Executive Order 13496 (Employee Posting Rule) Update

New requirements under Executive Order 13496 could appear in federal contracts and subcontracts as early as this week. The final rule, published on May 21, becomes effective June 21, 2010. Fortunately or unfortunately, the Federal Acquisition Regulation Council (FAR Council) has not yet issued an implementing FAR that will require the employee notice to be posted.

Qs & As

The following questions and answers address some common questions about the implementation and immediate possibility of enforcement of the final rule under Executive Order 13496:

Q:  Am I required to post the new employee notice clause on June 21, even if the only federal contracts I have are dated before June 21?

A:  No. Contractors and subcontractors have no obligation to post the employee notice until and unless they are signatories to a non-exempt federal contract or subcontract entered into on or after June 21. (Contracts of $100,000 or more, and subcontracts of $10,000 or more that are necessary to the performance of the prime contract, are subject to the employee notice clause.) In other words, until the FAR Council publishes the implementing FAR at 52.222-40 and FAR 52.222-40 is included in non-exempt contracts and subcontracts, no posting is required.

Q: The Office of Labor Management Standards (OLMS) website contains two versions of the poster.  One is 11×17 and the other is two pages, both 8.5×11. Can I post the smaller version?

A: No. The posting must be 11×17 and be in color, just like the one on the OLMS website here. If you have a significant number of employees who are not proficient in English, you must post the notice in the language(s) spoken by employees. (OLMS currently has posters in Spanish and Mandarin Chinese available for download.) OLMS will provide translations of the poster in other languages in the near future.

You can, of course, post a consolidated all-in-one poster including the notice, as long as the notice is identical to the notice published by OLMS. One such poster can be obtained here in English and Spanish.

Q: Where do I have to physically post the notice in my building?

A: When and if you receive a contract or subcontract containing FAR 52.222-40, and you determine that you are covered by the FAR’s provisions, the employee notice must be posted where employees covered by the National Labor Relations Act (NLRA) “engage in contract-related activity.” (Employees not covered by the NLRA include agricultural laborers, domestic workers, independent contractors, supervisors, and employees who work for employers subject to the Railway Labor Act.)

Whether or not you are currently “non-union” does not matter in determining whether the employee notice must be posted; the trigger for posting is having a non-exempt federal contract or subcontract. The Office of Federal Contract Compliance Programs (OFCCP) is taking the position in its recent enforcement directive that the notice must be posted in “conspicuous places in and about” the contractor’s work site so that it is “prominent and readily seen by employees.” This certainly means that more than one copy of the poster must be physically posted but an exact number will depend on the facts and circumstances of each workplace.

Q: Must I post the employee notice electronically?

A: The final rule requires that you physically post the employee notice and post it electronically if you “customarily” electronically post notices to employees regarding the terms and conditions of their employment (e.g., your employee handbook is online, or you customarily correspond with employees regarding work issues via email). If you do post the notice electronically, you must post a “prominent” link to the employee notice contained on the OLMS website.

Q: May I post the notice electronically instead of posting it physically in my workplace?

A: No. Electronic posting cannot be used as a substitute for physical posting.

Q: If I have multiple locations and one or more receives a federal contract or subcontract after June 21 that requires the employee notice to be posted, do I have to post the notice at all of my locations or just the location(s) where the contract will be performed?

A: You must physically (and perhaps electronically) post the notice where employees covered by the NLRA are engaged in activities relating to the performance of a federal contract that contains the notice posting requirement. No posting is required at locations where no employees “engage in activities related” to the contract. In contrast, posting will be required at locations where even some employees – but not all – “engage in activities related” to the contract. The notice also must be posted at locations where auxiliary or indirect work that supports the contract is done – such as off-site human resources, payroll, maintenance, or repair departments. In addition, there is a provision for an exemption in the Final Rule but we anticipate very few exemptions, if any, to be granted.

Q: Are there any exemptions to having to post the notice?

A: Yes. The posting requirements do not apply to federal contracts entered into before June 21, to contracts entered into after June 21 that do not include FAR 52.222-40, to contracts below $100,000 or subcontracts below $10,000 which are not necessary to the performance of the prime contract, to contracts/subcontracts for work exclusively performed outside of the United States, to grants or loans (such as Medicare and Medicaid) that constitute “federal financial assistance,” to states or political subdivisions, and to companies subject to the Railway Labor Act.  Other exemptions also may apply.

Q: If I get a federal contract or subcontract subject to the notice posting requirement, can I ever take the notice down?

A: Yes. When the contract or subcontract is completed, the notice can be removed.

Q: Do financial institutions need to comply with the employee notice posting? 

A: Financial institutions that are fund depositories are clearly subject to the employee notice posting. OFCCP has advised that it believes that financial institutions that are issuing and paying agents for U.S. savings bonds and notes also must post the notice, but there is no such regulatory requirement. We anticipate that OFCCP soon may change its position on this issue. Finally, OFCCP believes that receipt of federal deposit insurance requires financial institutions to post the notice, but this has never been conclusively litigated and again, this requirement is not contained in the Executive Order or the Final Rule.

Q.  Executive Order 13496 revokes the prior Executive Order from the Bush Administration, which had required the posting of a so-called Beck notice informing employees of their rights to withhold payment of that portion of union dues spent for non-collective bargaining purposes, such as union political contributions. Does this mean that we may no longer be entitled to continue voluntarily posting notices regarding Beck rights?

A: Even though Executive Order 13496 revokes the requirement to post Beck notices, the U.S. Supreme Court decision upholding the rights of employees to withhold that portion of union dues spent for non-collective bargaining or contract administration purposes is still the law. Thus, although you are not required to post Beck notices informing your employees of their Beck rights, you are still permitted to post information regarding those rights.

Of course, unions detest the Beck decision and, therefore, it is an individual decision for each contractor as to the impact the posting of Beck notices may have on labor relations.

Q.  May we post our own notices regarding the company’s position on unions, collective bargaining and other forms of protected concerted activity (such as strikes)?

A: The law has not changed with regard to an employer’s right to provide information, posted or otherwise, which is made available to employees concerning unions, collective bargaining and other forms of concerted activity. Section 8(c) of the NLRA provides: “The expressing of any views, argument, or opinion, or the dissemination thereof, whether in written, printed, graphic, or visual form, shall not constitute or be evidence of an unfair labor practice under any of the provisions of this Act [subchapter], if such expression contains no threat of reprisal or force or promise of benefit.”

There is no reason why an employer may not lawfully post its own notice, so long as it does not deface or demean the notice required under Executive Order 13496.

Q: Does the posting under Executive Order 13496 of the required notices of employee rights under the NLRA create an opportunity for us to hold meetings with our employees regarding unions?

A: Yes. An employer may decide to conduct a meeting with employees to explain that the notice posted pursuant to Executive Order 13496 is required by the federal government and at the same time clarify the employer’s position with regard to unions, so long as what the employer says is consistent with the limitations under Section 8(c) of the Act by not “threat(ening) reprisal or force or promise of benefit.”

Again, however, such meetings should be conducted within the employer’s individual workplace circumstances as a program encouraging positive employee relations and consistent with sound labor relations, and should be reviewed by in-house or outside legal counsel to ensure that nothing is said which could lead to an unfair labor practice charge.

Q: What happens if OFCCP or OLMS claims that I have not complied with the employee notice posting or contract provisions?

A: If noncompliance is alleged as a result of an OFCCP compliance review or a complaint investigation, OFCCP and OLMS will first seek voluntary compliance (e.g., post the notice). Should voluntary compliance fail, OFCCP has the option of filing an enforcement action with the Office of Administrative Law Judges to mandate compliance.