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.