Wage and Hour Division (WHD)
Final Rule on Nondisplacement of Qualified Workers Under Service Contracts
The Department of Labor’s Wage and Hour Division has issued a final rule to implement Executive Order 13495, Nondisplacement of Qualified Workers Under Service Contracts. This final rule will be effective once the Federal Acquisition Regulatory Council (FARC) issues regulations for the inclusion of the nondisplacement contract clause in covered federal solicitations and contracts, as required by the Executive Order.
The Order and the final rule require contractors and subcontractors who are awarded a federal service contract to provide the same or similar services at the same location to, in most circumstances, offer employment to the predecessor contractor’s employees in positions for which they are qualified. Successor contractors are allowed to reduce the size of the workforce and to give first preference to certain of their current employees.
Where the successor contract is a contract subject to the Order and the final rule, the contracting officer (or designee) will ensure that the contractor provides written notice to the eligible employees of the predecessor contractor of their possible right to an offer of employment. Such notice may either be posted in a conspicuous place at the worksite or may be delivered to the employees individually. An offer of employment may be for any position for which the employee is qualified; the offer need not be for the same position that the employee previously held.
The Order and the final rule do not apply to certain types of contracts and certain types of employees. The Department will offer additional guidance on the provisions of the final rule once the FARC produces its regulations and the final rule is effective.
Questions regarding the Order may be addressed directly to Timothy Helm, Chief, Branch of Government Contracts Enforcement, Wage and Hour Division, U.S. Department of Labor, Washington, DC 20210. The telephone number is (202) 693-0064.
Additional Resources on Final Rule:
Additional Information about the Service Contract Act:
- Service Contract Act Factsheet
- Service Contract Act Webpage
- McNamara-O’Hara Service Contract Act of 1965, as Amended — 41 U.S.C. 351 et seq. (PDF)
- 29 C.F.R. Part 4 — Labor Standards for Federal Service Contracts
- 29 C.F.R. Part 6 — Rules of Practice for Administrative Proceedings Enforcing Labor Standards In Federal and Federally Assisted Construction Contracts and Federal Service Contracts
- 29 C.F.R. Part 8 — Practice Before the Administrative Review Board With Regard to Federal Service Contracts
