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CRTC Govt Contractor Compliance 11


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Thanks to FosterThomas for a great TechFocus Program: Compliance Challenges for Small Businesses doing Business with the Government
Thursday, July 28, 2011, 7:30 am - 9:30 am
Missed the program? Don\'t miss the resources: Here are the slides from the presentation!

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CRTC Govt Contractor Compliance 11

  1. 1. 7/28/2011 Government Contractor Compliance Seminar July 28, 2011 HR Agenda• Sexual Harassment & Discrimination• Business Conduct and Ethics• Executive Order 11246 – Affirmative Action• FLSA Exempt vs. Non-Exempt Classifications• I-9 Requirements & Drug Free Workplace Act• Business Risk – Employment Practices Liability (EPL) – Professional Liability (Errors & Omissions) – Directors & Officers Liability (D&O) – Defense Base Act Sexual Harassment What Supervisors Need to Know 1
  2. 2. 7/28/2011Why You Need to KnowSexual harassment and Discrimination: • Damages organizations • Undermines trust and respect • Exposes companies to damaging liabilities • Non-productive. Want to keep it out of workplace & if it enters the workplace deal with it promptly and effectively.Harassment and the LawGoverned by the EEOC. FourElements under the law thatdefine sexual Harassment: I. Based on Sex II. Unwelcome III. Sufficiently Severe or Pervasive IV. Conduct Is Imputable on Some Factual Basis Two Forms • Quid Pro Quo • Hostile Work Environment Sexual Harassment Quid Pro Quo I. Term or Condition of Employment. II. Affects the decisions about a person’s job or career. III. Interferes with an individuals work performance or creates an intimidating or offensive work environment. 2
  3. 3. 7/28/2011 Hostile Work EnvironmentSexual conduct that has the purpose or effect ofunreasonably interfering with an individual’s workperformance or creating an intimidating or offensivework environment. Effects their ability to performtheir job.Perceived by the victim and a reasonable person. Employer Protection Affirmative Defense This defense can be invoked where the employer can demonstrate that: (1) it exercised reasonable care to prevent and promptly correct any sexually harassing behavior, and (2) the employee unreasonably failed to take advantage of any preventative or corrective opportunities provided by the employer or to otherwise avoid harm Effective Policies are Critical • Provide a clear statement of your position against sexual harassment • Promote compliance and prevention by defining responsibilities • Protects employee rights and fosters respect for all 3
  4. 4. 7/28/2011Policy Communication• Equal Employment Opportunity Policy• Anti-Harassment Policy• Formal Complaint Procedure - Multiple Avenues to report - Prompt and thorough investigations - Corrective action where necessary• Non-Retaliation Policy• Documented training and reinforcement Business Conduct and EthicsLegal Requirements• Federal Acquisition Regulations (FAR) • FAR 3.10 • FAR 52.203-13 • FAR 52.203-14• Similar to: • Sarbanes-Oxley Act Section 406 4
  5. 5. 7/28/2011 FAR Requirements• Applies to contracts greater than $5 million and with a performance period of more than 120 days• Government Contractors must: • Have formal business code of conduct and ethics guidelines • Represent an ongoing effort to promote compliance and ensure employees understand the code • Institute and maintain internal controls Ethical Problem Areas • Time Charging • Business Acquisition • Gratuities • Conflicts of Interest Non-ComplianceCompanies that do not comply with ethical conduct guidelines may be subjected to:• Suspension of current contracts• Loss of future contract opportunities• Financial penalties and fines • Company and individual• Debarment 5
  6. 6. 7/28/2011 Executive Order 11246 & Affirmative Action Affirmative Action Requirements • Office of Federal Contract Compliance Programs (OFCCP) • Executive Order 11246 • Rehabilitation Act of 1973 • Vietnam-Era Veterans Readjustment Act of 1974 Affirmative Action Requirements• Prohibits illegal discrimination• Requires affirmative action to ensure equal opportunities – Recruitment – Hires and Promotions – Benefits and Compensation 6
