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Fed Contractors Need to Be Wary

In the midst of the wave of deregulation promoted by the Trump administration, there is one area in which Obama-era employer rules are still in force.

In particular, three changes in rules imposed on federal contractors continue, and there don’t appear to be any immediate plans to change them.

The three employment-related rules apply to agreements between a federal agency and another party for nonpersonal services.

Nonpersonal services include transportation, utilities, construction, research, insurance and fund depository.

The rules require that a company adhere to policies and affirmative actions prohibiting employment discrimination based on race, color, religion, sex, sexual orientation, gender identity or national origin. These strictures also cover certain classes of veterans and people with disabilities.

“Such policies must be more than in name only,” warns attorney Jayna M. Rust of the law firm of Thompson Coburn LLP. “Indeed, the government will look at statistics relating to a company’s hiring and promotions history to ascertain whether a company has complied with its obligations.”

To the surprise of many companies, the obligations apply even when an agency neglects to include them in agreements, when the employer is a subcontractor to a contractor that should have included the clause in its contract, and when the firm is an affiliate of another company with government contracts.

Penalties can be severe, Rust notes, including back pay for the victims of discrimination, injunctions against the employer; referral of the matter to the Justice Department for legal action, withholding payments and barring the contractor from future contracts or extensions of existing contracts.

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