Labor Relations Counsel - Legal Insight into Labor Relations Developments

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.

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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.

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