  7. 7. 7/28/2011 Affirmative Action Requirements• EEO – 1 Reporting • 50 Employees and $50K in Govt. contracts• Veterans 100 & 100A Reporting • $25K in contracts entered prior to 12/1/03 • $100K in contracts entered after 12/1/03• Written Affirmative Action Plan • 50 Employees and $50K in Govt. Contracts AAP for Women and Minorities • Annual Snapshot of Company • Workforce Analysis – Job Groups – Females and Minority • Availability Analysis – Compare with external census data – Weight in terms of internal promotions – Establish goals if underrepresented Compliance • OFCCP Governs and conducts audits • Penalties include: • Suspension of current contracts • Loss of future contract opportunities • Financial penalties and fines • Restitution to employees • Debarment 7
  8. 8. 7/28/2011 Fair Labor Standards ActNonexempt and Exempt • Nonexempt employees are covered by FLSA’s minimum wage and overtime provisions. • Exempt employees are not covered by the overtime provisions of FLSA. • Exemptions are based duties and salary. Executive Exemption• Salary of at least $455 per week• Job duties • Direct work of others • Authority to hire and fire • Primary duty is Management of Department or subdivision • Customarily and regularly directs work of two or more other employees 8
  9. 9. 7/28/2011 Administrative Exemption • Salary of at least $455 per week • Exercise of discretion and independent judgment to matters of significance • Non-manual work related to management or business operations Professional Exemption • Salary of at least $455 per week • Learned and creative professionals • Primary duty requires advanced knowledge that is intellectual in character and includes the consistent exercise of discretion and judgment • Advanced knowledge in a field of learning or science Computer Exemption• Salary or hourly rate of at least $27.63 per hour• Computer systems analyst, programmer, engineer or other similar field 9
  10. 10. 7/28/2011Avoid Deductionsfrom Pay• Maintain their salary basis and do not deduct for: • Absences due to illness or disability • Absences for personal reasons • Disciplinary suspensions and penalties • Unpaid leave • Can make the employee utilize leave FLSA Penalties• Back wages• Fines of $1,000 - $10,000 for each willful violation.• Class Action – Go back 5 yearsI-9 Worker Eligibility• I-9 Worker Eligibility • Completed within 3 days. • Federal contractors and subcontractors are required to use E-Verify as of September 8, 2009. Executive Order 12989 mandates the electronic verification of all employees working on any federal contract • Must be done accurately • Companies will get unannounced audits. All employees hired within last three years all terminated employees within last year. • Penalties range from $1,000 - $10,000 for each wrongful act. Civil penalties and criminal penalties, including incarceration for up to six (6) months for willful violation acts. 10
  11. 11. 7/28/2011 Drug Free Workplace Act • Drug Free Workplace Act of 1988 • Contractors with contracts over $100,000 must comply with the Drug Free Workplace Act• Establish a continuing, drug-free awareness program: • to inform employees of the dangers of drug abuse; the companys drug- free workplace policy; the penalties for drug abuse violations occurring in the workplace; the availability of any drug counseling, rehabilitation, and/or employee assistance plans offered through the employer. Drug Free Workplace Act• Requires each employee directly involved in the work of the contract or grant to notify the employer of any criminal drug statute conviction for a violation occurring in the workplace not less than five (5) calendar days after such conviction.• Notify the Federal agency with which the employer has the contract or grant of any such conviction within ten (10) days after being notified by an employee or any other person with knowledge of a• Penalties: • Payments for contract or grant activities may be suspended. • Contract or grant may be suspended or terminated. • Contractor or grantee may be prohibited from receiving, or participating in, any future contracts or grants awarded by any Federal agency for a specified period, not to exceed five years. RISK MANAGEMENT An Overview of Government Contractors’ Liability Exposures 11
  12. 12. 7/28/2011 Core Contract Requirements • General Liability - Standard limits are $1,000,000 per occurrence; $2,000,000 aggregate - Client listed as an Additional Insured/Waiver of Subrogation • Hired & Non Owned Auto Liability - Standard limit is $1,000,000 • Employer’s Liability - Majority of contracts require $1,000,000 per employee; $1,000,000 per disease; $1,000,000 policy limit • Umbrella - Requirements from $1,000,000 to $5,000,000 + in limitRecommended Coverages • Employment Practices Liability - Standard limit is $1,000,000 - $2,000,000 • Professional Liability (Errors & Omissions) - Standard limit is $1,000,000 • Directors and Officers - Standard limit is $1,000,000Employment Practices (EPL) Protects the company against lawsuits arising from employment related incidents. Examples: • Sexual Harassment • Wrongful Termination/Wrongful Discipline • Discrimination • Retaliation • Employment related defamation or invasion of privacy • Negative Evaluation 12
