Posted on June 8, 2010 by James A. Burns, Jr.

Federal Contractors and Subcontractors Must Notify Employees of Right to Unionize

This post was written by Daniel J. Moore, James A. Burns, Jr. and Joel S. Barras.

Just 10 days after taking office, President Obama signed Executive Order 13496, requiring all federal contractors and subcontractors to notify employees of their rights under the National Labor Relations Act (NLRA), including their right to join and support unions, and to include in every contract, subcontract, and purchase order, a pledge to honor the employee notice requirements. The U.S. Department of Labor (DOL) has now issued its final rule implementing the Executive Order, specifying how contractors and subcontractors must comply with those requirements, including a poster describing employees’ rights and how they can file claims with the National Labor Relations Board (NLRB), and the penalties employers will face if they fail to comply. The rule will take effect June 21, 2010.

Who Is Affected by Executive Order 13496?

Executive Order 13496 (“the Order”) affects contractors and subcontractors who contract or subcontract with a federal government agency and are covered under the NLRA. The Order does not apply to the federal government, state or local governments, labor unions, or employers who are covered by the Railway Labor Act. The Order also does not apply to prime contracts under the simplified acquisition threshold, currently set at $100,000, or subcontracts of $10,000 or less.

Employee Rights’ Notice

Federal contractors subject to the Order must post an “Employee Rights Notice,” which informs employees about their right to form, join, assist or support unions and bargain collectively with their employer; lists several examples of conduct by employers and unions that violates employees’ rights; and tells employees how to contact the NLRB to ask questions or file charges. Copies of the Notice are available for download at the DOL’s website. Employers must post the Notice exactly as issued by the DOL, meaning that it cannot be altered in size, color, or content. If a significant portion of a contractor’s workforce is not proficient in English, the contractor must provide the notice in the other language(s) that the employees speak. Translations of the Notice may be requested from the Division of Interpretations and Standards of DOL’s Office of Labor-Management Standards (OLMS).

Posting the Notice

The Notice must be posted conspicuously in the contractor’s or subcontractor’s facilities so it can be easily seen by employees. Indeed, the DOL’s rules require a copy of the Notice to be posted at each location where the employer posts other required employee notices, and at each part of the facility where any employee covered by the NLRA performs work related to the contract or subcontract, presumably meaning each office, production floor, warehouse, and so on. In addition, if a contractor or subcontractor customarily posts notices to its employees electronically, then the Notice must be posted electronically as well. The electronic posting requirement can be met by displaying the Notice prominently on the employer’s website or intranet (using the heading “Important Notice about Employee Rights to Organize and Bargain Collectively with Employers”), or by posting a link to the DOL’s website containing the full text of the Notice.

Employee Notice Clause

The DOL rule sets out four paragraphs that must be included in all non-exempt government contracts, subcontracts, and purchase orders entered into on or after June 21, 2010, although it may be cited by referring to 29 CFR Part 471, Appendix A to Subpart A.

Complaints, Enforcement and Penalties

Any employee of a covered contractor or subcontractor may file a complaint with the OLMS or DOL’s Office of Federal Contract Compliance Programs (OFCCP) that his or her employer has failed to post the Notice or failed to include the required notice clause in subcontracts or purchase orders. As might be expected, an employer is prohibited from retaliating against any employee for filing such a complaint.

Separately, the OFCCP may conduct compliance reviews to determine whether a contractor or subcontractor holding a covered contract is complying with Executive Order 13496 and the DOL rules. All federal contractor and subcontractors, therefore, should expect that any OFCCP compliance review will include such an evaluation, just as they now review compliance with affirmative action and Form I-9 rules.

Penalties for violating the Executive Order may include cancellation, suspension or termination of the contract or subcontract, or debarment of the employer from future federal contracts or subcontracts, at least until it has demonstrated full compliance with the Order and rule. Finally, employers should keep in mind that any substantive violations of the provisions of the Notice may amount to a violation of the NLRA, with its accompanying remedies.
 
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Posted on December 29, 2009 by James A. Burns, Jr.

New Law Restricts Employment Arbitration for Defense Contractors and Subcontractors

President Obama has signed the Department of Defense Appropriations Act for Fiscal Year 2010 (H.R. 3326). Section 8116 of that Act significantly restricts the ability of defense contractors and subcontractors to enter into or enforce agreements that require employees or independent contractors to arbitrate certain claims.

In particular, section 8116 provides that no funds appropriated under the Act may be spent on any federal contract in excess of $1 million that is awarded 60 or more days after the effective date of the Act, unless the contractor agrees not to:

(1) enter into any agreement with any of its employees or independent contractors that requires, as a condition of employment, that the employee or independent contractor agree to resolve through arbitration any claim under title VII of the Civil Rights Act of 1964 or any tort related to or arising out of sexual assault or harassment, including assault and battery, intentional infliction of emotional distress, false imprisonment, or negligent hiring, supervision, or retention; or

(2) take any action to enforce any provision of an existing agreement with an employee or independent contractor that mandates that the employee or independent contractor resolve through arbitration any claim under title VII of the Civil Rights Act of 1964 or any tort related to or arising out of sexual assault or harassment, including assault and battery, intentional infliction of emotional distress, false imprisonment, or negligent hiring, supervision, or retention.

Section 8116 also provides that no funds appropriated by the Act may be spent on any federal contract in excess of $1 million that is awarded 180 or more days after the effective date of the Act, unless the contractor certifies that each of its subcontractors that has a subcontract worth more than $1 million has agreed not to enter into or seek to enforce any provision of any agreement described above with respect to any employee or independent contractor who is or will be performing work related to the subcontract.

