New notice and posting obligation for federal contractors effective June 21st

June 21, 2010 by

The Secretary of Labor has finalized implementing regulations under Executive Order 13496, which requires federal contractors and subcontractors covered by the National Labor Relations Act (NLRA) to post a new notice advising employees of their rights under the Act. Note that most employers in the private sector are covered by the NLRA; the Order is not limited to companies with union activity or representation.    

The regulations are codified at Title 29, Part 471 of the Code of Federal Regulations. The Department of Labor (DOL) also provides a helpful fact sheet about the new requirement.

Background

Executive Order 13496 was signed by President Obama on January 30, 2009. It revokes Executive Order 13201, which required posting of the “Beck Poster” (the Beck Poster advised employees they could not be compelled to join a union or maintain a union membership to keep their jobs, and could restrict the use of their union dues for certain purposes). The goal of the Order is to ensure federal contracts will not be interrupted by labor unrest. It is premised on the idea that industrial peace is best achieved by informing workers of their rights under Federal labor law.

After almost a year and a half of rulemaking, the form of the new notice has been finalized. Hard copies can be obtained from the DOL’s Office of Labor-Management Standards (OLMS) at (202) 693-0123 or by email request at http://mailto:vog.lodnull@cilbup-smlo.

What The Notice Does

The new notice informs employees of their rights to organize, join a union, bargain collectively, and engage in other protected concerted activity under the NLRA. It also gives examples of illegal conduct by employers and unions, and gives contact information for National Labor Relations Board.

Is Your Company Affected?

Companies should carefully scrutinize any federal contracts or subcontracts that are signed or modified after June 21, 2010. The new posting obligation is triggered by the government agency or department’s inclusion of a notice clause in the government contract. The clause may not be included in full, however, so also look for inclusion by reference to “29 CFR Part 471, Appendix A to Subpart A.”

Exceptions to the posting requirement include federal contracts under $100,000, subcontracts below $10,000, and contracts/subcontracts for work to be performed exclusively outside the territorial U.S. Also, employers who exclusively employ workers excluded from coverage under the NLRA are not covered.

What Should You Do To Comply?

If the notice clause is present in your contract, the company must conspicuously post the prescribed notice wherever employees covered by the NLRA are engaged in activities related to performance of the contract. The notice must be posted in all places where notices to employees are customarily posted, both electronically and physically. Physical postings must be on 11×17 size paper. For electronic postings, the employer must provide an electronic link to the actual notice. If a large portion of the company’s workforce is not proficient in English, a translated notice must be provided. Translations can be obtained from the OLMS.

In addition, the contractor must include provisions requiring posting of the same notice in all subcontracts entered into in connection with the contract.

Penalties and Enforcement

The Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) will conduct evaluations to determine compliance with the new requirement. It is thus particularly important for any company undergoing audit by the OFCCP to ensure the new notice is posted by June 21, 2010. The OFCCP has issued a Powerpoint Presentation of guidance to federal contractors. Employees also may file complaints about noncompliance.

Failure to comply with the notice and posting obligation can result in cancellation, termination or suspension of the government contract, in whole or in part. The contractor may also be declared ineligible for further government contracts. In addition, the Secretary of Labor may publish the names of any contractors that have failed to comply.

– by Hunton & Williams LLP, June 10, 2010

New contract clause and posting requirement for federal contractors

June 11, 2010 by

The U.S. Department of Labor (DOL) Office of Labor-Management Standards on May 20 issued a final rule implementing Executive Order 13496, which requires federal contracting agencies to include in most contracts a new clause requiring contractors and subcontractors to post notices informing employees about their rights under the National Labor Relations Act (“NLRA”).  The rule, which takes effect on June 21, establishes the content of the notice, clarifies flow-down requirements, and sets forth penalties and procedures for noncompliance. It applies only to contracts directly with the federal government and related subcontracts, not to federally assisted contracts made with other nonfederal government entities.

Several changes were made from the proposed rule issued in August 2009, including many made in response to comments submitted by the Associated General Contractors of America (AGC).  For example, DOL adopted AGC’s recommendation to abandon the requirement that government contracts include the entire text of the employee notice – which is quite lengthy – and to allow incorporation by reference.  DOL also expanded the description of unlawful union conduct contained in the text of the employee notice, in response to objections raised by AGC and others that the notice contained an imbalanced list focused on employer misconduct. 

Furthermore, DOL favorably responded to AGC’s concerns that the proposed rule appeared to give DOL improper authority to enforce compliance with the NLRA – which the is role of the National Labor Relations Board – and authorized overly severe sanctions for even minor violations.  While it did not change the text of the final rule on these matters, DOL explained in the preamble that “contractors will not receive harsh sanctions for inadvertent or unintentional violations of the rule.”  The preamble also “assures the contractor community that [DOL] cannot, nor will it, attempt to enforce the substantive provisions of the notice.” 

The executive order and rule exempt prime contracts for purchases below the simplified acquisition threshold (currently $100,000).  However, the proposed rule did not exempt subcontracts below the threshold, and DOL declined to change this in the final rule, despite AGC’s protests.  A subcontract that is below the threshold is covered by the rule, provided that it is “necessary to the performance” of a prime contract above the threshold.  The final rule does, however, add a de minimis standard exempting subcontracts with a value of $10,000 or less.  The rule requires inclusion of the new clause in nonexempt contracts and subcontracts at all tiers, not just first-tier subcontracts, and provides that DOL may require a contractor to enforce subcontractor compliance.  The preamble explains that, while a contractor may not “turn a blind eye toward noncompliance of its subcontractors,” it is only required to seek compliance and will not be liable if the subcontractor still fails to comply.

The rule contains various directives about the manner and location of the posting.  If the contractor posts notices to employees physically, then it must also physically post the NLRA notice.  The posting must be made in “conspicuous places,” including areas (1) where other notices about employment terms and conditions are posted and (2) where employees covered by the NLRA engage in activities related to performance of the government contract.  A noteworthy change for many AGC members in the final rule requires contractors to provide the notice in other languages “where a significant portion of a contractor’s workforce is not proficient in English.”  The rule does not explain what “significant portion” means, but the standard is adopted from rules implementing the Family and Medical Leave Act.  The rule states that DOL will provide an official poster in English and various other languages on its website at www.olms.dol.gov, but, as of publication of this article, only English posters were provided, available in two formats via links at http://www.dol.gov/olms/regs/compliance/EO13496.htm.

If the contractor “customarily” posts notices to employees electronically, then it must also post the NLRA notice electronically by prominently displaying on any website customarily used for employee notices about terms and conditions of employment a link that reads “Important Notice about Employee Rights to Organize and Bargain Collectively with Their Employers” and links to the DOL Web page where the full text of the poster is found.  Again, foreign languages must also be used if a significant portion of the workforce is not English literate, and DOL will provide translations.

Contractors should promptly advise appropriate staff to begin to look for the new contract clause in federal contracts and subcontracts resulting from solicitations issued on or after June 21, and to prepare for compliance.  DOL’s Office of Federal Contract Compliance (OFCCP), which is tasked with conducting compliance evaluations under this rule, has stated in recent months that its enforcement efforts will target the construction industry.  (Click here and here to learn more.)  AGC will meet with OFCCP on May 24 to discuss this and other initiatives.

– Source AGC of America, Human Resource & Labor News, May 24, 2010