Labor_Day_Executive_Order_Requires_up_to_7_days_sick_leaveIn an Executive Orders (EO) issued on Labor Day, President Obama continued to display his willingness to manage the personnel policies of government contractors. This latest EO, one of many directed solely at Government contractors, will require contractors to provide up to seven days paid sick leave (annually) for employees. The EO comes with the typical unsupported rhetoric that “we’ve seen that many companies, including small businesses, support these policies because they understand it’s helpful with recruitment and retention” and a separate assertion “that paid sick leave will improve contractor performance”. Perhaps unintended, but it is noteworthy that the White House did not state that many companies support the notion that paid sick leave will “improve contractor performance”; by implication, the White House could not find any companies which were sufficiently naive to buy-in to that highly speculative and wholly unsupported assertion.

This recent EO is not the first to assert that an EO will increase recruitment and retention, thus, supported by the generic and unidentified “business community” or by statements made by one or two identified business owners (as if they represent everyone else). In 2014, an EO mandated a new minimum wage of $10.10 per hour for certain Government contractors. Not surprisingly, the White House made note of at least one small business owner quoted as supporting the higher minimum wage because the small business owner had found that paying a higher wage (then the national minimum wage) had helped that business with recruitment and retention. If one bothers to critically analyze that one quotation, it would be all too obvious that the small business owner had been able to differentiate his/her business from competitors by offering a slightly higher wage. Apparently lost on that small business owner was the fact that once competitors were forced to pay the same wage, there would no longer be any recruitment or retention advantage (unless the one small business owner substantially increased his/her wages to maintain the difference). Equally apparent, the White House believes that the masses are simpletons who will not understand that his various mandates which eliminate differentiation (compensation and benefits) among employers will similarly eliminate any recruitment or retention advantages for any given employer.

Perhaps the most disconcerting aspect of EOs which are premised upon socialistic ideals of mandated equalization of pay and benefits, is the fact that our Chief Executive Officer is ignoring or oblivious to the fact that companies pick and choose the levels and types of compensation to attract employees who prefer certain forms of compensation and/or certain benefits. For example, some companies have higher salaries, but lower benefits; others have lower base pay, but higher “at risk” compensation (bonuses based upon company goals and/or individual performance). Assuming our current “CEO” were in office long enough, it is safe to say that mandated standardization (compensation and benefits) will eliminate any recruitment and retention strategies which might be achieved through flexible compensation policies which differentiate a company from its competition. Apparently policies which allow flexibility benefitting both employer and employee aren’t acceptable within a socialist agenda bent on standardization and Government control.

As the White House rolled out one more EO directed solely at Government contractors, one cannot help but note the irony (if not outright contradiction) of the continuing saga of intrusive Government mandates juxtaposed against the ongoing efforts by the Secretary of Defense to invite Silicon Valley (commercial companies) into Government contracting. Even if the targeted commercial companies are not impacted by any given EO (because the company already has compensation or benefits exceeding those mandated by the President), they cannot be enthusiastic about entering into Government contracts which expose the highly successful commercial company into a world of externally (Government) mandated personnel policies coming from someone with no relevant experience. In fact, there is an “elephant in the room” which explains why commercial companies are disinterested in pursuing contracts with the Federal Government and its name is Obama.

Whitepaper: Government Contracting and Uncompensated Overtime Download Now

Written by Michael Steen

Mike Steen is a Senior Advisor with Redstone Government Consulting, Inc. and a specialist in complex compliance issues to include major contractor cost accounting & business system regulations, financial compliance, resolution of DCAA audit issues, Cost Accounting Standards application, litigation support, and claims preparation. Prior to joining Redstone Government Consulting, Mike served in a number of capacities with DCAA for over thirty years, and upon his retirement, he was one of the top seven senior executives with DCAA. Mike Served as a Regional Director for two DCAA regions, and during that time was responsible for audits of approximately $25B and 800 employees. In October 2001, he was selected for the Senior Executive Service and in 2006 he received the Presidential Rank Award. During Mike’s tenure with DCAA, he was involved in conducting or managing a variety of compliance audits, to include cost proposals, billing systems, Cost Accounting Standards, claims, defective pricing, and then-evolving programs such as restructuring, financial capability and agreed-upon procedures. He directly supported the government litigation team on significant contract disputes and has prepared and presented various lectures and seminars to DCAA staff and business community leaders. Since joining Redstone Government Consulting in June 2007, Mike has developed and presented training and seminars on Government Contracts Compliance to NCMA, Federal Publications Seminars and various clients. Mike also is a prolific contributor of written articles to government contracting publications, as well as to our own Government Insights Newsletter. Mike also serves as the director of our training service offerings, with responsibilities for preparing and developing course content as well as instructing our seminars to clients and general audiences throughout the U.S. Mike also serves as a faculty instructor for the Federal Publications Seminars organization. Education Mike has a BS Degree in Business Administration from Wichita State University. He is also a graduate of the DCAA Director’s Fellowship Program in Management, and has a Masters Degree in Administration from Central Michigan University. Mr. Steen also completed a number of OPM’s management and executive development courses.

About Redstone GCI

Redstone Government Consultants are a team of the most senior industry veterans and the brightest new talent in the industry. Many have held senior government positions including leadership roles in the DCAA. Our new talents bring significant accounting and software experience along with fresh perspectives, inspiration and energy to our team. Through our leadership and combined experience, we provide a unique perspective, bringing both government and contractor proficiencies to bear and ensuring rock-solid government compliance for our clients.

Topics: Contractor Employee Compensation, Government Compliance Training