March 12, 2009
Previously published on February 9, 2009
President Obama recently issued four Executive Orders that have a significant impact on federal contractors and provide a glimpse into his views about organized labor. The January 30 Executive Orders reverse certain obligations that President Bush imposed on federal contractors, creating new obligations and restrictions in their place.
Together with the recent creation of a Working Families Task Force under the leadership of Vice President Biden, the President’s actions underscore his statement that “…we have to reverse many of the policies towards organized labor that we’ve seen these last eight years. I do not view the labor movement as part of the problem; to me it’s part of the solution.” While the President is currently focused on the economy, these actions confirm that the administration will act in support of organized labor’s agenda.
1. Economy in Government Contracting: Under this Executive Order, costs incurred by an employer to advise or persuade employees concerning the exercise of their labor rights are disallowed expenses for federal contractors, effective immediately. The President has stated that this Order is “consistent with the policy of the United States to remain impartial concerning any labor-management dispute involving Government contractors.” While the Order does not directly require Contractors to remain neutral during a union organizing campaign, it does present Contractors with a difficult choice: either refrain from holding meetings with employees, hiring labor counsel, and undertaking other efforts to remain union-free or undertake these activities, but put systems in place to carefully and clearly segregate all costs related to the activities so that the Contractor does not inadvertently seek reimbursement for them. Many commentators believe that most employers will remain neutral as a union tries to organize its workers rather than risk the consequences.
2. Nondisplacement of Qualified Workers under Service Contracts: When a service contract expires and a subsequent Contractor is awarded the contract to perform the same service, the new Contractor was free to hire the predecessor’s employees, a new workforce, or a combination of both. Under this Executive Order, the subsequent employer must now offer the employees of the predecessor employer jobs for which they are qualified. The employer must hold the jobs open for at least 10 days. After that, the employer may hire new employees.
Under the successorship doctrine, an employer may be required to bargain with a union that represented its predecessor’s employees if a majority of its workforce is composed of the previously represented employees and certain other requirements are met. By requiring an employer to give preferential hiring rights to its predecessor’s employees the likelihood that a majority of its employees worked for the predecessor increases. If a union represented the predecessor’s employees, the new employer will, in most cases, have a legal obligation to bargain with the union even if a significant portion of its workforce did not choose union representation.
3. Notification of Employee Rights Under Federal Labor Laws: This Executive Order requires federal Contractors and their subcontractors to post a notice advising employees of their rights under federal labor law. The language of the required posting notice is yet to be determined, but it is expected to include topics such as the right to organize, the right to engage in collective bargaining, and other rights under the National Labor Relations Act. A Contractor that violates the terms of the notice or any related rules issued by the Secretary of Labor is subject to termination of the contract and possible debarment from future government contracts.
This Executive Order reverses Executive Order 13201, signed by President Bush in 2001, referred to as the “Beck” requirements. These required qualifying federal contractors to advise employees of the right not to join a union and the right to avoid paying the portion of dues that the union used for purposes other than collective bargaining, including lobbying and other political purposes.
4. Update: President Obama Signs Yet Another Executive Order: Since this article was posted, President Obama signed the Use of Project Labor Agreements for Federal Construction Projects Executive Order. Like the other three, this Executive Order sends the message to organized labor that the President has not forgotten their interests. The most recent Order, signed on February 6, 2009, provides that federal agencies are free to require large scale construction projects of $25 million and above to require the use of union-only project labor agreements. This Order reverses another President Bush Executive Order that had prohibited such arrangements.
Takeaway
The Executive Orders clearly show that change is in the air, not only for federal contractors, but for all employers. Taken together, they demonstrate that, as President Obama said, he views organized labor as “part of the solution.” While it is unclear what other actions he may take in support of organized labor, and whether the Employee Free Choice Act will be enacted, either as written or otherwise, one thing is certain: substantial changes in existing labor law will occur and these changes will, at a minimum, make it easier for unions to organize workers. Organized labor can be expected to continue to press for favorable changes in existing laws and regulations and to succeed in large measure.
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