Hunton Employment & Labor Law Perspectives : Employment Lawyers & Attorneys : Hunton & Williams Law Firm : Labor Law Legislative Updates

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 olms-public@dol.gov. 

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 11x17 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. 

Beginning in its fiscal year 2010, which began October 1, 2009, “there is no limit on the number of compliance evaluations that OFCCP may schedule or conduct per contractor during a fiscal year.”   This is a significant change from past practice, in which the agency limited the number of compliance evaluations identified each scheduling cycle to 25 per parent company.

The CSAL is a courtesy notification, given to a company’s chief executive officer, that two or more of the company’s facilities are to be scheduled for a compliance evaluation (or “audit”) during the scheduling cycle.  The list of contractors to be audited is generated by the Federal Contractor Selection System (FCSS).  Receipt of a CSAL does not mean that an audit has been initiated, but instead that one will be scheduled in the future.  Once an audit is scheduled, the OFCCP sends out a separate Scheduling Letter, which provides only 30 days for the contractor to provide all requested information and materials.

The CSAL may not necessarily list all the establishments that are to be scheduled for an audit.  Examples of those that may be audited without being listed in a CSAL include, for example:  establishments that are not clearly associated with the parent organization through EEO-1 Reports (as in the case of recent mergers); establishments selected for review through means other than the FCSS; an establishment named in a complaint; an establishment subject to monitoring of a conciliation agreement; an establishment recently awarded a federal contract; and establishments selected for auditing as part of the OFCCP’s Corporate Management Compliance Evaluation (CMCE) or Functional Affirmative Action Plan (FAAP) initiatives.

This change in policy will affect large employers with more than 25 facilities subject to OFCCP jurisdiction.  Such companies will likely have to take additional steps to prepare for and defend audits, which typically include statistical analysis and detailed review of affirmative action plans.  If the OFCCP finds statistically significant disparities at one facility, it will not be limited in the number of investigations of other facilities it may pursue in an attempt to identify patterns of discrimination.  In light of this possibility, federal contractors should consider conducting privileged statistical reviews at facilities subject to OFCCP jurisdiction as early as possible, particularly on receipt of a CSAL.