Labor Relations Counsel - Federal Contracts

Agencies Issue Final Rule Disallowing Federal Contractor Reimbursement for Persuader Activities

Stefan Marculewicz — Wed, 02 Nov 2011 11:23:21 -0800

The Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA) have issued a final rule implementing Executive Order (EO) 13494, Economy in Government Contracting, which precludes government contractors from being reimbursed for expenses incurred to influence employees regarding their decisions to form unions or engage in collective bargaining. Issued on January 30, 2009, EO 13494 considers as un-reimbursable any activities that are undertaken to persuade employees to exercise or not exercise such rights, such as preparing and distributing materials, hiring or consulting legal counsel or consultants, holding meetings (including paying the salaries of the attendees at meetings held for this purpose) and planning or conducting activities by managers, supervisors or union representatives during working hours. Such expenditures are deemed “unallowable” under any federal government contract by the order. Although federal contractors cannot use federal funds for these purposes, they may use federal dollars to “maintain satisfactory relations” between the contractor and its employees. As stated in the order, such expenditures could include the cost of labor-management committees, employee publications (provided they do not attempt to persuade employees regarding unionization), and other related activities.

]]>The final rule does not deviate in any significant way from the proposed rule issued in April 2010. The agencies acknowledge that some comments submitted in response to the proposal argued that the changes favor unions and penalize contractors, contain unclear and conflicting language, impose significant compliance burdens on contractors, and infringe upon a contractor’s right to engage in free speech that is not otherwise prohibited by the National Labor Relations Act (NLRA), and is therefore preempted. As to the last point, the agencies disagreed with the preemption assessment, explaining that the rule “does not prohibit or otherwise regulate persuader activities; it only disallows the reimbursement of the costs of these activities under Federal contracts.” Predictably, the agencies also disagreed with the other raised concerns, and reaffirmed the language and changes posed in the proposed rule.

The final rule therefore revises section 31.205-21 of the Federal Acquisition Regulations (FAR) to read as follows:

31.205-21 Labor relations costs.

(a) Costs incurred in maintaining satisfactory relations between the contractor and its employees (other than those made unallowable in paragraph (b) of this section), including costs of shop stewards, labor management committees, employee publications, and other related activities, are allowable.

(b) As required by Executive Order 13494, Economy in Government Contracting, costs of any activities undertaken to persuade employees, of any entity, to exercise or not to exercise, or concerning the manner of exercising, the right to organize and bargain collectively through representatives of the employees’ own choosing are unallowable. Examples of unallowable costs under this paragraph include, but are not limited to, the costs of—

(1) Preparing and distributing materials;

(2) Hiring or consulting legal counsel or consultants;

(3) Meetings (including paying the salaries of the attendees at meetings held for this purpose); and

(4) Planning or conducting activities by managers, supervisors, or union representatives during work hours.

The changes made by the rule apply to contracts resulting from solicitations issued on or after the rule’s November 2, 2011 effective date.

Photo credit: Kent Weakley

DoD, GSA, and NASA Adopt Final Rule on Notification of Employee Rights Under Federal Labor Laws

Ilyse Schuman — Tue, 01 Nov 2011 15:45:09 -0800

The Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA) have issued a final rule (pdf) adopting regulations that implement Executive Order (EO) 13496: Notification of Employee Rights Under Federal Labor Laws. (pdf) Among other requirements, this E.O. mandates that all government contracting departments and agencies include a provision in most government contracts stipulating that the contractor post a notice "in all places where notices to employees are customarily posted both physically and electronically," informing them of their rights under the National Labor Relations Act (NLRA). Covered contractors are also required to include a similar provision in subcontracts that are necessary to the performance of the government contract and in an amount in excess of $10,000. This notification rule should not be confused with the National Labor Relations Board’s final rule – Notification of Employee Rights under the National Labor Relations Act – that requires private sector employers subject to the NLRA to post a notice informing employees of their rights under the NLRA. Continue reading this entry at Littler's Washington DC Employment Law Update.

