Seyfarth Synopsis: Beginning July 1, 2016, pursuant to the President’s Fair Pay and Safe Workplaces Executive Order the NLRB will now require any Federal Contractor that has a Complaint issued against it by a Regional Director to submit information that may lead to the loss of future federal contracts unless that employer settles or resolves the charge prior to the issuance of the Complaint.

On July 31, 2014, President Obama signed the Fair Pay and Safe Workplaces Executive Order with the stated purpose of “promot[ing] economy and efficiency in procurement by contracting with responsible sources who comply with labor laws.” The Executive Order mandates that contracting agencies look at a federal contractor’s history of violating various labor and employment laws, including the NLRA, when deciding whether to do business with the contractor. The Executive Order further requires that agencies track, and that contractors must disclose, any “administrative merits determination[s]” that the contracting party violated the NLRA. While one would reasonably assume that an “administrative merits determination” that a party violated the NLRA would only include a decision of the Board or an ALJ, last May the Department of Labor issued proposed guidance interpreting “administrative merits determination” to include a “complaint issued by any Regional Director.”

Accordingly, on July 1, 2016, the NLRB Office of the General Counsel issued Memorandum OM 16-23 stating that the NLRB will begin collecting information pursuant to the above Executive Order on any complaints issued after July 1, 2016. The memorandum can be found here.

Compounding the obvious problems of possibly losing federal contracts based on the mere allegations sufficient to issue a Complaint, the memo further explains how the NLRB will use this new database to pressure settlements out of employers. The memo contains several attachments, including a form email to be sent to charged employers once the Regional Director has made the determination to issue a complaint. The form email states that “if you reach a resolution of this matter before the Region issues a complaint, such as by entering a pre-complaint informal settlement agreement with the Regional Director, no information on this case will be forwarded to this database.”

Thus, contractors are now in the precarious position of either settling potentially baseless unfair labor practice charges or risking that they could lose future contracts. With this latest directive from the NLRB, federal contractor employers should assess these risks associated with any existing unfair labor practice charges still under investigation by the Regions.