Piliero Mazza & Pargament, PLLC   Vol. 5, Issue 5  May 2003

Addressing Tribal and Alaska Native Corporation
Legal and Business Issues

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  A R T I C L E S

EMPLOYMENTProposed Changes to the FAIR Labor Standards Act

SMALL BUSINESS - OFPP Policy Would Require Small Businesses to Recertify Annually

SUPREME COURT WATCHTribal Sovereignty Has Its Day in Court


Proposed Changes to the FAIR Labor Standards Act

On March 31, 2003, the U.S. Department of Labor published proposed regulations which, if adopted, would significantly modify the regulations governing the exempt status of employees under the federal Fair Labor Standards Act (FLSA). The FLSA, which establishes minimum wage and overtime requirements for covered employers, does not expressly exempt Indian tribes. At least one federal court has suggested that the FLSA applies to tribal employees engaged in commercial, as opposed to governmental, activities.  Reich v. Great Lakes Indian Fish and Wildlife Comm’n, 4 F.3d 490 (7th Cir. 1993). The FLSA is an intricate law which can be a source of many pitfalls for unwary employers. The failure to adhere to the FLSA’s rules can result in the loss of exempt status for entire classes of employees and liability for unpaid overtime. Such liability could extend for three years where the violation was “willful,” and the award will be doubled unless the employer can show that it acted reasonably and in good faith. Importantly, employers also face liability for the plaintiff’s attorneys’ fees. In recent years, many employers have been subjected to so-called “collective actions,” in which groups of similarly situated employees join together in the same FLSA action.



OFPP Policy Would Require Small Businesses to Recertify Annually

In an effort to address a perceived problem of larger businesses receiving work intended for small businesses, the Office of Federal Procurement Policy (OFPP) proposed earlier in the year an annual recertification requirement for small businesses. The OFPP recommendation would affect government-wide agency contracts (GWACS) across four agencies - Commerce, NASA, NIH and GSA. However, there is a growing concern that this proposal could eventually spread to other types of contracts and other agencies.

In the past, the general rule has been that once a business certifies as small and wins a federal contract, it retains its size status for the life of the contract. As applied to GSA schedule holders, this meant that those who obtained their GSA schedule contract as a small business could remain eligible as a small business under that contract for a period of up to 20 years (five-year base period, plus three, five-year options), regardless of how large the company has grown. To avoid this unintended effect, the GSA in November 2002 issued a new policy requiring GSA schedule holders to self-certify at the beginning of each option period of their GSA Schedule contracts (i.e., every five years). Previously, case precedent at GAO and SBA’s Office of Hearings and Appeals also required GSA schedule holders to self-certify at the time that they submit a bid in response to a competitive request for quotations for a GSA Schedule (i.e., a GSA buy contemplating award of a blanket purchase agreement). OFPP’s recommended annual recertification requirement represents a further expansion of this concept to GWACS.



Tribal Sovereignty Has Its Day in Court

On the morning of March 31, 2003, the sun reflected brilliantly against the eastern facade of the U.S. Capitol building. At 6:00 a.m., a class of students began to gather at the foot of the steps of the U.S. Supreme Court with the hope of being among the lucky few who would be admitted for the entirety of the morning’s oral arguments, including those in Inyo County v. Bishop Paiute Tribe. Three and a half hours later, they were granted permission to enter the main doors of the country’s highest judicial authority.

As they filed into the courtroom, the air seemed to be frozen in time. There were no cell phones, no laptops, no television screens or cameras. Nine justices clad in black sat comfortably in swivel-chairs, showing various stages of attention. After announcing the results of their decisions, Chief Justice Rehnquist proceeded to admit new members of the Supreme Court bar. Current members rose, announced the name of an attorney whom they recommended for admission, and asserted that the attorney possessed the necessary qualifications. In special cases, one member sponsored his wife and another, her father.



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