Nondisplacement Revoked Again: The Right of First Refusal for Employment By Federal Contractor Employees Was Already Gone, But DOL Just Buried the Rules.
“Good riddance to bad rubbish”
--English Proverb
The US Department of Labor (“DOL”) completed part of its deregulatory efforts today when it fully revoked the regulations issued by former President Biden’s Administration which had implemented Executive Order (“EO”) no. 14055. That EO dealt with the so-called nondisplacement of workers. The new DOL action involved the rescission of regulations published by the previous administration in 2023 requiring contractors and subcontractors to give qualified employees the right of first refusal of employment with a successor contract.
The only surprise here is how long it took DOL to act. On his first day of office, on January 20,2025, President Trump issued Executive Order no. 14148, “Initial Rescissions of Harmful Executive Orders and Actions,” which revoked, among other items, Executive Order no. 14055. Today’s’ action fully implements Executive Order no. 14148 and revokes Executive Order no. 14055 by deep-sixing the regulations. This was a reprise of President Trump’s first term when he also repealed the Obama nondisplacement EO. https://www.awrcounsel.com/blog/2020/5/13/the-end-is-here-for-the-nondisplacement-rules?rq=nondisplacement%20.
Accordingly, nondisplacement is officially dead, once again. No surprise. May it rest in peace. It was never very effective. I had a case once where an employee bought a gun to work (from another job as a guard) and claimed to accidently a firearm in the bathroom stall at work. My client thought she shot the toilet on purpose and consequently refused to hire her when they took over the contract. DOL used the nondisplacement EO to claim that the failure to give her a first right of refusal for the job was a violation of the EO. Rather than pay a small fortune to fight it out with DOL, the client hired her back. As my wife always says about our marriage, it is cheaper to keep her. I always thought that DOL demand was a misuse of the EO. So, good riddance to bad rubbish.
Anyhow, the economic reality of being a successor contractor mostly dictates that they hire almost all of the predecessor’s work force, since they have the skill and experience to do the work. Usually, only the poorest of performers need fear getting the shaft. But some new employers will use this revocation as an opportunity to get back at employees engaged in past union organizing, so yes, the loss of the EO protections does make that effort harder.
DOL suggests it is delivering on the President’s agenda to unburden industry by giving federal service contractors greater flexibility during contract transitions. DOL claims that with these regulations rescinded:
Successor contractors are not required to offer jobs to qualified incumbent workers before hiring new employees.
Employers have more discretion to structure their workforce based on current contract needs and performance goals.
Staffing decisions during transitions can better align with operational priorities and efficiency.
And so it goes, at least until the next election. This is one ball we been batting back and forth since the Clinton Administration, with successive Republican and Democratic Administrations reversing each other in serial fashion. If you don’t like the weather, just wait a few more years.