This post was also written by Daniel J. Moore.

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.