[Federal Register: May 20, 2010 (Volume 75, Number 97)]
[Rules and Regulations]
[Page 28367-28402]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20my10-10]
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Part III
Department of Labor
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Office of Labor-Management Standards
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29 CFR Part 471
Notification of Employee Rights Under Federal Labor Laws; Final Rule
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DEPARTMENT OF LABOR
Office of Labor-Management Standards
29 CFR Part 471
RIN 1215-AB70; RIN 1245-AA00
Notification of Employee Rights Under Federal Labor Laws
AGENCY: Office of Labor-Management Standards, Department of Labor.
ACTION: Final rule.
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SUMMARY: On August 3, 2009, the Office of Labor-Management Standards
(``OLMS'') in the Department of Labor (``the Department'') issued a
proposed rule implementing Executive Order 13496. This final rule sets
forth the Department's review of and response to comments on the
proposal and any changes made to the rule in response to those
comments.
President Barack Obama signed Executive Order 13496 (``Executive
Order'' or ``E.O. 13496'') on January 30, 2009. The Executive Order
requires nonexempt Federal departments and agencies to include within
their Government contracts specific provisions requiring contractors
and subcontractors with whom they do business to post notices informing
their employees of their rights as employees under Federal labor laws.
The Executive Order requires the Secretary of Labor (``Secretary'') to
prescribe the size, form, and content of the notice that must be posted
by a contractor under paragraph 1 of the contract clause described in
section 2 of the Order. Under the Executive Order, unless a specified
exception or exemption applies, Federal Government contracting
departments and agencies must include the required contract provisions
in every Government contract. As required by the Executive Order, this
final rule establishes the content of the notice required by the
Executive Order's contract clause, and implements other provisions of
the Executive Order, including provisions regarding sanctions,
penalties, and remedies that may be imposed if the contractor or
subcontractor fails to comply with its obligations under the Order and
the implementing regulations.
DATES: Effective Date: This rule will be effective on June 21, 2010.
FOR FURTHER INFORMATION CONTACT: Denise M. Boucher, Director, Office of
Policy, Reports and Disclosure, Office of Labor-Management Standards,
U.S. Department of Labor, 200 Constitution Avenue, NW., Room N-5609,
Washington, DC 20210, (202) 693-0123 (this is not a toll-free number),
(800) 877-8339 (TTY/TDD).
SUPPLEMENTARY INFORMATION: The Regulatory Information Number (RIN)
identified for this rulemaking changed with publication of the Spring
Regulatory Agenda due to an organizational restructuring. The old RIN
was assigned to the Employment Standards Administration, which no
longer exists; a new RIN has been assigned to the Office of Labor-
Management Standards.
I. Background on the Rulemaking
On August 3, 2009, the Department issued a Notice of Proposed
Rulemaking (``NPRM'' or ``proposed rule''), 74 FR 38488, to implement
Executive Order 13496, ``Notification of Employee Rights Under Federal
Labor Laws,'' 74 FR 6107, Feb. 4, 2009. The Department invited written
comments on the proposed regulations from interested parties, including
current and potential Government contractors, subcontractors, and
vendors, and current and potential employees of such entities; labor
organizations; public interest groups; Federal contracting agencies;
and the public. In addition, when proposing certain provisions of the
rule, the Department invited public comment regarding issues addressed
in those specific provisions. The public comment period closed on
September 2, 2009, and the Department has considered all timely
comments received in response to the proposed rule.\1\
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\1\ The Department received a single request to extend the
comment period for an additional 30 days. The commenter, a law firm,
asserted that the 30-day comment period was too brief and that, as a
result, many interested parties were unaware of the proposed rule.
After due consideration, the Department has determined that the 30-
day comment period was sufficient, and additional time in which to
respond is not warranted. The commenter requesting the extension was
able to submit a lengthy, substantive comment within the 30-day
period and attached additional comments from many of its clients. In
addition, the Department received within the 30-day period a notable
number of substantive comments representing a broad spectrum of
interests associated with the proposed rule. Finally, no other
commenter requested such an extension.
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The Department received 86 unique and timely comments from a wide
variety of sources. Commenters included individuals, labor
organizations, and other organizations and associations representing
the interests of employees, employers and government contractors and
subcontractors. The Department recognizes and appreciates the value of
comments, ideas, and suggestions from members of the public, labor
organizations, employers, industry associations and other interested
parties.
II. The Executive Order
On January 30, 2009, President Barack Obama signed Executive Order
13496, entitled ``Notification of Employee Rights Under Federal Labor
Laws.'' 74 FR 6107, Feb. 4, 2009. The purpose of the Executive Order is
``to promote economy and efficiency in Government procurement'' by
ensuring that employees of certain Government contractors are informed
of their rights under Federal labor laws. Id., Sec. 1. As the Order
states, ``When the Federal Government contracts for goods or services,
it has a proprietary interest in ensuring that those contracts will be
performed by contractors whose work will not be interrupted by labor
unrest. The attainment of industrial peace is most easily achieved and
workers' productivity is enhanced when workers are well informed of
their rights under Federal labor laws, including the National Labor
Relations Act (Act), 29 U.S.C. 151 et seq.'' Id. The Order reiterates
the declaration of national labor policy contained in the National
Labor Relations Act (``NLRA''), 29 U.S.C. 151, that ``encouraging the
practice and procedure of collective bargaining and * * * protecting
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 or protection'' will ``eliminate the
causes of certain substantial obstructions to the free flow of
commerce'' and ``mitigate and eliminate these obstructions when they
have occurred.'' Id., Sec. 1, quoting 29 U.S.C. 151. As the Order
concludes, ``[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.'' Id.
