On January 30, 2009, President Barack Obama issued Executive Order 13496. The Order stated that the government would require federal contractors to post notices in the workplace notifying employees of their "rights" under the National Labor Relations Act (the Act).

The executive order did not prescribe the content of the notice, nor any of the posting rules. However, many observers expected the notices would reiterate Section 7 of the Act, which sets forth employee "rights" under the Act. (Section 7 states that "Employees shall have the right to self-organization, to form, join or assist labor organizations, to bargain collectively, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection, and shall also have the right to refrain from any or all such activities…")

On August 3, 2009, the Department of Labor (the "Department") published a proposed rule, including the proposed content of the mandatory notice to employees. Many considered the proposed rule to be one-sided and an encouragement to unionize. The Department received and considered public comments on the proposed rule over the last nine months.

Last week, on May 20, 2010, the Department published its final rule, including a revised notice to employees. The revised rule, including the revised notice, will still encourage employees of federal contractors and subcontractors to unionize, but somewhat less so than the proposed rule.

This new rule becomes effective June 21, 2010, and will apply to contracts that result from government solicitations on or after that date, as well as contracts that are renewed after that date. No posting is required until the employer signs a government contract that requires the posting.

The Notice

The notice itself is in bold red, blue and black print on white paper. It is 11 by 17 inches. You may see and obtain a copy by clicking here. The following revisions to the notice are especially significant.

1. The preamble to the final rule's mandatory notice is somewhat less pro-union:

• While the preamble in the proposed rule stated that "[i]t is the policy of the United States to encourage collective bargaining . . ." the final rule's preamble states omits explicit "encouragement" and states that "[t]he NLRA guarantees the right of employees to organize and bargain collectively with their employers"; and
• The preamble now states that employees are protected by the NRLA from certain types of union conduct, as well as certain types of employer conduct.

2. Four examples of unlawful union conduct have been added, bringing the number of examples of unlawful conduct by the employer and the union slightly more in line (now, there are seven examples of unlawful employer conduct and five examples of unlawful union conduct).

While these changes do make the notice a bit more balanced, a pro-union slant remains. For example, the notice notifies employees of their right to solicit for a union, but not against one, and it fails to notify employees of their right to decertify a union.

One of the best examples of how the poster subtly and misleadingly encourages workers to seek union representation is the statement that:

"If you and your coworkers select a union to act as your collective bargaining representative, your employer and the union are required to bargain in good faith in a genuine effort to reach a written, binding agreement setting your terms and conditions of employment. The union is required to fairly represent you in bargaining and enforcing the agreement."

While this statement is literally true, the Department explicitly rejected suggestions that the Notice do more to tell employees the whole story about how collective bargaining works in practice. For example, the Department rejected suggestions that the Notice inform employees that the NLRA explicitly states that obligation to bargain in good faith "does not compel either party to agree to a proposal or require the making of a concession." 29 U.S.C. § 158(d). In practice, because both employers and unions have the right to say "no" to any proposal made by the other, and because no collective bargaining agreement is ever reached until the parties have agreed on all mandatory subjects of bargaining proposed by either, in approximately 75 percent of all first contract negotiations, no "written binding agreement" is reached during the first year of bargaining after employees vote for union representation.

Scope of the Rule

The final rule governs all contracts with any agency of the United States government with a value of $100,000 or more, as well as all subcontracts necessary to the performance of the covered contracts with a value of $10,000 or more.

What the Rule Requires

1. Contract Clause

The contracts signed by federal contractors on covered contracts will contain clauses requiring that they post the mandatory notices, and every subcontract entered into by such a contractor that is necessary to the performance of the prime contract and that is for at least $10,000 must also include the same clause or an explicit incorporation by reference to the clause, with a citation to 29 CFR Part 471, Appendix A to Subpart A.

2. Physical and Electronic Posting

Covered contractors (and subcontractors) must also post the prescribed employee notice. The notice must be physically posted in "conspicuous" places "in and about [the contractor's] plants and offices where employees covered by the National Labor Relations Act engage in activities relating to the performance of the contract, including all places where notices to employees [including notices that are not legally prescribed] are customarily posted…." In the Department's Summary of the Final Rule, the Department concluded that the phrase "[where employees] engage in activities relating to the performance of the contract" should be read broadly to include not only places where employees work whose duties "fulfill[] a contractual obligation" but also places where employees work whose positions are allowable as costs under principles set forth in the Federal Acquisition Regulations at 48 C.F.R. Chapter 1, part 31 Rather ominously, the Department noted that a contract for production and sale of goods to the Government commonly requires the work not only of the production employees assembling the goods, but also of those engaged in functions such as repairing the machinery used…; assuring quality control and security; storing the goods…; delivering them to the Government; hiring, paying and providing personnel services for employees engaged in contract-related work; keeping financial and accounting records; [and] performing related office and clerical tasks…." It remains to be seen whether, in practice, enforcement officers (enforcement is discussed below) will ever look for posters in personnel or accounting offices where clerical employees work on matters at best tangentially related to covered contracts.

In addition, covered contractors (and subcontractors) that post other employee notices electronically must post these new notices electronically, as well. In such cases, the revised rule requires an electronic link to the Department's Web site, and the link to the Department's Web site must read, "Important Notice about Employee Rights to Organize and Bargain Collectively with Their Employers."

Where a "significant portion" of a contractor's workforce is not proficient in English, the notice must be provided in the language the employees speak. (The final rule does not define "significant portion.")

Enforcement

The rule will be enforced by the Office of Federal Contract Compliance Programs (OFCCP). The rule provides for "compliance evaluations," and for the OFCCP to receive complaints from employees of non-compliance.

If the OFCCP finds a contractor out of compliance, the final rule requires the OFCCP "to make reasonable efforts to secure compliance through conciliation." 29 C.F.R. § 471.12(a). Compliance is secured through the contractor "correct[ing] the violation" and "commit[ing], in writing, not to repeat the violation." If compliance is not secured, enforcement proceedings may be prosecuted by the Solicitor of Labor and heard by an Administrative Law Judge.

If a contractor fails to comply with this rule, the contract can be canceled, terminated, or suspended, and the contractor may be declared ineligible for further government contracts.

What This Means to Federal Contractors

Posting the mandated notice in paper and electronic form will obviously encourage some employees to unionize or engage in other concerted activity that is protected under the National Labor Relations Act. How much of a difference this will make will depend largely on how carefully employees read government postings and how large and conspicuous these postings are in comparison to the employer's other postings.

Contractors who believe the posted notices will encourage covered employees to form or join a union should consider:

1. Posting and otherwise communicating to exposed employees further information about the disadvantages of union representation.
2. Assuring that proper, written no-solicitation and no distribution rules are in place that lawfully restrict solicitations for a union and the distribution of literature in support of a union.
3. Otherwise auditing employment practices that may bear upon union organizing or make the organization more susceptible to union organizing activity.
4. Taking steps to lawfully limit access of outside union representatives
5. Educating supervisors and managers about how unions organize and what to do when organizing activity takes place
6. Holding meetings with existing employees and new hires to explain why the Company thinks it is in the best interests of everyone that employees remain union free.