Submitted electronically to http://www.regulations.gov
August 15, 2022
Division of Regulations, Legislation, and Interpretation
Wage and Hour Division
U.S. Department of Labor
200 Constitution Avenue NW
Washington, D.C. 20210
Re: Nondisplacement of Qualified Workers Under Service Contracts, RIN 1235-AA42
Dear Ms. DeBisschop,
The Economic Policy Institute (EPI) is a nonprofit, nonpartisan think tank created in 1986 to include the needs of low- and middle-income workers in economic policy discussions. EPI conducts research and analysis on the economic status of working America, proposes public policies that protect and improve the economic conditions of low- and middle-income workers, and assesses policies with respect to how well they further those goals. EPI submits these comments on the U.S. Department of Labor’s (DOL) Notice of Proposed Rulemaking on the Nondisplacement of Qualified Workers Under Service Contracts.
The DOL proposes regulations to implement President Biden’s Executive Order 14055, issued on November 18, 2021. This executive order reinstates provisions of Executive Order 13495, issued by President Obama in 2013 but revoked by the Trump administration in 2019. It provides federal employees under a contract covered by the Service Contract Act (SCA) a minimum of 10 business days to accept or refuse the option to continue working after a change of contractor. Workers on the old contract would otherwise lose their job as a result of the completion or expiration of their contract.
The Nondisplacement of Qualified Workers Under Service Contracts not only grants federal employees the right of first refusal under the new contract, but also requires the new contractor to recognize existing unions, and bargain with them to change any terms and conditions of employment. This executive order authorizes the secretary of labor to enforce compliance by imposing “appropriate sanctions” on any successor contractor, or subcontractor, that violates its terms. These may include liability for lost wages incurred by former employees, or potentially being debarred for three years.
EPI strongly supports the Department of Labor’s proposed rulemaking. In addition to benefiting federal employees directly, this executive order reduces worker turnover, keeping skilled workers in their jobs and making federal procurement more efficient.1 In doing so, it also saves taxpayer dollars; research has shown that worker turnover can cost employers approximately one-fifth of a job’s salary to fill each vacancy, plus an average of nearly $1,300 in training expenditures for each new hire.2 The executive order would also support workers in the service sector and the work they do for the American people. For these reasons, we applaud and promote the Department of Labor’s NPRM, and thank the department for their encouragement to submit comments on this proposition.
Economic Policy Institute
Economic Policy Institute
1. Heather Boushey and Sarah Jane Glynn, There Are Significant Business Costs to Replacing Employees, Center for American Progress, November 2012.
2. Lorri Freifeld, “2020 Training Industry Report,” Training Magazine, November 17, 2020.