The Executive Order achieves the goal of notification to employees
of federal contractors of their legal rights through two related
mechanisms. First, Section 2 of the Order provides the complete text of
a contract clause that Government contracting departments and agencies
must include in all covered Government contracts. Sec. 2, 74 FR at
6107-08. Second, through incorporation of the specified clause in its
contracts with the Federal government, contractors thereby agree to
post a notice in conspicuous places in their plants and offices
informing employees of their rights under Federal
[[Page 28369]]
labor laws. Sec. 2, para. 1, 74 FR at 6107-08.
The Executive Order states that the Secretary ``shall be
responsible for [its] administration and enforcement.'' Sec. 3, 74 FR
at 6108. To that end, the Executive Order delegates to the Secretary
the authority to ``adopt such rules and regulations and issue such
orders as are necessary and appropriate to achieve the purposes of this
order.'' Id., Sec. 3(a). In particular, the Executive Order requires
the Secretary to prescribe the content, size, and form of the employee
notice. Id., Sec. 3(b). In addition, the Executive Order permits the
Secretary, among other things, to make modifications to the contractual
provisions required to be included in Government contracts (Sec. 3(c));
to provide exemptions for contracting departments or agencies with
respect to particular contracts or subcontracts or classes of contracts
or subcontracts for certain specified reasons (Sec. 4); to establish
procedures for investigations of Government contractors and
subcontractors to determine whether the required contract provisions
have been violated (Sec. 5); to conduct hearings regarding compliance
(Sec. 6); and to provide for certain remedies in the event that
violations are found (Sec. 7). 74 FR at 6108-09.
III. Statutory Authority for the Executive Order and the Department's
Regulation
A. Legal Authority
The President issued Executive Order 13496 pursuant to his
authority under ``the Constitution and laws of the United States,''
expressly including the Federal Property and Administrative Services
Act (``Procurement Act''), 40 U.S.C. 101 et seq. The Procurement Act
authorizes the President to ``prescribe policies and directives that
[he] considers necessary to carry out'' the statutory purposes of
ensuring ``economical and efficient'' government procurement and
supply. 40 U.S.C. 101, 121(a). Executive Order 13496 delegates to the
Secretary of Labor the authority to ``adopt such rules and regulations
and issue such orders as are necessary and appropriate to achieve the
purposes of this order.'' Sec. 3, 74 FR at 6108. The Secretary has
delegated her authority to promulgate these regulations to the Office
of Federal Contract Compliance Programs (``OFCCP'') and the Office of
Labor-Management Standards (``OLMS''). Secretary's Order 7-2009, 74 FR
58834, Nov. 13, 2009; Secretary's Order 8-2009, 74 FR 58835, Nov. 13,
2009.
B. Interagency Coordination
Section 12 of the Executive Order requires the Federal Acquisition
Regulatory Council (``FAR Council'') to take action to implement
provisions of the Order in the Federal Acquisition Regulation (FAR). 74
FR at 6110. Accordingly, the Department has coordinated with the FAR
Council for the insertion of language into the FAR that implements the
Executive Order.
IV. Summary of the Final Rule and Discussion of the Comments
This final rule establishes standards and procedures for the
implementation and enforcement of Executive Order 13496. Subpart A of
the rule sets out definitions, the prescribed requirements for the
size, form and content of the employee notice, exceptions for certain
types of contracts, and exemptions that may be applicable to
contracting departments and agencies with respect to a particular
contract or subcontract or class of contracts or subcontracts. Subpart
B of the rule sets out standards and procedures related to complaint
procedures, compliance evaluations, and enforcement of the rule.
Subpart C sets out other standards and procedures related to certain
ancillary matters. This preamble follows the same organizational
outline, and within each section of the preamble the Department has
noted and responded to the comments addressed to that particular
section of the rule.
During the interagency review process that preceded the publication
of the NPRM, the Department received requests to improve the
readability and understandability of the regulatory text by employing
``plain language,'' which includes, among other things, the use of
common, everyday words, except for necessary technical terms, the use
of the active rather than the passive voice, and the use of short
sentences. The Department has made revisions to the regulatory text of
the final rule in accordance with these guidelines.
As part of a Departmental restructuring, effective November 8,
2009, the Department abolished the Employment Standards Administration
(``ESA''), which was the administrative umbrella for several agencies
within the Department, including OLMS and OFCCP. As the administrator
overseeing both OLMS and OFCCP, the Assistant Secretary for Employment
Standards had designated administrative and enforcement functions under
the proposed rule. Due to the elimination of ESA and the position of
Assistant Secretary for Employment Standards, the final rule has been
revised so that the roles and functions assigned to the Assistant
Secretary in the proposed rule are reassigned. See Sec. Sec. 471.2,
471.13, 471.14, 471.15, 471.16, 471.21, 471.22, and 471.23. Generally
speaking, the Assistant Secretary's enforcement review functions have
been reassigned to the Department's Administrative Review Board, and
the administrative functions in the rule have been reassigned to the
Directors, formerly called the Deputy Assistant Secretaries, of OFCCP
or OLMS, or both.\2\ In addition, the definition of ``Assistant
Secretary'' has been deleted from Sec. 471.1, and definitions have
been added for easy reference to the ``Director of OFCCP'' and the
``Director of OLMS'' in the body of the rule.
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\2\ For ease of reference and to avoid confusion, the Directors
of OLMS and of OFCCP are referred to in this preamble by their
current title, ``Director,'' even when this preamble is discussing
passages of the NPRM that refer to their former title, ``Deputy
Assistant Secretary.''
