DOL Publishes Proposed Rule Implementing Executive Order 13496

by Fred Satterwhite, Senior Consultant, DCI Consulting Group

(UPDATE: Final rule published on May 20, 2010)

More than six months after President Obama signed Executive Order 13496, the U.S. Department of Labor today published a proposed regulation describing the content of the notice required by the Order's contract clause. The DOL has requested that comments regarding the proposed rule be received no later than September 2, 2009.

According to the proposed rule, the required notice will be included in all Federal contracts, except those involving purchases below the simplified acquisition threshold (currently $100,000) and contracts resulting from solicitations issued prior to the effective date of the final rule. Subcontracts necessary to the performance of the prime contract that fall below the simplified acquisition threshold, however, are not exempted and must include the notice.

The requirement does not apply to employers subject to the Railway Labor Act or employing workers as agricultural laborers, but in a significant change from the previous E.O. 13201 ("Beck") requirements, it does apply to employers across the country (including states with right-to-work laws).

The notice includes details about the rights of employees under the NLRA, including:

• Forming a union and participating in various union-related activities;

• Choosing not to join a union or participate in such activities;

• • Protection from illegal actions by an employer as a result of union activities;
    • Protection from illegal actions by a union based on their support of the union.

The notice also includes detailed instructions for contacting the NLRB if employees feel that their rights have been violated. The proposed rule states that the notice is to be included verbatim in a contract, subcontract, or purchase order, rather than incorporated by reference only (as was permitted for the Beck requirement).

Required posters will be printed by the DOL and made available through government contracting agencies, OLMS, OFCCP, and by download from the OLMS web site.

If notices are provided to employees electronically, contractors must display a link to the DOL’s web page that contains the full text of the notice. Also, the link itself must include the following text on the contractor’s web site:

RIGHTS OF EMPLOYEES UNDER THE NATIONAL LABOR RELATIONS ACT

‘‘It is the policy of the United States to encourage collective bargaining and protect the exercise by workers of full freedom of association, self-organization, and designation of representatives of their own choosing, for the purpose of negotiating the terms and conditions of their employment or other mutual aid and protection.’’

OFCCP may enforce the Order through either a review specifically targeting E.O. 13496 compliance only, or during the course of a regular compliance evaluation, or in response to a complaint. No specifics were given regarding the selection of contractors for an E.O. 13496-only review.

Employees of covered contractors can file written complaints that the contractor has failed to comply with the Order to either OLMS or OFCCP. Complaints will be investigated by OFCCP, and the DOL estimates that they will receive approximately 50 such complaints per year.

If non-compliance is not resolved through conciliation, OFCCP must refer the case to OLMS, who then may take it to the Solicitor of Labor for enforcement. The ultimate penalties for non-compliance can include cancellation or suspension of current contracts, or debarment from future contracts including extension of existing contracts.

A potentially controversial portion of the proposed rule states that, if the DOL finds a subcontractor is not in compliance with the Order, the Secretary of Labor may direct the contractor to require the subcontractor to come into compliance. If this results in the contractor becoming involved in litigation with the subcontractor, the contractor may request that the United States enter the litigation. In cases where the contractor does not take the action directed by the Secretary, the DOL can enforce against the contractor as though they were out of compliance with the Order.

The DOL estimates that each contractor will spend 3.5 hours per year to comply with this rule, at an average annual cost of $108.57.