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DoD, GSA, and NASA Proposed Definition of “Recruitment Fees” Published

DoD, GSA, and NASA published a definition of “recruitment fees” for purposes of FAR 52.222-50 in today’s Federal Register.  As we have previously discussed, the anti-trafficking requirements in FAR 52.222-50 were amended almost a year and a half ago to prohibit contractors from charging employees recruitment fees, without defining such fees.  Subsequent efforts to define the term have included (1) the House’s passage of the Trafficking Prevention in Foreign Affairs Contracting Act (H.R. 400), which would require USAID to propose a definition of recruitment fees, and (2) the Defense Acquisition Regulations Council and the Civilian Agency Acquisition Council’s (the “Councils”) release of a proposed definition and request for public input.

The definition published today differs only slightly from the Councils’ previously proposed definition. It provides that “recruitment fees include, but are not limited to, fees, charges, costs, assessments, or other financial obligations assessed against employees or potential employees, associated with the recruiting process” for:

  • Soliciting, identifying, interviewing, transferring, or training employees or potential employees;

  • Covering the cost of advertising;

  • Processing petitions;

  • Visas, including appointment and application fees;

  • Government-mandated costs, including border crossing fees;

  • Procuring photographs and identity documentation;

  • Facilitating a condition of access to the job opportunity, such as medical examinations, immunizations, security clearance checks;

  • Compensating an employer’s recruiters, agents or attorneys; or

  • Hiring language interpreters or translators.

Additionally, a fee qualifies as a recruitment fee regardless of whether it is collected by the employer or a third party, including (but not limited to) agents, recruiters, and subcontractors.

DoD, GSA, and NASA will accept comments regarding the proposed definition through July 11, 2016. The agencies are seeking input regarding the following particularly noteworthy topics:

  • Whether all costs associated with onboarding an employee should qualify as recruitment fees;

  • Whether the definition of recruitment fees should vary based on whether the position at issue is “a professional high-paying, high-skill job or an unskilled low-paying job”;

  • Whether the location of a job should be a factor in the definition recruitment fees; and

  • Whether the proposed definition includes sufficient “boundaries (i.e., limitations).”

Given the breadth of the proposed definition, it could have a significant impact on contractors’ recruiting practices. Indeed, contractors could be liable for a host of fees collected by third parties, even if such fees are not collected at the direction of the contractor.  Consider, for example, a potential employee that pays a third-party training service to secure training to become a more competitive applicant prior to contacting a potential employer.  Under the proposed definition, this arrangement could qualify as a “recruitment fee,” as a third party would have collected a fee in exchange for training in connection with the recruitment process.  As a result, a contractor who subsequently hires the employee could be liable, even though it had no involvement with the arrangement between the third-party and the employee.

Therefore, contractors would be well advised to evaluate the potential impact of this proposed definition and consider submitting comments to the extent that the seemingly broad definition may encompass activity beyond that which is necessary to prevent human trafficking.

© 2019 Covington & Burling LLP

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About this Author

Jennifer Plitsch, Litigation attorney, Covington
Partner

Jennifer Plitsch is co-chair of the firm’s Government Contracts practice group where her practice includes a wide range of contracting issues for large and small businesses in both defense and civilian contracting. Her practice involves advising clients on contract proposal, performance, and compliance questions as well as litigation, transactional and legislative issues. She has particular expertise in advising clients on intellectual property and data rights issues under the Federal Acquisition Regulations and Bayh-Dole Act, and has significant experience in...

202-662-5611
Alexander Hastings, Litigation and e-discovery lawyer, Covington
Associate

Alex Hastings advises clients across a broad range of government contracting issues, including advising clients in transactional matters involving government contractors and assisting defense contractors and pharmaceutical companies in securing and performing government contracts.

Mr. Hastings also advises clients concerning best practices in e-discovery. He assists in investigations and litigations that involve complex e-discovery issues and has represented clients in matters involving the U.S. Department of Justice, Securities and Exchange Commission and the United States International Trade Commission.

202-662-5026