On May 20, 2010, the Office of Labor-Management Standards ("OLMS") issued a final rule implementing Executive Order 13496 ("Notification of Employee Rights Under Federal Labor Laws"). http://www.dol.gov/olms/regs/compliance/EO13496.htm.  Pursuant to the final rule, federal contractors and subcontractors at any tier must do two things: (1) post a notice informing employees of their collective bargaining rights, and (2) include a clause in covered federal contracts, subcontracts, and purchase orders requiring their subcontractors to post the employee notice.  The effective date for the final rule is June 21, 2010.

Employee Notice

The employee notice includes the following information: (1) information regarding employees' right to form, join, or assist a union, and to bargain collectively with their employer regarding wages, benefits, hours, or other working conditions; (2) examples of illegal union and employer conduct that interferes with employees' rights; and (3) information regarding how employees can contact the National Labor Relations Board with questions or to file complaints.  

Federal contractors and subcontractors must display the employee notice conspicuously in plants and offices where employees covered by the National Labor Relations Act ("NLRA") perform contract-related activity.  A contractor/subcontractor who customarily posts notices for employees on a website must display an electronic posting and a paper posting.  Where a significant portion of a contractor's or subcontractor's workforce is not proficient in English, an employer must provide the employee notice in languages spoken by employees.  OLMS will provide translations of the employee notice upon request.  

Employee Notice Clause

Federal contractors and subcontractors also now must include a clause in their government contracts, subcontracts and purchase orders committing the federal contractor or subcontractor to post the employee notice.  The verbatim text of the employee notice clause may be found at Appendix A to Subpart A of 29 C.F.R. § 471, http://edocket.access.gpo.gov/2010/2010-11639.htm.  The employee notice clause may be included verbatim or incorporated by reference.

Exemptions and Exceptions

The final rule lists a variety of exceptions and exemptions from the compliance obligations discussed above.  For example, the notice posting/employee notice clause requirements do not apply to prime contracts under the Simplified Acquisition Threshold, which is currently set at $100,000, and do not apply to subcontracts below $10,000. The exception for prime contracts below the Simplified Acquisition Threshold does not apply to subcontracts of the prime contract. For example, if a prime contract is $50,000, a contractor would not have any responsibility regarding the notice posting/employee notice clause requirements. If a subcontract is valued at $50,000, however, the subcontractor would have an obligation to post the notice and include the clause.  In addition, employers who are not covered by the NLRA, such as railroads and airlines, are equally exempt from Executive Order 13496's notice posting/employee notice clause requirements. Finally, covered government contracts and subcontracts issued prior to June 21, 2010 are exempt; however, if the contract or subcontract is modified after June 21, 2010, then the employee notice and notice clause obligations will apply.  

Noncompliance Penalties

If a federal contractor or subcontractor fails to comply with the new posting requirements or employee notice clause requirements, the contractor or subcontractor may be subject to penalties that could include having their contract/subcontract terminated or suspended.  In addition, a failure to comply could result in the contractor or subcontractor being ineligible for future government contracts.