First Source Employment Agreement

Make Work Possible
First Source Reform in Washington, D.C.

Earlier this week, the DC City Council Committee on Committee on Housing and Workforce Development, chaired by Councilmember Michael A. Brown, at-large, passed a bill, B19-50 “District of Columbia Workforce Intermediary Establishment and Reform of First Source and Living Wage Amendment Act of 2011,” to reform the city’s First Source law.

First Source has a long and complicated history in the District. The current provisions of First Source assure city residents priority for new jobs created by municipal financing and development programs. It mandates that all projects funded in whole or in part with District of Columbia funds, or other funds which the District administers, shall provide for increased employment opportunities for District residents. Under the law’s provisions, each employer in the program must sign an agreement ensuring that:

• All job openings created are listed with the Department of Employment Services.
• 51 percent of new hires are District residents.

In practice, we haven’t seen the desired results.

Even though the FSEA aimed to Make Work Possible for District residents, it has been reported that the majority of jobs in the District are filled by non-residents. According to a special report by the DC Council Committee on Housing and Workforce Development, 72 percent of the more than 700,000 jobs in the District are held by people living outside of the DC borders. Currently, First Source laws contain no consequences for employers who do not meet the FSEA goals, specifically failing to hire the required amount of District residents.

The most common complaint of employers is that they cannot meet hiring requirements because DC does not have the necessary workforce. However, the District has service providers who graduate hundreds of trained residents who are ready and willing to work. Moreover, within recent years, the District’s unemployment rate has more than doubled, meaning there are residents who are unemployed with work experience.

As a result, the Committee on Housing and Workforce Development has adopted amendments to the original FSEA of 1984.

The amendments to the FSEA include new regulations for projects receiving government assistance totaling $5 million or more. Specifically, these projects must have 20 percent of journey worker hours, 50 percent of apprentice hours, 60 percent of skilled laborer hours, and 70 percent of common laborer hours performed by District residents.

There will also be increased penalties for companies that do not reach specific hiring requirements. Additionally, companies who have been found in violation of the FSEA three times over a ten year period can be excluded from receiving government assistance. The new FSEA provisions give DOES greater authority to enforce FSEA agreements. The FSEA amendments give DOES the authority to suspend invoice payments of contractors that are not in compliance with First Source.

The unemployment rate in the District stands at 11.1 percent. In other words, there are about 66,561 people without employment. Included are thousands of District residents who are willing, able, and qualified to work. The most important benefit of First Source reform may very well be the opportunity to Make Work Possible for District residents. With the District’s unemployment and poverty rates nearing all-time highs, the timing for the FSEA amendments is impeccable.

The Council of the District of Columbia will conduct a first reading of the amendments to the First Source bill on Tuesday, November 1, 2011 at their legislative meeting. For language of the bill, visit- http://dccouncil.us/images/00001/20110121162550.pdf

History of the First Source Employment Agreement Act:
The First Source Employment Agreement Act of 1984 was proposed and created in order to solve the unemployment woes of District residents. It is designed to ensure that qualified District residents are given priority consideration for new jobs.

The Department of Employment Services (DOES) requires that beneficiaries of government-assisted projects of $100,000 or more must enter into a First Source Employment Agreement. The FSEA requires 51 percent of an employer’s new hires must be District residents. In addition, the employer must use DOES as a first source referral for qualified applicants, trainees, and other workers. These requirements apply to contractors as well as subcontractors. In order to monitor their performance, each employer must submit a Contract Compliance form to DOES each month.

Furthermore, the FSEA is aimed to provide benefits for companies who participate. Employers who agree to the FSEA receive the benefit of reducing interviewing time. DOES will recruit, pre-screen, and refer qualified applicants. Also, FSEA provides marketing opportunities to employers because their jobs will be advertised through the DOES website. Employers will also save on taxes by participating in the FSEA.

The FSEA regulations, however, do not apply to nonprofit organizations with 50 employees or less, jobs to be filled by current employees, contractors or subcontractors awarded government assistance that is less than $100,000, or jobs to be filled by laid-off workers. Also, employers who demonstrate a good faith effort to comply with the provision may have the FSEA regulations waived. Additionally, an employer may not follow these regulations if DOES certifies an insufficient number of DC residents in the labor market possess the required skills.