August 10, 2009
Last week, the Department of Labor published in the Federal Register proposed regulations to implement President Obama’s Executive Order requiring that government contracts include provisions regarding employees’ unionization rights, that a notice of employees’ rights under the federal labor laws be posted by the employer pursuant to those contracts, and authorizing the Secretary of Labor to investigate contractors’ compliance with the Order and the accompanying Labor Department regulations. 74 Fed. Reg. 38,488 (Aug. 3, 2009).
Comments on the proposed regulations are due Wednesday, September 2.
The proposed regulations prescribe the content and form of the notice that must be provided to employees. The proposed notice contains over a dozen statements summarizing employees’ rights pursuant to the National Labor Relations Act, beginning with the broad declaration that "It is the policy of the United States to encourage collective bargaining and protect the exercise by workers of full freedom of association, self-organization, and designation of representatives of their own choosing, for the purpose of negotiating the terms and conditions of their employment or other mutual aid and protection." Although brief reference to workers’ right against coercion by unions also is included, some commentators will regard the proposed notice as suggesting greater limits on employers’ actions than the labor laws actually impose. For example:
- The proposed notice states that an employer may not threaten to close a workplace if workers choose unionization, which alone may be misleading without adding that an employer may tell employees what the employer reasonably believes will be the likely economic consequences of unionization that are outside the employer’s control.
- The proposed notice also states that it is unlawful to "prohibit [employees] from wearing union hats, buttons, t-shirts, and pins in the workplace except under special circumstances, for example, where doing so might interfere with patient care." This statement uses only one narrow example of "special circumstances", which can also include ensuring safety (as with pins or hats in a manufacturing plant), preventing alienation of customers, maintaining production and discipline in some situations, or prohibiting inflammatory and offensive material. Without these other examples, the statement may cause employees to think they can wear any union material they want, except in a hospital.
The notice–which the government will print and make available to contractors–must be posted in conspicuous places where employee notices are generally placed. If an employer customarily posts employee notices on its website, the website must also include a specific link with the information provided in the regulations.
These proposed rules are the first to implement four different labor-related executive orders signed by President Obama shortly after taking office. The other three orders are:
- Economy in Government Contracting, which prohibits most federal contractors from using contract funds to oppose or support union organizing activities;
- Nondisplacement of Qualified Service Contract Workers, which generally requires that successor contractors–those awarded a follow-on contract to provide the same services at the same location as a previous contractor–offer employment to qualified employees who worked under the prior contract; and
- Project Labor Agreements, which would allow agencies to require the use of project labor agreements–pre-hire collective bargaining agreements covering the terms and conditions of employment–in connection with construction projects whose total cost exceeds $25 million.
Proposed regulations are already overdue for implementing the Economy in Government Contracting Executive Order, which prohibits federal contractors from using contract funds to oppose or support union organizing activities. That Executive Order, combined with the current proposed regulations, will operate to send the largely pro-unionization message contained in the new poster, while limiting federal contractors’ ability to communicate their own views about unionization.
The Executive Order requiring the new poster by its terms generally applies only to contracts between the federal government and prime contractors that involve purchases above the simplified acquisition threshold defined in the Office of Federal Procurement Policy Act, which is generally $100,000. Prime contractors, however, are required to include the same contractual terms regarding the notice in their contracts with certain subcontractors, thus requiring that those subcontractors post the notices as well. The regulations do not place a dollar threshold for the subcontractors that are subject to the Executive Order. Rather, the notice requirement would apply to those subcontracts that are either necessary to the performance of the prime contract or that perform an obligation in the prime contract. The subcontractor provision therefore creates the possibility of the notice provision applying to a large number of subcontractors working pursuant to a federal contract.
The regulations further provide procedures for filing and investigating complaints and for sanctions against a contractor or subcontractor for violating the Executive Order. The sanctions include cancellation of the contract and debarment from entering into further government contracts. However, these sanctions may only be imposed if the head of the contracting agency consents. The Secretary may also "direct" a contractor to sanction a subcontractor for failing to comply with the Order; if this results in litigation between the contractor and subcontractor, the contractor "may request" the Department to join the litigation. Since the Office of Federal Contract Compliance Program (OFCCP) is given enforcement authority, an OFCCP audit of a federal contractor’s affirmative action program may well include a check to see that the employee notice is posted properly and the appropriate clause has been included in subcontracts.
Gibson, Dunn & Crutcher’s Labor and Employment Practice Group and Government Contracts Practice Group have extensive experience in counseling and litigation regarding federal contractors’ obligations in the employment area. Gibson Dunn lawyers are available to assist in addressing any questions you may have regarding these issues. Please contact the Gibson Dunn attorney with whom you work, or any of the following attorneys:
Labor and Employment Practice Group
William D. Claster – Practice Co-Chair, Orange County (949-451-3804, [email protected])
Eugene Scalia – Practice Co-Chair, Washington, D.C. (202-955-8206, [email protected])
William J. Kilberg P.C. – Washington, D.C. (202-955-8573, [email protected])
Scott A. Kruse – Los Angeles (213-229-7970, [email protected])
Christopher J. Martin – Palo Alto (650-849-5305, [email protected])
Jason C. Schwartz – Washington, D.C. (202-955-8242, [email protected])
Government Contracts Practice Group
Joseph D. West – Practice Co-Chair, Washington, D.C. (202-955-8658, [email protected])
Karen L. Manos – Practice Co-Chair, Washington, D.C. (202-955-8536, [email protected])
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