Obama Issues Pro-Labor Executive Orders

In what may be considered a gift to organized labor, President Obama issued a series of executive orders on Friday aimed at undoing Bush-era policies involving federal contractors. Issuing executive orders is a quick way to implement labor policy – and appease unions – without enduring the time and uncertainty inherent in the legislative process. Moreover, reversing the prior administration’s executive orders has become a tradition whenever a new party takes over the White House.

One executive order, Notification of Employee Rights Under Federal Labor Laws, mandates that all government contracting departments and agencies include a provision in every government contract (other than a collective bargaining agreement and those involving purchases of less than $100,000) stipulating that the contractor post a notice “in all places where notices to employees are customarily posted both physically and electronically,” informing them of their rights under federal labor laws, including the National Labor Relations Act. The contractor also must include these provisions in every subcontract entered into in connection with the contract. According to the order, “[r]elying on contractors whose employees are informed of such rights under Federal labor laws facilitates the efficient and economical completion of the Federal Government’s contracts.”

The wording and other specifications of the notice will be determined through a rule-making process. In the event of noncompliance, the contract is subject to termination or suspension, and the contractor may be declared ineligible for further government contracts, and subject to other sanctions or remedies to be determined by the Secretary of Labor and/or are otherwise provided for by law.

This order also revokes Executive Order 13201 – Notification of Employee Rights Concerning Payment of Union Dues or Fees – issued by former President Bush on February 17, 2001. This order required federal contractors to post a notice to its employees informing them that (1) they are not required to join or maintain membership in a labor union, and (2) that those who are not union members – but are nonetheless required to pay dues or fees pursuant to a union security agreement – can object to paying a portion of those dues or fees to support activities that are not related to collective bargaining, contract administration or grievance adjustment. 

The second executive order issued Friday, Nondisplacement of Qualified Workers Under Service Contracts, requires that any federal service contracts and solicitations for such contracts include a clause requiring contractors and their subcontractors to offer existing employees the right of first refusal to take positions for which they are qualified under the new contract. The right of first refusal clause does not apply to managerial or supervisory employees. Any new contractor cannot advertise employment openings until the right of first refusal has been exercised by the existing employees.

This order does not apply to (a) contracts or subcontracts under the simplified acquisition threshold as defined in 41 U.S.C. 403; (b) contracts or subcontracts awarded pursuant to the Javits-Wagner-O’Day Act; (c) guard, elevator operator, messenger or custodial services provided to the federal government under contracts or subcontracts with sheltered workshops employing the severely handicapped; (d) agreements for vending facilities entered into pursuant to the preference regulations issued under the Randolph-Sheppard Act; and (e) employees who were hired to work under a federal service contract and one or more nonfederal service contracts as part of a single job, provided that the employees were not deployed in a manner that was designed to avoid the purposes of this order.

This order revokes Executive Order 13204, also issued by Bush on February 17, 2001, which in turn had rescinded Clinton-era Executive Order 12933 implementing the displaced worker policy in the first instance. Obama’s order effectively reinstates Clinton’s. 

The third order issued – Economy in Government Contracting – precludes government contractors from being reimbursed for expenses incurred to influence employees regarding their decisions to form unions or engage in collective bargaining. Such un-reimbursable activities that are undertaken to persuade employees to exercise or not exercise such rights include preparing and distributing materials, hiring or consulting legal counsel or consultants, holding meetings (including paying the salaries of the attendees at meetings held for this purpose) and planning or conducting activities by managers, supervisors or union representatives during working hours.

Permissible expenses include those spent maintaining satisfactory relations between the contractor and its employees, including the costs of labor-management committees and employee publications (other than those used to influence employees to exercise or not exercise their rights to organize or bargain collectively).

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.