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A. The Purpose of Executive Order, Statutory Authority and Preemption
The Department received a number of comments about the Executive
Order and its purpose, the President's authority to issue it, and the
asserted preemption of the Order or the Department's regulation by the
National Labor Relations Act (``NLRA''), 29 U.S.C. 151, et seq. First,
the Department received several comments opposing the Executive Order
generally, each of which suggests, for various reasons, that the
Executive Order constitutes unnecessary interference with private
enterprise. Several commenters also commented on the purpose of the
Executive Order. Some commenters were doubtful that the Executive Order
would fulfill its stated goals of promoting economy and efficiency in
government procurement through notifying employees of their rights, and
suggested instead the Executive Order would have the opposite effect
and actually increase costs to taxpayers and amplify labor-management
conflict, among other negative effects cited. Other commenters stated
that the Executive Order would undoubtedly achieve its stated goals. In
particular, these commenters indicated that informing employees of
their rights will enhance industrial peace and worker productivity,
promote a stable workforce and improve employee morale, reduce
intimidation, misinformation, harassment, and fear in the workplace,
eliminate injustice, and contribute to positive labor-management
relations--all of which will foster labor peace and reduce costs to the
government.
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One commenter suggested that the Procurement Act provides an
insufficient basis of authority for the President to issue Executive
Order 13496. Although the comment acknowledges that the courts have
rejected a similar challenge alleging insufficient authority under the
Procurement Act for the issuance of an executive order requiring
federal contractors to post notices to their employees, the commenter
suggests that the scope of the notice required by Executive Order 13496
is broader than the Procurement Act permits.
The Department disagrees with the assertion that Executive Order
13496 is not within the President's authority under the Procurement
Act. The Procurement Act authorizes the President to ``prescribe
policies and directives that the President considers necessary to''
``provide the Federal Government with an economical and efficient
system'' of government procurement. 40 U.S.C. 101, 121. The Procurement
Act grants the President flexibility and ``broad-ranging authority,''
and executive orders issued under the authority of the Procurement Act
need only meet a ``lenient standard'' that requires that the order have
a ``sufficiently close nexus'' to the values of providing the
government an economical and efficient system for procurement and
supply. UAW-Labor Employment Training Corp. v. Chao, 325 F.3d 360, 367-
68 (DC Cir. 2003). Various executive orders have passed this ``lenient
standard,'' even in cases in which the link between the order and
efficient procurement may seem attenuated, where an argument can be
made that the order will have the opposite effect of its stated goal,
or when the order increases costs to the government in the short term.
Id. at 367-68.\3\ Executive Order 13496, which is intended to reduce
government procurement costs through better informing employees of
their rights so that obstructions to commerce stemming from labor
unrest will be mitigated or eliminated, certainly meets this standard.
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\3\ Since the passage of the Procurement Act in 1949, successive
administrations have issued executive orders governing labor and
employment practices of federal contractors, and such orders have
been sustained in the federal courts of appeals against attacks
asserting that the President exceeded his authority under the
Procurement Act. See, e.g., Executive Order 11246, 3 CFR 339 (1964-
65 Compilation) (1965) (applying equal opportunity principles to
federal contractors), upheld by Contractors Ass'n of Eastern
Pennsylvania v. Secretary of Labor, 442 F.2d 159 (3d Cir.), cert.
denied, 404 U.S. 854, (1971); Executive Order 12092, 43 FR 51,375
(1978) (imposing wage controls on federal contractors), upheld by
AFL-CIO v. Kahn, 618 F.2d 784 (DCCir.) (en banc), cert. denied, 443
U.S. 915 (1979); Executive Order 13202, 66 FR 11225 (2001) (agencies
and entities receiving federal assistance for construction projects
may neither require nor prohibit bidders or contractors from
entering into project labor agreements), upheld by Bldg. and
Constr.. Trades Dept, AFL-CIO v. Allbaugh, 295 F.3d 28 (DC Cir.
2002); E.O. 13201, 66 FR 11221 (2001) (requiring federal contractors
to include in their contracts a provision agreeing to post notices
informing employees of Beck rights), upheld by UAW-Labor and
Employment Training Corp. v. Chao, 325 F.3d 360 (DCCir. 2003). See
also City of Albuquerque v. U.S. Dept. of Interior, 379 F.3d 901
(10th Cir. 2004) (Procurement Act provided a sufficient statutory
foundation for executive order directing that in meeting federal
space needs in urban areas, first consideration be given to
centralized community business areas; order's directions were
sufficiently related to the Act to be a valid exercise of the Act's
delegated authority); AFL-CIO v. Carmen, 669 F.2d 815 (DC Cir. 1981)
(executive action to phase out free parking for federal employees
was authorized since the institution of parking charges for federal
employees would assist government in utilizing its property
efficiently and economically).
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Five commenters contend that the Executive Order or the
Department's regulations implementing it are preempted by the National
Labor Relations Act. The comments invoke both theories of NLRA
preemption fashioned by the Supreme Court, so-called Garmon preemption
(San Diego Bldg. Trades Council v. Garmon, 359 U.S. 236, 244 (1959)),
which prohibits regulation of activities that are protected by Section
7 or prohibited by Section 8 of the NRLA, and so-called Machinists
preemption (Int'l Ass'n of Machinists & Aerospace Workers v. Wisconsin
Employment Relations Comm'n, 427 U.S. 132, 144 (1976)), which prohibits
regulation of areas that Congress intended to be left ``unregulated and
to be controlled by the free play of economic forces.'' 427 U.S. at
144. The Court has described Machinists pre-emption as creating a
``free zone from which all regulation, `whether federal or State,' is
excluded.'' Golden State Transit Corp. v. Los Angeles, 493 U.S. 103,
111 (1989), quoting Machinists, 427 U.S. at 153.
