United States: Department of Labor Issues Final Rule on Federal Contractor Posting Requirements Relating to Union Membership And Dues

The United States Supreme Court’s 1988 decision in Communications Workers v. Beck held that union represented employees who have not joined the union cannot be required to pay that portion of union dues attributable to expenditures that are not "germane" to the union’s representational functions. Examples of "germane" activities include collective bargaining, contract administration, and grievance adjustment. Union activities that are not germane to representational functions include political and charitable activities.

In reaction to the Beck decision, and in an effort to inform employees of their Beck rights, President George W. Bush issued Executive Order 13201 on February 17, 2001. The executive order required federal contractors to post a notice of employees’ Beck rights. The Department of Labor subsequently issued a proposed rule elaborating on the executive order in October 2001. After allowing for comments, the Department of Labor has now finalized the proposed rule. The final Beck rule was published in the March 29, 2004 Federal Register and becomes effective on April 28, 2004.

The final Beck rule requires that federal contractors post notification of their employees’ Beck rights "in conspicuous places in and about [their] plants and offices, including all places where notices to employees are customarily posted." Basically, the notice is to inform employees that they cannot be required to join a union and that, even when a union-security agreement requires employees to pay dues and fees to a union, employees who are not union members can only be required to pay their share of union costs relating to certain activities. Further, the notice generally describes the remedies for violations of these rights as well as contact information for employees who wish to make further inquiries regarding their rights. A copy of the Department of Labor notice is attached.

The Beck rule is generally applicable to all federal contractors. However, the rule does exempt certain classifications of contracts, including those resulting from solicitations issued before April 18, 2001. Additionally, the final rule exempts nonunion contractors and contractors with fewer than 15 employees. The nonunion exemption applies to contractor establishments or construction worksites "where no union has been formally recognized by the prime contractor," even if subcontractors on the same worksite are represented by a union. Further, the rule is not applicable to contractor establishments or worksites in states that forbid enforcement of union-security agreements (right-to-work states). Additionally, the rule exempts contracts in an amount less than the $100,000 simplified acquisition threshold.

The Department of Labor’s Office of Labor-Management Standards (OLMS) is responsible for granting and withdrawing additional exemptions and waivers from the posting requirements and for referring cases of alleged violation of the rule for administrative enforcement. While the proposed rule called on the OLMS to refer complaints about misuse of union dues to the National Labor Relations Board, the final rule removes any reference of a referral from the Department of Labor to the NLRB.

The final Beck rule designates the Office of Federal Contract Compliance Programs (OFCCP) as the agency charged with policing the posting requirement. While complaints of alleged violations may be filed with either the OLMS or the OFCCP, the OFCCP is charged with determining compliance with the rule through compliance evaluations or investigations. This dual role calls on the OFCCP to determine contractors’ compliance and to work to resolve violations through conciliation efforts. In the event conciliation efforts are not successful, the OFCCP can pursue administrative enforcement proceedings and seek sanctions including suspension or termination of existing contracts and debarment from future contracts.