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DOL Finalizes Rule on Worker Nondisplacement for Federal Service Contracts

The Department of Labor (DOL) has recently solidified its commitment to the job security of service contract workers engaged in federal projects. On December 14, 2023, the DOL published  its final rule to implement Executive Order 14055 (“EO 14055”). EO 14055 mandates that federal contractors and subcontractors involved in certain successor contracts must extend job offers to qualified employees from predecessor contracts, ensuring a smooth transition and continuity of service.

The key purpose of EO 14055 is to preserve the jobs of skilled workers who might otherwise be displaced with the transition of service contracts from one contractor to another. The final rule establishes standards and procedures for the implementation and enforcement of these nondisplacement protections, outlining the obligations of federal contractors and subcontractors regarding the offer of employment to predecessor contract employees.

Key aspects of the final rule include: 

  • Federal contractors and subcontractors awarded a successor contract must offer employment to eligible employees who worked under the predecessor contract, ensuring that these workers are not displaced.
  • It specifies criteria to determine which workers are considered “qualified” under the predecessor contract, ensuring that only eligible employees are entitled to nondisplacement protections.
  • The incoming contractors are required to notify and provide a window of time for the predecessor’s employees to accept the job offer, ensuring a transparent transition process.
  • Qualified workers under the predecessor contract are given a right of first refusal for employment in positions for which they are qualified under the successor contract, before hiring new employees.
  • The rule outlines specific conditions under which federal contractors might be exempt from these requirements or may seek a waiver, providing flexibility in certain circumstances.
  • Contractors are mandated to maintain records demonstrating compliance with the nondisplacement requirements, facilitating oversight and enforcement by the DOL.
  • The DOL has established procedures for investigating complaints, imposing remedies and sanctions for non-compliance, and resolving disputes, ensuring adherence to the rule.
  • The rule clarifies how these nondisplacement requirements interact with other federal, state, and local laws, ensuring harmonious application and compliance.

The rule is set to take effect on February 12, 2024, and will be applicable to solicitations issued on or after this date by the Federal Acquisition Regulatory (FAR) Council.

For further details, including FAQs on the implementation and implications of this rule, interested parties can visit the DOL’s official webpage about this final rule