The Department disagrees with the contention that the Executive
Order or this implementing regulation is preempted by the NLRA. Garmon
preemption is inapplicable because the activity regulated by the
Executive Order--the posting of an accurate, noncoercive notice of
employee rights--is not conduct that is either protected by Section 7
or prohibited by Section 8 of the NLRA. Similarly, Machinists
preemption is inapplicable because the provision of accurate,
noncoercive information to employees about their NLRA rights is not
within the zone of conduct intended by Congress to be reserved for
market freedom. Further, Chamber of Commerce v. Brown, 128 S.Ct. 2408
(2008), in which the Court held that Machinists preemption invalidated
a State statute that prohibited employers that receive State funds from
assisting, promoting, or deterring union organizing, is distinguishable
because the State law in that case attempted regulation of speech about
unionization that was within the zone of conduct intended to be left to
market forces. In this case, federal contractors remain free to
advocate about unionization, and there is no interference with speech
rights protected by Section 8(c) of the NLRA. Further, the regulation
does not interfere with the primary jurisdiction of the National Labor
Relations Board (``NLRB'' or ``Board'') to draw the lines defining
coercive speech that violates Section 8 of the NLRA, 29 U.S.C. 158, or
that is prejudicial to a fair representation election under Section 9,
29 U.S.C. 159.
B. The Definitions
Section 471.1 of the final rule contains definitions of terms used
in the rule. The Department received six comments from the public about
the proposed definitions and, as noted below, has made some
modifications to the definitions after reviewing the comments.
The Department received three related to the definitions of
``contractor'' and ``contract.'' The NPRM defined a ``contractor'' to
include both a prime contractor and a subcontractor, and defined
``contract'' to include both a Government contract and a subcontract.
The effect of these definitions, taken together with the substantive
obligations of the Executive Order and the rule, creates no
differentiation between the obligations of the prime contractor--the
contractor that directly does business with the Federal government--and
the subcontractors of the prime contractor. The three comments noted
that the broad definitions of ``contractor'' and ``contract''
improperly and without limitation impose the substantive obligations of
the rule on all subcontractors. The three comments all suggest that the
definitions should be modified to reflect some limitation on the
application of the rule to subcontractors, such as the application of
the simplified acquisition threshold, 41 U.S.C. 403, to subcontractors
or a limitation on the application of the rule to subcontractors below
the first tier. One of the three comments notes that although the
proposed rule stated that the simplified acquisition threshold did not
apply to subcontracts, because the definition of ``contract'' and
``contractors'' included ``subcontract''
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and ``subcontractor,'' the rule arguably applies the simplified
acquisition threshold to subcontracts. 74 FR at 38491.
The remaining comments about the definitional section of the rule
were all submitted by one commenter. This commenter noted that the
limited definition of ``collective bargaining agreement'' in the
proposed rule is inconsistent with the definition of ``collective
bargaining agreement'' in the NLRA, and may lead to confusion. The same
commenter requests an explanation for the inclusion of
``weatherization'' in the definition of ``construction,'' noting that
the definition of ``construction'' in similar Departmental regulations
does not include the term. Finally, this commenter recommends that the
definition of ``government contract'' should expressly exclude
contracts for the purchase of ``commercial items,'' as defined in the
Federal Acquisition Regulation, 48 CFR 2.101, so that the terms and
conditions of sales of commercial items to the government will be as
similar as possible to sales in the private sector where a contract
with the government is not involved.
After full consideration of these comments about the definitions in
the proposed rule, the Department has made the following decisions. The
Department endorses the definitions of ``contract'' and ``contractor''
as set out in the proposal, and has made no change to these definitions
in the final rule. As discussed in greater detail below, the
obligations of the final rule apply to both the government contractor
and its subcontractors at any tier. In addition, the exception in the
Executive Order, and in this implementing rule, for government
contracts below the simplified acquisition threshold applies only to
the prime contract and not to subcontracts of the prime contract.
Finally, as further explained below, the Department has decided to
except from application of the final rule subcontracts that are de
minimis in value, which the Department has defined as those
subcontracts that do not exceed $10,000. This exception has been
incorporated into the rule in Sec. 471.3(a), and no modification to
the definitions is required in order to implement this new exception
for de minimis value subcontracts.
The Department declines to exclude from the definition of
``government contract'' contracts for commercial items as defined in
the Federal Acquisition Regulations, 48 CFR 2.101. The Department
acknowledges, as the comment suggests, that the application of this
rule to contracts for commercial items means that such contracts will
differ from the purchase of the same items when the Federal government
is not the purchaser. However, the judgment underlying the Executive
Order, and the Department's judgment in this implementing rule, is that
cost savings in Federal contracting can be made when employees are well
informed of their NLRA rights, and this principle holds true whether
the contract is for commercial items or for some other product or
service.
The Department agrees that the definition of ``collective
bargaining agreement'' in the rule, which is intended only to identify
a class of collective bargaining agreements under the Federal Service
Labor Management Relations Statute (``FSLMRS''), 5 U.S.C. 7101 et seq.,
that are excepted from coverage under the Executive Order, may be
confusing to readers accustomed to the usage of the same term in the
NLRA. Therefore, the definition of this term has been removed from
Sec. 471.1, and the exception for collective bargaining agreements
entered into under the FSLMRS is set out more fully in Sec. 471.3
without cross-reference to the definitional section. In order to treat
the other coverage exception similarly, the definition of ``simplified
acquisition threshold'' has been removed from Sec. 471.1, and the
exception for government contracts below the simplified acquisition
threshold has been made more explicit in Sec. 471.3 without cross-
reference to the definitional section. In addition, in response to a
comment, the Department notes that because of the Federal government's
increased emphasis on energy efficiency, the inclusion of
weatherization activities within the definition of ``construction'' was
important to ensure that Federal contracts involving weatherization are
subject to the rule. For consistency, a similar revision has been made
to the definition of ``construction work site.'' Finally, in response
to a comment received during interagency review of the final rule, the
Department has modified the definition of ``labor organization'' to
more precisely duplicate the definition of ``labor organization'' in
the NLRA, 29 U.S.C. 152(5).