Federal Agencies to Issue Interim Rule Amending FAR to Implement Employee Notification Rights Under Executive Order 13496

Ilyse Schuman — Fri, 10 Dec 2010 15:02:52 -0800

The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (Councils) will issue an interim rule (pdf) that adopts the Department of Labor’s final rule implementing Executive Order (EO) 13496: Notification of Employee Rights Under Federal Labor Laws. (pdf) The DOL issued its final rule on this EO last May. The EO at issue mandates that all government contracting departments and agencies include a provision in most government contracts stipulating that the contractor post a notice “in all places where notices to employees are customarily posted both physically and electronically,” informing them of their rights under the National Labor Relations Act (NLRA), and revokes a Bush-era EO that had required federal contractors to post a notice (commonly known as “Beck” notices) to their employees informing them that they were not required to join or maintain membership in a labor union, and that those who were not union members – but were nonetheless required to pay dues or fees pursuant to a union security agreement – could object to paying a portion of those dues or fees to support activities that are not related to collective bargaining, contract administration or grievance adjustment.

The Councils’ interim rule essentially amends the Federal Acquisition Regulation (FAR) to reflect the DOL’s notification requirements. These changes include a new FAR subpart 22.16 and clause 52.222-40, Notification of Employee Rights Under the National Labor Relations Act. The interim rule also revises FAR clauses at 52.212-5, Contract Terms and Conditions Required to Implement Statutes or Executive Orders—Commercial Items, and FAR 52.244-6, Subcontracts for Commercial Items, to include the requirements of the new FAR employee notification clause. These amendments to the FAR represent the formal notice to contracting officers to include the amended FAR clause in all solicitations and contracts, except those contracts that are under the simplified acquisition threshold (currently $150,000), subcontracts of $10,000 or less, or contracts/subcontracts that are for work performed exclusively outside of this country.

For more information on the requirements set forth in the DOL’s final rule, see Littler's ASAP: DOL Issues Final Rule on Notification by Federal Contractors of Employee Labor Law Rights by David Goldstein and Jay Sumner.

Photo credit: blackred

OFCCP Publishes Compliance Verification Procedures for Contractor Notice Posting Requirements

Labor Management Relations Practice Group — Fri, 18 Jun 2010 16:08:52 -0800

The Office of Federal Contract Compliance Programs (OFCCP) has issued a directive on its verification procedures under Executive Order (E.O.) 13496, Notification of Employee Rights under Federal Labor Laws. (pdf) This E.O. mandates that all government contracting departments and agencies include a provision in government contracts covered by the order stipulating that contractors and subcontractors post a notice “in all places where notices to employees are customarily posted both physically and electronically,” informing them of their rights under the National Labor Relations Act (NLRA). The Department of Labor’s Office of Labor Management Standards (OLMS) published a final rule (pdf) implementing this E.O. last month. The OFCCP is responsible for investigating complaints, performing compliance evaluations, conciliating compliance issues, and referring violations to the OLMS for enforcement. The directive published online this week outlines the processes and procedures it will use to perform these tasks.

]]>Specifically, as explained in the OFCCP document, Section A of the directive provides details about the posting and contract clause requirements for non-exempt federal contractors. Section B outlines OFCCP procedures for conducting compliance verifications, including the issuance of a contractor notice of onsite evaluation; performance of an onsite evaluation; conciliation; reporting of the auditor’s findings; closing of the compliance verification process for the reviewed contractor; and referral of the matter to the OLMS for further enforcement in the event the contractor fails to take corrective action. The OLMS is responsible for taking any necessary administrative enforcement action and/or imposing any penalties and remedies for noncompliance with E.O. 13496. Section C of the directive specifies the procedures for investigating complaints of contractor noncompliance. Finally, Section D provides details on the provision of compliance assistance.

The OFCCP directive also includes a number of attachments providing sample documents such as a notice of receipt of an E.O. 13496 complaint; sample closure letter; notice of a complaint referral to the OLMS; an E.O. 13496 technical assistance letter; and the text of E.O. 13496 itself.

For more information on the notification requirements mandated by E.O. 13496, see Littler's ASAP: DOL Issues Final Rule on Notification by Federal Contractors of Employee Labor Law Rights by David Goldstein and Jay Sumner.

In addition, Littler will be conducting a webinar on this topic on Monday, June 21.