November 8, 2019

President Trump Rescinds Nondisplacement of Qualified Worker Executive Order

Holland & Knight Government Contracts Blog
David S. Black | Eric S. Crusius

On Halloween, President Trump issued an Executive Order rescinding one of the most notable employment-related executive orders from the Obama Administration: Executive Order 13495, commonly known as the Nondisplacement of Qualified Workers (NDQW). The NDQW Executive Order broadly required contractors taking over contracts from an incumbent contractor give offers of employment to existing Service Contract Act-covered employees already working on the contract. It also required the outgoing contractor to advise employees of their rights under the NDQW Executive Order and provide an employee list to the contracting agency (which would then forward it to the incoming contractor).

While President Obama issued the NDQW Executive Order just a few weeks into his first term in 2009, it took another four years for the issuance of the implementing regulations. These regulations set forth the requirements, the exceptions, and highlighted the Department of Labor's (DOL) enforcement rights, which included debarment. While subject to some controversy at the outset, very few cases were adjudicated by the Department of Labor under this regulation (though one was handled by this firm).

President Trump specified in his Executive Order that all enforcement activities by DOL in support of the regulations must cease immediately. Despite that, the regulations will be in place until formally rescinded and the clause remains in existing contracts. Because of that, the NDQW is still enforceable by an agency as a matter of contract administration and we recommend consulting with a contracting agency if the clause is still present in new solicitations and contracts regarding the agency's expectations with respect to the NDQW.

It is not surprising to see a Republican administration rolling back worker protection executive orders and regulations established by a previous democratic administration (which President George W. Bush did upon taking office with a more limited version of this executive order issued by president Clinton). The timing, however, nearly three years into the administration, is unexpected. While the sudden genesis of President Trump's Executive Order is unclear, it may foreshadow the abandonment of other Obama-era initiatives, including a special minimum wage for contractors and sick leave for contractor employees.

We will, of course, continue to monitor this and draft follow-up blogs where necessary.

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