C. The Content of the Employee Notice
1. Statutory Rights Included in the Notice
Executive Order 13496 requires the Secretary to ``prescribe the
size, form and content of the notice'' that contractors must post to
notify employees of their rights. Sec. 3(b), EO 13496, 74 FR at 6108.
Appendix A to Subpart A of the proposed regulatory text presented the
content of the Secretary's proposed notice, which sets forth employee
rights under the NLRA. 74 FR at 38498-99. As a threshold matter, the
Department concluded in the NPRM that providing notice of employee
rights under the NLRA best effectuates the purpose of the Executive
Order. 74 FR at 38489-90. Section 1 of the Executive Order clearly
states that the Order's policy is to attain industrial peace and
enhance worker productivity through the notification of workers of
``their rights under Federal labor laws, including the National Labor
Relations Act.'' Sec. 1, 74 FR at 6107. The policy of the Executive
Order goes on to emphasize the foundation underlying the NLRA, which is
to encourage collective bargaining and to protect workers' rights to
freedom of association and self-organization, and notes that efficiency
and economy in government contracting is promoted when contractors
inform their employees of ``such rights.'' Further, the contract clause
prescribed by the Executive Order requires Federal contractors to post
the notice ``in conspicuous places in and about plants and offices
where employees covered by the National Labor Relations Act engage in
activities related to performance of the contract. * * *'' Sec. 2,
para. 1, 74 FR at 6107 (emphasis added). Because of these specific
references to the NLRA, the NPRM proposed including in the notice only
employee rights contained in the NLRA.
The Department received one comment noting a textual ambiguity in
the Executive Order relating to the content of the notice. The
commenter pointed out that the Executive Order refers to the provision
of notice about ``rights under Federal labor laws, including the
National Labor Relations Act,'' which, the commenter submits, suggests
that the Department should include rights under other ``Federal labor
laws'' in the notice as well. In particular, this commenter suggested
that the notice should include statutory rights under the Railway Labor
Act (``RLA''), 45 U.S.C. 151-188, the Federal law governing labor-
management relations in the airline and rail industries. Two other
commenters suggested the inclusion in the notice of rights under the
Labor-Management Reporting and Disclosure Act (``LMRDA'') 29 U.S.C. 401
et seq., which guarantees certain rights to union members. A final
commenter on this subject agreed with the Department that
[[Page 28372]]
the notice should be limited to rights under the NLRA.
The Department has considered the inclusion of other statutory
rights in the notice, but has concluded that there is overwhelming
textual support in the Executive Order, as noted above, for its
original conclusion that rights under the NLRA should be the sole focal
point of the required notice. Taken together, these provisions of the
Executive Order offer strong evidence that its intent is to provide
notice to employees of rights under the NLRA. Furthermore, no other
Federal labor or employment laws are mentioned expressly in the
Executive Order.\4\ Therefore, there is no textual support--other than
the plural reference to ``Federal labor laws''--that would support the
inclusion of rights under either the LMRDA or the RLA, as suggested by
the comments. Inclusion of rights under the RLA is precluded for
another reason as well. Because Executive Order 13496 requires that the
notice be posted ``where employees covered by the National Labor
Relations Act'' work, 74 FR 6107, and the NLRA expressly excludes from
its coverage employers covered under the RLA and their employees, 29
U.S.C. 152(2) and (3), when the Executive Order and the NLRA are read
together, federal contractors that are covered by the RLA are excluded
from the requirements of the Executive Order.
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\4\ The Postal Reorganization Act, 39 U.S.C. 101 et seq.,
extended the jurisdiction of the NLRB to employees of the United
States Postal Service. See 39 U.S.C. 1201-1209.
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2. Overview of the Comments on the Content of the Proposed Notice
As noted in the NPRM, the Department considered the level of detail
the notice should contain regarding NLRA rights. The Department
considered requiring a verbatim replication of the NLRA's enumeration
of employee rights in Section 7, 29 U.S.C. 157, or a simplified list of
rights based upon that statutory provision.\5\ In the end, however, the
Department concluded in the NPRM that inclusion of the statutory
language itself or a simplified list of rights in a notice would be
unlikely to convey the information necessary to best inform employees
of their rights under the Act. Instead, the Department proposed a
statement of employee rights, contained in Appendix A to Subpart A of
Part 471 (``NPRM notice'' or ``proposed notice''), 74 FR at 38498-99,
that provided greater detail of NLRA rights derived from Board or court
decisions and that would more effectively convey such rights to
employees. The proposed notice also contained examples of general
circumstances that constitute violations of employee rights under the
Act. Thus, the Department proposed a notice that provided employees
with more than a rudimentary overview of their rights under the NLRA,
in a user-friendly format, while simultaneously not overwhelming
employees with information that is unnecessary and distracting in the
limited format of a notice. The Department specifically invited comment
on the statement of employee rights proposed for inclusion in the
required notice to employees. In particular, the Department requested
comment on whether the notice contains sufficient information of
employee rights under the Act; whether the notice effectively conveys
the information necessary to best inform employees of their rights
under the Act; and whether the notice achieves the desired balance
between providing an overview of employee rights under the Act and
limiting unnecessary and distracting information.
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\5\ Section 7 of the NLRA, 29 U.S.C. 157, states that:
``[e]mployees shall have the right to self-organization, to form,
join, or assist labor organizations, to bargain collectively through
representatives of their own choosing, and to engage in other
concerted activities for the purpose of collective bargaining or
other mutual aid or protection, and shall also have the right to
refrain from any or all such activities except to the extent that
such right may be affected by an agreement requiring membership in a
labor organization as a condition of employment as authorized in
section 8(a)(3) [section 158(a)(3) of this title].''
