• President Obama Issues Executive Orders Changing Labor Rules for Federal Contractors
  • February 26, 2009
  • Law Firm: Baker & Hostetler LLP - Cleveland Office
  • On Friday, January 30, 2009, President Obama issued three executive orders substantially affecting the rights and duties of federal contractors and their employees, giving organized labor an expected early win. Signed on the second day that leaders of major unions were visiting with the President at the White House, these executive orders have the stated purpose of “level[ing] the playing field” between labor and management.

    Executive Order No. 13494 prohibits federal contractors from seeking reimbursement from the government for expenses incurred in persuading employees not to unionize. Specific examples of expenses that may no longer be billed to the government include “preparing and distributing materials,” “hiring or consulting legal counsel or consultants,” “holding meetings,” and “planning or conducting activities by managers, supervisors, or union representatives during work hours.”

    Executive Order No. 13495 provides continued employment for employees when the federal government changes to a new service provider. Under the order, service contracts must require that an offer of continued employment be made to the old service provider’s employees when the government contracts with a new service provider. This provides job security for employees who may be affected by the government’s decision to change service providers. If the new provider fails to offer continued employment to affected employees, the Secretary of Labor is empowered to levy appropriate sanctions, including requiring offers of employment, payment of lost wages, or debarring the provider for up to three years.

    Executive Order No. 13496 requires federal contractors to post notices informing employees of their right to form unions and collectively bargain. This requirement must be included in every federal contract along with language giving the government the right to terminate/suspend the contract or even debar the contractor for noncompliance.

    The impact of these executive orders will be felt almost immediately. While relatively narrow in scope, these executive orders emphasize the new administration’s position towards labor unions and the pro-union shift in federal policy. With Congressional consideration of the Employee Free Choice Act (EFCA) looming on the horizon, employers should anticipate further policy and legislative shifts and a much more pro-labor Executive Branch.