Last year, President Biden signed the Juneteenth National Independence Day Act, making June 19, the celebration of the end of slavery, a federal holiday. The second Juneteenth National Independence Day is fast approaching. This year, Juneteenth falls on a Sunday and will be observed on Monday, June 20, 2022.
This means a holiday for federal workers, but what does this mean for an employer with federal contracts or subcontracts? The following provides a brief overview of when Juneteenth is a paid holiday for a federal contractor’s employees under contracts or subcontracts subject to (i) the Service Contract Act (SCA), (ii) the Davis Bacon Act’s (DBA) labor standards provisions, or (iii) another contract provision governing paid holidays.
Service Contract Act
When does the SCA apply? With some exceptions, the SCA applies to federal service contracts in excess of $2,500 that have a principal purpose of furnishing services in the US through the use of service employees.
What does the SCA have to do with paid holidays? Each federal contract subject to the SCA must contain a wage determination (WD) that specifies the wage rates and fringe benefit rates under the contract, and a federal prime contractor must flow down the obligations under the wage determination in its covered subcontracts. The SCA WD specifies the local prevailing wage rates and fringe benefit rates that must be paid to employees under the contract.
When does the SCA require an employer to make Juneteenth a paid holiday? Most SCA fringe benefit determinations specify the required number of holidays, and these are generally named in the WD. Effective October 20, 2021, the SCA WDs were revised to include Juneteenth. This means invitations for bids opened and any service contracts awarded on or after October 20, 2021, must include an updated SCA WD that includes a paid holiday for Juneteenth.
Davis Bacon Act
When does the DBA apply? The DBA applies to laborers and mechanics working on federal contracts (or contracts with the District of Columbia) in excess of $2,000 for the construction, alteration, or repair of public buildings or public works. In addition to applying to contracts subject to the DBA, the DBA’s prevailing wage provisions apply to other federally assisted construction projects (these are often referred to as Related Acts).
What does the DBA have to do with paid holidays? An employer with a contract subject to the DBA must pay its laborers and mechanics the prevailing wage rates and fringe benefit rates specified in the applicable DBA WD.
When does the DBA require an employer to make Juneteenth a paid holiday?
Similar to the requirements under an SCA WD, if Juneteenth is a named holiday in the DBA WD, it must be a paid holiday.
At this time, it appears that DBA WDs have not been modified to include Juneteenth as a named holiday, but this could change as the new holiday approaches. In addition to reviewing the DBA WDs applicable to its current contracts, an employer should review the terms of the DBA WD applicable to new contracts to become familiar with its paid holiday obligations and to determine whether Juneteenth is, in fact, included. An employer with a multiyear construction contract that includes an option for the government to extend the contract should review the current DBA WD when the federal agency exercises an option under the contract, because the federal agency is required to treat the exercise of an option as a new contract and incorporate the current DBA WD.
Steps an Employer Can Take
What should an employer with a federal contract or subcontract do? An employer should review its federal contracts and subcontracts to determine whether one or more of its contracts are subject to an SCA or DBA WD. If a contract is subject to an SCA or DBA WD, the employer should review the contract’s current WD to determine whether its contractual paid holiday obligations include the Juneteenth holiday.
What if there is no applicable WD? Federal contracts and subcontracts that are not subject to an SCA or DBA WD may still contain a provision that requires a contractor or subcontractor to pay employees certain paid holidays. An employer should review the terms of its federal contracts and/or subcontracts to determine whether the terms of any contract include an obligation to make Juneteenth a paid holiday.
Can an employer with no contractual obligation make Juneteenth a paid holiday? Yes. An employer may choose to make Juneteenth a paid holiday for employees absent a contractual obligation to do so under a federal contract or subcontract. Many employers have voluntarily made Juneteenth a paid holiday as a matter of policy, other employers have made it a paid holiday pursuant to the terms of a collective bargaining agreement negotiated with a union. An employer should review the terms of the applicable contract to determine whether treating Juneteenth as a paid holiday absent a contractual obligation under the federal contract or subcontract impacts its tracking of employee work hours under the contract or how the employer bills the federal agency or prime contractor.
What if an employer is still uncertain about its obligations after reviewing its contracts? If an employer is unclear about its contractual obligations concerning paid holidays or any other provision of a federal contract or subcontract, it would be prudent for the employer to consult with counsel to clarify its obligations and identify what, if any, additional steps need to be taken to come into compliance.
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