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The content of the proposed notice received more comments than any
other single topic addressed in the proposed rule. Many comments from
both individuals and organizations offered general support for the
content of the proposed notice, stating that employee awareness of
basic legal rights will promote a fair and just workplace, improve
employee morale, and foster workforce stability, among other benefits.
Several employee and civil rights organizations registered support for
the rule, and maintained that because employers are required to post
notices informing employees of other federal workplace rights, this
notice represents little or no additional burden and, in fact, is long
overdue given the other required notices.\6\ Labor organizations were
also supportive of the proposed notice generally, noting that
employees' awareness of their basic workplace rights in a clear and
effective manner will promote the free exercise of those rights and
prevent employer interference and intimidation of employees regarding
self-organization and collective bargaining.
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\6\ The Department of Labor implements employee notification
requirements pertaining to employers covered by the Fair Labor
Standards Act, 29 U.S.C. 211 (implementing regulation 29 CFR 516.4);
the Occupational Safety and Health Act, 29 U.S.C. 657(c)
(implementing regulation 29 CFR 1903.2); the Family Medical Leave
Act, 29 U.S.C. 2601 et seq., (implementing regulation 29 CFR
825.300, .402); the Uniformed Service Employment and Reemployment
Rights Act, 38 U.S.C. 4334 (implementing regulation 20 CFR 1002);
Employee Polygraph Protection Act, 29 U.S.C. 2003 (implementing
regulation 29 CFR 801.6); and the Migrant and Seasonal Agricultural
Worker Protection Act, 29 U.S.C. 1821(b), 1831(b) (implementing
regulation 29 CFR 500.75, .76). Federal contractors specifically
have additional notification requirements, including equal
employment opportunity rights under Executive Order 11246, the
Rehabilitation Act of 1973, 29 U.S.C. 793, and the Vietnam Era
Veterans' Readjustment Assistance Act of 1974, (implementing
regulations at 41 CFR Chapter 60-l .42; 41 CFR 60-250.4(k); and 41
CFR 60-74 1.5(a)(4)), and rights under the Davis-Bacon Act, 40
U.S.C. 3142(c)(2) (implementing regulation 29 CFR 5.5(a)(l)) and the
Service Contract Act, 29 U.S.C. 351(a)(4) (implementing regulation
29 CFR 4.6(e), .184).
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Other commenters were less enthusiastic about the content of the
proposed notice. A significant number of commenters--approximately one-
third--including many employer, industry and interest groups, argued
that the content of the notice is not balanced, and appears to promote
unionization instead of employee freedom of association. In particular,
many commenters stated that among the rights contained in Section 7 of
the NLRA is the right to refrain from union activity, but this right is
given little attention in comparison to other rights in the proposed
notice. In addition, many of these commenters also noted that the
examples of employer and union unfair labor practices are unbalanced--
the list of employer misconduct in the proposed notice was seven items
long, while the example of union misconduct contained only one item.
Several commenters also noted that the proposed notice excludes rights
associated with an anti-union position, including the right to seek
decertification of a bargaining representative, the right to abstain
from union membership in so-called right-to-work states, and rights
associated with the Supreme Court's decision in Communication Workers
v. Beck, 487 U.S. 735 (1988), permitting employees to seek
reimbursement of that portion of dues or fees collected under a union
security clause in a collective bargaining agreement that is not used
for collective bargaining, contract administration, or grievance
adjustments. Many of these comments noted that a neutral and even-
handed government position on unionization would be more inclusive of
these rights.
Many comments addressed the issue of complexity, as it pertains
both to the
[[Page 28373]]
law and to the content of the proposed notice. Approximately ten
comments stated that the Department's attempt to summarize NLRA
decisional law was flawed because the law is far too complex to
condense into a single workplace notice. Many of these comments noted
that NLRA law has been developed over 75 years, and involves
interpretations by both the NLRB and the federal courts, sometimes with
conflicting results. Some commenters noted that because of Board member
turnover, which alters the political composition of the Board, legal
precedent changes frequently, thus requiring frequent updates to the
content of the notice. Several commenters cited the NLRB's Basic Guide
to the National Labor Relations Act: General Principles of Law Under
the Statute and Procedures of the National Labor Relations Board (Basic
Guide to the NLRA) (1997), available at http://www.nlrb.gov/nlrb/
shared_files/brochures/basicguide.pdf, to make their point about legal
complexity. In the Foreword to the Basic Guide to the NLRA, the Board's
General Counsel states that ``[a]ny effort to state basic principles of
law in a simple way is a challenging and unenviable task. This is
especially true about labor law, a relatively complex field of law.''
The thrust of these comments about legal complexity was that NLRA
decisional law is too complex, dynamic, and nuanced, and any attempt to
summarize it in a workplace notice will result in an oversimplification
of the law and lead to confusion, misunderstanding, inconsistencies,
and some say, heightened labor-management antagonism.
Similarly, six comments stated that the proposed notice itself was
too complex to be helpful or informative to employees. Some said the
notice was too long and wordy, and therefore likely to confuse or
mislead employees, which, as one commenter noted, is contrary to the
purpose of the Executive Order. Another said the notice is too long and
contains examples of employer misconduct that are arbitrary and too
specific.
Comments asserting that the content of the proposed notice was too
detailed dovetailed with the many comments suggesting that the required
notice should specify only those rights contained in Section 7 of the
NLRA or, alternatively, those rights and obligations as stated in
employee advisories on the NLRB's Web site.\7\ Approximately sixteen
comments suggested this simplified approach, while only three advocated
in favor of the level of complexity in the notice, noting particularly
that the detail in the notice comports with the Executive Order's
requirement that employees should be ``well informed of their rights.''
Those comments favoring a more streamlined notice suggested that a
simplified version of the notice based on Section 7 or the NLRB's Web
site advisory would be clear, straightforward, and easily understood;
would not be stated in ``legalese''; would be unlikely to confuse or
inflame tensions; would defer to the statute's drafters or to the
NLRB's expertise to provide a statement of rights; would be unbiased;
and would decrease the likelihood of misleading employees; and would
improve readability.