The Secretary of Defense may waive the application of these provisions to a particular contractor or subcontractor for the purposes of a particular contract or subcontract if the Secretary or the Deputy Secretary personally determines, with a specific explanation, that the waiver is necessary to avoid harm to national security interests of the United States, and that the term of the contract or subcontract is not longer than necessary to avoid such harm.

Congress is considering more sweeping restrictions on arbitration that would apply to every employer. The Arbitration Fairness Act (H.R. 1020, S. 931), which now has 106 cosponsors in the House and 11 cosponsors in the Senate, would prohibit the enforcement of all pre-dispute agreements to arbitrate employment disputes (other than in collective bargaining agreements), civil rights disputes, consumer disputes, or franchise disputes, and would require courts, rather than arbitrators, to decide the validity or enforceability of any such agreement.

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Posted on August 6, 2009 by James A. Burns, Jr.

Labor Department Proposes Rule Requiring Federal Contractors and Subcontractors to Notify Employees of Right to Unionize

Just 10 days after taking office, President Obama signed Executive Order 13496, requiring all federal contractors and subcontractors to notify employees of their rights under the National Labor Relations Act (NLRA), including their right to join and support unions. On Aug. 3, 2009, the U.S. Department of Labor (DOL) issued a proposed regulation specifying how contractors and subcontractors must comply with that Order, including a poster describing employees’ rights, and how they can file claims with the National Labor Relations Board (Board). Parties wishing to comment on the proposed rule must do so by Sept. 2.

Executive Order 13496

Citing the government’s need to deal with “contractors whose work will not be interrupted by labor unrest,” and a belief that industrial peace is best achieved when employees are “well informed of their rights,” Executive Order 13496 requires most federal departments and agencies to include in virtually all government contracts, provisions that require the contractor to post a notice for employees describing their rights under the NLRA, to follow all DOL rules relating to the Order, and to be subject to penalties for noncompliance that can include debarment from future contracts. The Order exempts two types of contracts: collective bargaining agreements, and contracts for purchases under the “simplified acquisition threshold” of $100,000. The Order also requires contractors to include such provisions in every subcontract they enter into in connection with the government contract. The Order directs the DOL to issue regulations implementing its requirements, and they will take effect when those regulations become final.

DOL’s Proposed Rule

The DOL’s proposed rule outlines what the required notice must say, which contractors and subcontractors are covered, and the range of penalties that may be imposed on employers who fail to comply.

Proposed notice

Instead of merely quoting Sections 7 and 8 of the NLRA, which describe employees’ rights and unlawful employer and union conduct, the DOL’s proposed notice goes into some detail, “derived from [Board] or court decisions,” as to what those rights mean and what sort of activities are prohibited. For instance, in addition to telling employees that they may form, join or assist unions and bargain collectively for a contract with their employer, the notice informs employees that they have the right to “[d]iscuss your terms and conditions of employment with your co-workers or a union, join other workers in raising work-related complaints with your employer, government agencies, or members of the public… [and] take action with one or more co-workers to improve your working conditions, including attending rallies on non-work time, and leafleting on non-work time in non-work areas.” After briefly noting that employees also have the right to refrain from these activities, the proposed notice provides several specific examples of prohibited employer conduct, and only a brief general description of what unions cannot do, devoting about four times as much space to the former as the latter.

The proposed notice also tells employees that “[i]llegal conduct will not be permitted,” that the Board will “prosecute” those who violate the NLRA, and that employees have only six months to file a complaint. To facilitate that process, the proposed notice directs employees to the Board’s website address and toll-free phone number.

Who must post the notice

Broadly interpreting the Order, the DOL’s proposed rule would require the notice to be posted not only by federal contractors and first-tier subcontractors, but also by every subcontractor below that first tier. Although the Order exempts contracts below $100,000, because the DOL does not say that limit applies to subcontracts, it has proposed that all subcontracts be covered regardless of size, so long as they are “necessary to the performance of the prime contract.” Becoming a subcontractor to a government contractor or subcontractor, therefore, even for a small amount, will require posting the notice if the subcontract is viewed as “necessary” to the performance of the main federal contract.

Where and how the notice must be posted

The Order itself requires posting the notice “in conspicuous places in and about [the] plants and offices where employees covered by the [NLRA] engage in activities relating to the performance of the contract.” The DOL will supply copies of the required poster free of charge and make it available on its website. The proposed regulation says that if a contractor or subcontractor normally posts employee notices electronically, it must do the same with this notice by posting it on the employer’s intranet or external website, including a link to the Board’s website.

Enforcement

The proposed rule would allow employees to file complaints that an employer has failed to post the notice or include the required clause in its contracts with the DOL’s Office of Labor-Management Standards or its Office of Federal Contract Compliance Programs. If the DOL finds a violation, penalties can include cancellation, suspension, or termination of the contract or subcontract, or debarment of the employer from future federal contracts or subcontracts until it has complied with the Order.

How to Comment on the Proposed Rule

The DOL has invited comments on all parts of the proposed regulation, including the proposed notice and coverage of subcontractors. Comments may be sent to Denise M. Boucher, Director of the Office of Policy, Reports and Disclosure, Office of Labor-Management Standards, U.S. Department of Labor, 200 Constitution Avenue, N.W., Room N-5609, Washington, DC 20210, or electronically through the Federal eRulemaking Portal at www.regulations.gov. All comments must contain the identification number 1215-AB70, and be received by Sept. 2, 2009.
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