor Standards Act; (iv) employees under the predecessor contractor whom the successor reasonably believes, based on the employee’s past performance, failed to perform suitably on the job; or (v) positions for which the successor intends to utilize its existing employees, provided that those employees have worked for the successor for at least three months and would face discharge if not offered employment under the successor contract.

    Successor contractors who provide services pursuant to the Service Contract Act should review their policies and practices to ensure compliance with the new rule.  Penalties for non-compliance include backpay, reinstatement, and potential suspension and/or debarment.