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\7\ See http://www.nlrb.gov/Workplace_Rights/employee_
rights.aspx.
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In addition to these general comments about the proposed notice,
many comments offered suggestions for specific revisions to individual
provisions within the four sections of the proposed notice: the
preamble, the statement of affirmative rights, the examples of unlawful
conduct, and the enforcement and contact information. The following
discussion presents in succession the comments related to individual
provisions of the notice, followed by the Department's decisions
regarding the content of the final notice made in response to all
comments on the content of the notice.
3. Comments Addressing the Preamble of the Proposed Notice
The preamble of the proposed notice stated that ``[i]t 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.'' 74 FR at 38498. The
proposed preamble was based on Section 1 of the NLRA, 29 U.S.C. 151,
and Executive Order 13496, Section 1. The Department specifically
sought comment on this description of policy in the proposed notice.
Five commenters support the statement in the preamble that U.S.
policy encourages collective bargaining and the full exercise of worker
self-determination rights. Many supportive comments noted that the
preamble is appropriate given that Section 1 of the Executive Order
also reiterates the policy of encouraging collective bargaining.
Fourteen commenters opposed the preamble on various grounds. Many
negative commenters noted that the preamble resembles text from Section
1 of the NLRA, ``Findings and Policies,'' 29 U.S.C. 151, but
substantially misstates it.\8\ These commenters note that U.S. policy
as stated in Section 1 of the NLRA is ``to eliminate the causes of
certain substantial obstructions to the free flow of commerce and to
mitigate and eliminate these obstructions when they have occurred,''
and that one means to achieve that policy goal is through the
encouragement of collective bargaining and free exercise of rights. By
overlooking the statute's true stated purpose to eliminate obstructions
to commerce, these commenters say, the notice's preamble improperly
elevates the ``encouragement of collective bargaining'' to a guiding
principle rather than simply a means to achieve the free flow of
commerce. Other commenters noted that the policy of the U.S. is, or
should be, to remain neutral regarding labor-management relations, and
the preamble should reflect neutrality by emphasizing employee choice,
which includes the right to refrain from collective bargaining or other
union activities. One commenter noted that Section 1 of the NLRA must
be read together with Section 9 of the NLRA, 29 U.S.C. 159, which
establishes procedures for the election of a collective bargaining
representative by a vote of a majority, thus underscoring that U.S.
policy encourages collective bargaining only when a majority of
employees have freely chosen workplace representation. Observing some
differences between the text of the notice's preamble and the statement
of purpose in the Executive Order, two commenters noted that the
preamble does not accurately track the Executive Order's precatory
language.\9\ Finally,
[[Page 28374]]
several commenters suggested that the preamble be eliminated altogether
so that these drafting issues need not be addressed.
---------------------------------------------------------------------------
\8\ Section 1 of the NLRA states that ``[i]t is declared to be
the policy of the United States to eliminate the causes of certain
substantial obstructions to the free flow of commerce and to
mitigate and eliminate these obstructions when they have occurred by
encouraging the practice and procedure of collective bargaining and
by protecting 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 or protection.''
29 U.S.C. 151.
\9\ Section 1 of the Executive Order, 74 FR 6107, states:
As the [NLRA] recognizes, ``encouraging the practice and
procedure of collective bargaining and * * * protecting 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 or protection'' will ``eliminate the causes of
certain substantial obstructions to the free flow of commerce'' and
``mitigate and eliminate these obstructions when they have
occurred.'' 29 U.S.C. 151.
---------------------------------------------------------------------------
4. Comments Addressing the Statement of Affirmative Rights in the
Proposed Notice
The proposed notice contains the following statement of affirmative
rights:
Under federal law, you have the right to:
Organize a union to negotiate with your employer concerning your
wages, hours, and other terms and conditions of employment.
Form, join or assist a union.
Bargain collectively through a duly selected union for a
contract with your employer setting your wages, benefits, hours, and
other working conditions.
Discuss your terms and conditions of employment with your co-
workers or a union; join other workers in raising work related
complaints with your employer, government agencies, or members of
the public; and seek and receive help from a union subject to
certain limitations.
Take action with one or more co-workers to improve your working
conditions, including attending rallies on non-work time, and
leafleting on non-work time in non-work areas.
Strike and picket, unless your union has agreed to a no-strike
clause and subject to certain other limitations. In some
circumstances, your employer may permanently replace strikers.
Choose not to do any of these activities, including joining or
remaining a member of a union.
Comments on the statement of affirmative rights offered both general
guidance on the provisions overall, as well as specific recommendations
for revising each provision individually. Generally, two labor
organizations suggested that the statement of affirmative rights should
present only the basic rights without any attempt to present the
limitations to those basic rights that have developed over the decades
of decisional law. The first labor organization argues that such
limitations are themselves subject to further exceptions, which cannot
be included in the notice without overwhelming and confusing employees.
This comment notes that the limitations to the basic rights included on
the notice involve fact-dependent scenarios that do not assist
employees in understanding their basic rights. None of the basic
rights, the comment asserts, have ever been understood as absolutes
without any exceptions or limitations, so the attempt to include those
in the notice is unnecessary and confusing. One commenter from the
retail industry noted generally that the statement of affirmative
rights should contain a disclaimer that ``certain types of speech and
expression in the workplace are not protected.'' As an example, the
commenter indicated that some employers may permissibly prohibit third-
party solicitations or leafleting, or wearing of any insignia, in a
retail setting. The final general comment regarding the statement of
affirmative rights suggested that the use of the second-person pronouns
``you'' and ``your'' is overly inclusive because not all casual readers
of the poster are covered by the statement of rights. This comment
suggests that the notice must make it clear that the enumerated rights
apply only to covered employees, as the Department has done with the
notice required by the Family and Medical Leave Act, 29 CFR part 825
Appendix C. This comment notes that a statement regarding eligibility
would eliminate confusion for employees who are not covered by the NLRA
but may read the notice.
