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The federal regulations implementing Executive Order 13496 take effect on June 21, 2010. This Executive Order – the Notification of Employee Rights Under Federal Labor Laws – requires federal government contractors to notify employees of their legal rights under the National Labor Relations Act (NLRA) by posting notices in conspicuous places in the workplace. The NLRA protects the rights of employees to join – or not to join – a union and regulates the conduct of employers and unions with regard to union organizing and collective bargaining.
Significantly, the Executive Order and the regulations do not affect government contracts resulting from solicitations issued before the effective date of the Final Rule. And only those employers and employees who are covered by the NLRA are covered by the Executive Order.
Because there are significant penalties for non-compliance, contractors must become aware of their notice obligations.
What Executive Order 13496 Requires
Executive Order 13496 (E.O. 13496), which was issued by President Obama on January 30, 2009, requires federal government contractors to post notices informing employees of their rights under the NLRA to organize for union representation. E.O. 13496 repealed the order that had been in effect since 2001, which, by contrast, required the posting of a notice, known as the "Beck Notice," informing employees of their rights not to join a union and not to pay union dues allocated to union expenses other than representation of employees.
E.O. 13496 represents a crystal clear policy shift – from notifying employees of federal contractors of their rights not to participate in unions, to affirmatively promoting employees' rights to unionize. As President Obama noted in issuing the Order, "Relying on contractors whose employees are informed of such rights under Federal labor laws facilitates the efficient and economical completion of the Federal Government's contracts."
Contractors were not required to comply with E.O. 13496 until the Secretary of Labor, who is charged with enforcing the Order, issued implementing regulations. Now that those regulations are issued, compliance will be required. The Secretary of Labor has delegated compliance responsibilites to the Office of Labor Management Standards (OLMS) and the Office of Federal Contract Compliance Programs (OFCCP).
What the Regulations Require
Federal government contracting agencies now must require specific provisions in covered government contracts regarding the mandated employee notice. The Federal Acquisition Regulatory Council (FAR Council) must take "whatever action is required" to implement the notice requirements. Government contractors must include a similar notice in each of their subcontracts so as to bind each subcontractor to the notice requirement.
The Required "Employee Notice Clause" in Government Contracts
The contract language required by government contracting agencies, the "Employee Notice Clause," is set forth in the Final Regulations. This language only needs to be cited by reference, as 29 CFR Part 471, Appendix A to Subpart A, in order to be incorporated into the government contract or subcontract.
What Contracts Are Covered by the Notice Requirement
The Notice Clause is required to be included in a government contract "for the purchase, sale, or use of personal property or non-personal services." "Personal property" covers "supplies, and contracts for the use of real property (such as lease arrangements)." The term "non-personal services" includes but is not limited to "utilities, construction, transportation, research, insurance and fund depository." Specifically excluded from the term "government contract" are employment agreements and certain forms of federal financial assistance. As there are numerous forms of federal financial assistance that would qualify for the exemption, the applicable regulations should be reviewed for compliance purposes.
Certain other contracts are exempt from the Notice requirement. These include: collective bargaining agreements affecting federal government employees; contracts that involve purchases below the Office of Federal Procurement Policy Act's "Simplified Acquisition Threshold," which is currently set at $100,000; subcontracts of $10,000 or less in value; and contracts or subcontracts for work performed exclusively outside the territorial United States. Other exceptions and exemptions could apply and the regulations should be consulted for specific guidance.
Requests for exemptions from the Notice requirement by a contracting agency or department will be processed by the Director of OLMS. The regulations expressly caution that no procurement process or provision of supplies and services may be done in such a way as to avoid the posting requirements.
The Required Poster
The Notice Poster sets forth the rights of employees under the NLRA, provides examples of unlawful employer and union conduct that interferes with those rights, and instructs employees on how to contact the National Labor Relations Board with questions or to file complaints under the NLRA. Contractors can obtain the required poster from the contracting departments and agencies, the field offices of the OFCCP, or from the OLMS at www.dol.gov/olms.
