Government contracting can be a rewarding business, but it comes with unique requirements that other employers may not have to address. As laws in the employment space continue to shift (such as the ongoing debate surrounding non-competes), here are 10 things for government contractors to consider when it comes to staffing contracts:
- Security Clearance: Employees of government contractors may be required to obtain and maintain a certain level of security clearance, such as a Confidential, Secret, or Top Secret clearance, to perform work on a specific contract. An employee’s responsibilities related to obtaining and maintaining security clearance eligibility is a unique feature of government contracting, and government contractors should make it clear that maintaining a specific type of security clearance may be considered a condition of employment.
- Non-Disclosure and Confidentiality: Employees of government contractors may handle or come into contact with sensitive, non-public, or even classified information or data while performing work for a government contractor. Government contractors should ensure their employment agreements and employee policies have appropriate provisions related to non-disclosure and confidentiality of such information and data in accordance with applicable government regulations and contract requirements. Government contractors should also take care to ensure that it is clear that such provisions do not prevent reporting suspected waste, fraud, or abuse or other legitimate whistleblowing.
- Identifying and Avoiding Conflicts of Interest: Government contractors have obligations to avoid and mitigate actual conflicts of interest and the appearance of conflicts of interest. Conflicts of interest can disqualify government contractors from being considered for contract awards. To protect against disqualification, government contractors should ensure appropriate employee policies are implemented to limit outside employment/activities by employees, obligate employees to disclose certain financial interests and activities, and monitor employee relationships with competitors or government officials.
- At-Will Status: Generally, employees tend to be employed on an “at-will” basis (with some exceptions), meaning the employer or the employee may terminate the employment relationship at any time, with or without a reason (so long as the reason is not illegal). Some government contractors want to lock in certain employees who are considered key personnel on a contract, and thus may enter into a term employment agreement which may change the nature of the “at-will” employment. While this may be a useful strategy in a competitive market, these term employment agreements should be carefully drafted. As government contractors know all too well, a government contract can be terminated for the government’s convenience, which may make it hard for the company to fulfill its part of a term employment agreement if the contract is no longer in effect.
- Employee Record Retention and Management: Government contractors may be required to maintain and grant access to certain employee records to the government for auditing, inspection, or investigation purposes. Government contractors should take care to ensure employee records are properly retained, and employee data is collected, maintained, and reported consistent with applicable laws and regulations.
- Export Control: Export control laws and regulations, which govern the export of sensitive technology or information, may apply to certain activities government contractors are engaged in both inside the United States and outside the United States. Government contractors should implement and adopt policies related to compliance with export control laws, including restrictions on sharing or transferring certain technology or information to non-U.S. persons located anywhere in the world (including in the U.S.).
- Compliance with Equal Employment Opportunity (EEO) Requirements: Government contractors are required to comply with EEO laws and regulations, which prohibit discrimination based on protected characteristics such as race, gender, sexual orientation, age, and disability. Government contractors should ensure that employment documents and policies include provisions related to EEO compliance and reporting requirements.
- Wage Determination: Government contracts may include wage determination requirements or be subject to the Services Contract Act, which establishes minimum wage rates for certain types of work. Depending on the contract, government contractors may need to have written agreements with employees stating applicable wage rates and adjustments over the life of the contract.
- Hiring the Predecessor Contractor’s Employees: When awarded a new service contract a government contractor may need to consider hiring the predecessor contractor’s employees to help reduce disruption to the delivery of services to the customer. When hiring predecessor contractor employees, government contractors should determine if the predecessor contract was covered by the Service Contract Labor Statute or was subject to a collective bargaining agreement and take steps to determine if those obligations apply. Government contractors should also issue a written offer of employment and conduct onboarding training to make the identity of the new employer and any obligations clear to the new employees.
- Staffing the Pipeline – Contingent Offers: Government contractors may need to be prepared to quickly staff contracts once awarded or provide letters of commitment from key personnel as part of the proposal or bid. Using contingent offers of employment can help meet these requirements, however, government contractors should ensure contingent offers are clear that the offer is contingent upon award of the underlying contract opportunity, approval by the customer, and the individual’s continued eligibility to perform the work.
Conducting a periodic audit of your employment agreements and policies is always beneficial. It is also important to note that applicable terms may vary depending on the specific government agency, contract type, and the nature of the work being performed. To help protect against potential contractual or employment related issues, it is advisable to seek legal advice from a qualified attorney who specializes in government contracts and employment law to ensure your offer letters, agreements, and company policies comply with applicable laws and regulations. The Fluet Government Contracts team regularly supports middle market government contractors with ongoing employment related matters.
Please note: Some links contained in this post lead to sites outside of Fluet’s organization and are not affiliated with Fluet. This post is for general informational purposes only and is not comprehensive of all legal requirements or situations. Nothing in this blog or Fluet’s website constitutes legal advice or creates an attorney-client relationship. If you have questions regarding the information provided, we urge you to seek legal assistance from your legal advisor.