Letter to The Honorable Julie A. Su, Acting Secretary, U.S. Department of Labor (February 1, 2024)

Summary

A February 1, 2024 letter from the House Committee on Small Business to the Honorable Julie A. Su, Acting Secretary of the U.S. Department of Labor, concerns the Department’s rule titled “Nondisplacement of Qualified Workers Under Service Contracts.” The letter states that the rule imposes far-reaching compliance costs for small entities and that up to 74 percent of impacted entities are small contractors and subcontractors. It states that the Department estimates the notice requirements would take only 45 minutes. It requests information by February 15, 2024, including the Department’s justification for the time estimates and the evidence behind the claimed efficiency benefits. The signature lines name Roger Williams, Chairman, Blaine Luetkemeyer, Vice Chairman, and Dan Meuser and Aaron Bean, Members.

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Full text

                                             February 1, 2024

The Honorable Julie A. Su
Acting Secretary
U.S. Department of Labor
200 Constitution Ave. NW
Washington, DC 20210

Dear Acting Secretary Su:

       The House Committee on Small Business (the Committee) writes to inquire about the
Department of Labor’s (DOL) recent rule change titled “Nondisplacement of Qualified Workers
Under Service Contracts” which forces contractors and subcontractors engaged in federal service
contracts to first offer employment to qualified workers previously employed under the
predecessor contract.1 The final rule imposes far-reaching compliance costs for small entities and
could result in inefficiencies in the procurement process since the contractor cannot bring its own
uniquely qualified employees to the project.2 Furthermore, the rule disproportionally impacts
small entities—up to 74 percent of impacted entities are small contractors and subcontractors—
and might discourage these small businesses from federal contracts.3 It appears that the DOL
may not have properly considered small entities during this rulemaking process.

        According to the final rule, the contractor must offer a job not only to former service
employees who appear on the certified list of all service employees on the predecessor contract,
but also to employees who offer other “reliable” evidence that they are eligible to a job offer.4
The rule creates multiple time consuming and costly requirements, such as notices to affected
workers and their representatives, possible location-continuity notices, and successor
contractor’s mandatory offer letters.5 However, the DOL estimates that these requirements would
take only 45 minutes. Furthermore, according to the DOL, it will take about 30 minutes for a
human resources staff member to review this rule and about 30 minutes for contractors to
incorporate the contract clause into their covered subcontracts.6 Further, though the DOL is
issuing this rulemaking to implement the Executive Order 14055 and thus has limited instances

1
  Nondisplacement of Qualified Workers Under Service Contracts, 88 F.R. § 86736 (2023) (to be codified at 29
C.F.R. § 9).
2
  Id.; DOL Issues Nondisplacement of Qualified Workers Under Service Contracts Final Rule, ABC Disappointed,
ASSOC. BUILDERS & CONTRACTORS (Dec. 18, 2023).
3
  Id.
4
  Id.
5
  Id.
6
  Nondisplacement of Qualified Workers Under Service Contracts, 88 F.R. § 86736 (2023) (to be codified at 29
C.F.R. § 9).
The Honorable Julie A. Su
February 1, 2024
Page 2 of 3

to use its own discretion, there are places where the DOL would have had the opportunity to
lessen the impact on small businesses, but it chose not to do so.

       It is important for agencies to examine small businesses interests—which make up 99.9
percent of all businesses in the United States—when passing any new rule. America’s small
businesses deserve to have their voices heard and considered. We therefore request the following
information as soon as possible but no later than February 15, 2024:

   1. Given that the information is not fully provided in the final rule, provide detailed
      justification for how the DOL came to the time estimates and why they were deemed
      sufficient.

   2. How does the DOL address the concern that companies may be harmed by employees
      leaving their companies to work for the follow-on successors?

   3. Provide evidence sufficient to show the reasoning behind the DOL’s decision to develop
      additional requirements beyond the requirements set forth in Executive Order 14055.

   4. The rule has a short analysis of the benefits of the rule, however, there is very limited
      evidence to support these assertions. Provide any evidence relied upon by the DOL to
      conclude that the rule will result in more efficient processes.

   5. Provide the DOL’s analysis behind the requirement that businesses must consider
      employees who are not on the list.

       To schedule the delivery of your response or ask any related follow-up questions, please
contact Committee on Small Business Majority Staff at (202) 225-5821. The Committee on
Small Business has broad authority to investigate “problems of all types of small business” under
House Rule X. Thank you in advance for your cooperation with this inquiry.


                                        In God We Trust,



_________________________                            _________________________
Roger Williams                                       Blaine Luetkemeyer
Chairman                                             Vice Chairman
Committee on Small Business                          Committee on Small Business
The Honorable Julie A. Su
February 1, 2024
Page 3 of 3




_________________________                     _________________________
Dan Meuser                                    Aaron Bean
Member                                        Member
Committee on Small Business                   Committee on Small Business




cc:    The Honorable Nydia M. Velasquez, Ranking Member
       Committee on Small Business


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