Posting Requirements for Contractors
The Notice Poster must be posted in a physical location if the contractor or subcontractor posts notices to employee in this manner. If a "significant portion" of the workforce does not speak English, the Notice Poster must be presented in the language that the employees speak.
The Notice Poster must be posted in "conspicuous places in and about the contactor's plants and offices so that the notice is prominent and readily seen by employees." "Conspicuous placement" includes but is not limited to areas in which employee notices about terms and conditions of employment are posted. For example, the Notice Poster must be included on any bulletin board where the contractor posts notices about EEO and workers' compensation laws. In addition, the Notice Poster must be posted where employees covered by the NLRA "engage in activities related to the performance of the contract." As explained in the OFCCP materials, such activities include "indirect or auxiliary work without which the contract could not be effectuated, such as maintenance, repair, personnel and payroll work."
If a contractor or subcontractor "customarily" posts notices to employees electronically, then the Notice Poster must also be posted in a similar manner. This requirement is satisfied by posting a link – with the same prominence as other website employee notices – to the OLMS website that contains the full text of the poster. The link to the OLMS website must read, "Important Notice about Employee Rights to Organize and Bargain Collectively with Their Employers." Again, if a significant portion of the workforce speaks languages other than English, the electronic notice must be posted in those languages. Finally, any required electronic posting of the Notice Poster is in addition to, and does not replace, the required "conspicuous" physical posting.
Enforcement Procedures
Employees may file written complaints about violations of the Executive Order with the OLMS, the OFCCP or with any field office of such agencies. The complaints must be signed and provide employee contact information. Complaints may cover violations by contractors and subcontractors as well as the failure of the federal government contract to include the posting requirement.
The OFCCP may also conduct a compliance evaluation to determine compliance with the Executive Order and Regulations, either specifically or as part of an evaluation of compliance with other laws and regulations enforced by the Department of Labor. For example, an investigation by the DOL of compliance with prevailing wage or overtime requirements could include compliance with the posting requirement.
A violation may be based on any one of the following, although the list is not exclusive: results of a compliance evaluation; results of a complaint investigation; a contractor's refusal to allow a compliance evaluation or complaint investigation to be conducted; a contractor's refusal to cooperate with either the compliance evaluation or the complaint investigation; a contractor's refusal to take such action with respect to a subcontract as directed by the OFCCP or OLMS; and a subcontractor's refusal to adhere to the notice requirements.
If a violation is found, the OFCCP will try to attain compliance through conciliation. In order to establish compliance, the contractor or subcontractor must cure the violation and commit in writing not to repeat the violation. If conciliation is unsuccessful, the matter will be referred to the Director of OLMS for further proceedings, including administrative enforcement proceedings conducted by the Solicitor of Labor in accordance with administrative hearing procedures including review by the Administrative Review Board.
There are stiff penalties for non-compliance, including cancellation, termination or suspension of any contract, or debarment precluding any contracting agency from contracting with the contractor or subcontractor. In addition, the Director of OLMS is authorized to publish and distribute to all executive agencies a list of the contractors and subcontractors who have, in the Director's judgment, failed to comply with the Executive Order and therefore are declared ineligible for future contracts. The Director of OLMS has the authority upon receipt of sufficient evidence of compliance to reinstate a contractor or subcontractor.
Recommended Steps to Ensure Compliance
Based on the compliance information that has already been distributed by the Office of the Solicitor, it is clear that the Labor Department has undertaken an extensive enforcement program to implement the Executive Order. It will be important for contractors and their subcontractors to determine if they are covered by the Executive Order's notice requirements, and if so, how will the posting requirements be implemented in order to comply with the strict mandate of the Executive Order and regulations. Contractors should canvass the locations where employee notices are posted and determine whether employee notices are otherwise posted electronically, as well as in what languages the poster should be printed. Contractors should also be prepared to respond to employee questions about the poster and their rights under the NLRA. In such instances, contractors still must adhere to the separate requirements of the NLRA.
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