  13. 13. 7/28/2011Top 5 Reasons for EPL 1. EPL covers both actual and alleged acts of discrimination, harassment, retaliation, wrongful termination and other similar acts. 2. 1 in 4 privately held companies has been sued by a current or former employee in recent years. 3. Over 40% of EPL claims are against firms with fewer than 100 employees. Federal & State employment laws apply to all employers - any size company has an exposure! 4. The Equal Employment Opportunity Commission (EEOC) recorded over 100,000 charges in 2010 and obtained more than $400 million in settlements for claimants. Thats an increase of more than 10,000 charges compared to 2009! 5. The financial ramifications of not having EPL insurance can be crippling, especially for small firms because they do not have the operating budgets to handle the defense costs, let alone settlements and judgments, of an uninsured claim.Professional Liability (Errors & Omissions) Professional Liability protects your company from claims arising from errors or omissions in your product or service. Examples: • Programming errors • Software performance • Breach of written contract • Intellectual property infringement • Negligent consulting adviceProfessional Liability (Errors & Omissions) Common misperception: Government Contractors aren’t at risk for a professional liability claim There is no clause in a government contract that states that the prime contractor or government is excluded from negligence. Certain contract are now requiring E&O insurance coverage. 13
  14. 14. 7/28/2011Directors & Officers (D&O) Protects Directors & Officers of a company against lawsuits alleging wrongful acts while acting in their capacity as such for an organization. Examples: • Mismanagement • Errors in Judgment • Breach of Fiduciary Duty/Obligation • Breach of Duties under applicable statutes/laws • Misstatements or Omissions regarding future performance to investors/clientsDirectors & Officers (D&O) Who can sue? - Competitors - Customers - Suppliers - Government - Shareholders **Directors & Officers can be held personally liable for their decision making!!**Defense Base ActFederal Law (Defense Base Act, 42 U.S.C. §§ 1651 54 and the Longshore and Harbor Workers’ Compensation Act 33 U.S.C §§ 901-50) Requires government contractors to secure separate workers compensation coverage for their employees overseas. The Defense Base Act provides medical, disability and death benefits to covered employees injured or killed in the course of employment. 14
  15. 15. 7/28/2011Defense Base Act The Defense Base Act covers the following employment activities: • Working for private employers on U.S. military bases or on any lands used by the U.S. for military purposes outside of the United States, including those in U.S. Territories and possessions; • Working on public work contracts with any U.S. government agency, including construction and service contracts in connection with national defense or with war activities outside the United States; • Working on contracts approved and funded by the U.S. under the Foreign Assistance Act, generally providing for cash sale of military equipment, materials, and services to its allies, if the contract is performed outside of the United States; • Working for American employers providing welfare or similar services outside of the United States for the benefit of the Armed Forces, e.g. the USO. Source: Department of LaborDefense Base Act •Responsibility • The Prime Contractor is responsible for ensuring that the subcontractor has required DBA insurance. • If the subcontractor fails to secure DBA coverage, the prime contractor will be liable for and be required to secure the payment of such benefits. • If any employer fails to secure DBA they can face fines and imprisonment. • If the employer is a corporation and fails to secure DBA, the president, secretary and treasurer shall be severally and personally liable, jointly with the corporation, for any compensation or other benefits payable under the Act for injury or death which may occur to any of its employees. Source: Department of Labor 15