Many comments about the notice's statement of affirmative rights
were directed at whether each individual provision, e.g., the right to
bargain collectively or the right to discuss union issues with
coworkers, constitutes an informative, accurate, and/or complete
statement of the law. Some general conclusions emerge from a review of
the comments on each provision, which is set out in more detail below.
First, labor organizations tended to favor statements of rights that
were short and without qualifications or exceptions, and disfavored the
``subject to certain exceptions'' limitations added to some of the
provisions. Groups representing employers, on the other hand, argued in
favor of adding exceptions and limitations to the notice, sometimes to
the extent that the notice would lose the quality of a poster and would
become instead a more comprehensive manual.
a. The Right To Organize and the Right To Form, Join and Assist a Union
There were no comments, positive or negative, specifically about
the text of the notice referencing employees' rights to organize a
union or form, join or assist a union.
b. The Right To Bargain Collectively
Two comments suggested that the statement that employees have the
right to bargain collectively with their employers through a duly
selected union over wages and other terms and conditions of employment
is misleading and vague. The first comment argues that the statement is
misleading because it fails to acknowledge that an employer does not
have an obligation under the NLRA to consent to the establishment of a
collective bargaining agreement, but instead only has the statutory
duty to ``meet at reasonable times and confer in good faith with
respect to wages, hours, and other terms and conditions of
employment.'' 29 U.S.C. 158(d). Moreover, the failure to reach an
agreement is not per se unlawful, and the finding of an unfair labor
practice instead depends on whether the parties engaged in good faith
bargaining. This commenter suggests that the notice should instead note
that the NLRA requires the parties to bargain in good faith but does
not compel agreement or the making of concessions, and that, in some
instances, a bargaining impasse will result, permitting the parties to
exercise their economic weapons, such as strikes or lockouts. A few
other commenters similarly suggested that the notice should include a
statement that both employers and unions have an obligation to bargain
in good faith.
The second comment submitted about this particular provision argues
that the term ``duly selected'' union is so vague that it permits
misunderstanding. For instance, the comment suggests, the phrase
permits the reader to erroneously conclude that an employer is
obligated to bargain with a union supported by the majority of
employees signing union authorization cards but not certified by the
NLRB following a government-supervised secret ballot election.
Alternatively, the comment submits that the phrase permits readers to
erroneously believe that an employer must bargain with a minority
union. To remedy the misstatements in this and other sections of the
notice, the comment suggests that the Department rely on the text of
the NLRB's very brief brochure entitled, Protecting Workplace
Democracy.\10\
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\10\ The brochure can be accessed at http://www.nlrb.gov/nlrb/
shared_files/brochures/OutreachBrochure_Rev_10-30-07.pdf.
---------------------------------------------------------------------------
c. Discuss With Coworkers, Join With Other Coworkers
Both labor organizations and management groups suggested changes to
the third provision in this section of the notice. One labor
organization suggested significant streamlining of this provision so
that it references only employees' ``communication'' rights, and
recommends the inclusion of the other ``action'' rights (``join other
workers,'' etc.) in the following provision. This comment advised that
separation of communication from action would clarify each provision.
Thus, the comment suggests that this provision should read simply:
``Discuss your terms and conditions of employment or union organizing
with your coworkers or with a union.'' A second labor organization
[[Page 28375]]
agreed that communication and action rights should be separated, but
adds that this provision should emphasize employees' rights to
communicate with their coworkers at their place of work about union
issues. While this comment suggests that this provision reference
``employee's rights of workplace access/communication,'' it makes no
specific proposal for revision of the text.
Comments from the groups representing employer interests generally
suggest one of two approaches--either that the provisions should be
stricken entirely because the law in this area is too complex to
summarize or that the general statement in the provision is inaccurate
because it fails to include limitations and qualifications on an
employee's right to discuss union issues with coworkers. One law firm
representing employers suggests that the provision be stricken
entirely, because the notice cannot possibly accurately summarize Board
law on this point, which is constantly evolving. Four other commenters
assert that the following complexities or subtleties are missed in the
overly succinct statement about communication rights: The statement
fails to notify employees that employers can lawfully prohibit certain
communication, such as a no-talk rule about a drug investigation or
disparagement of employer's product or service; the statement fails to
include the Board's recently articulated rules governing employee use
of and access to employer e-mail for union talk,\11\ omits references
to the fact that an employee does not have an absolute right to speak
to a union organizer on an employers' property, does not discuss the
meaning of ``mutual aid,'' fails to discuss an employees' duty not to
disparage employers' products or services, and does not reference the
limitations on so-called Weingarten rights involving an employee's
right to have a union representative present in a disciplinary meeting;
and the provision does not clarify that concerted activity must be both
``concerted'' and ``for the mutual aid and protection'' of employees,
nor does it reflect that not all action taken together with coworkers
is protected, for example, a sit down strike; and the provision does
not explain that certain expressions or conduct, for instance,
profanity directed at the employer, may not be protected (Jackson
Lewis). As proposed revisions to this provision, one comment suggests
that provisions should include the general ``subject to certain
limitations'' language; another suggests sole reliance on the NLRB's
brochure, Protecting Workplace Democracy, See supra n. 12; and the
remaining comments suggest the inclusion of the level of detail that
would effectively turn the notice into a multi-page legal reference.
---------------------------------------------------------------------------
\11\ See The Register Guard, 351NLRB 1110 (2007).
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d. Attending Rallies
All four comments about the right to attend rallies suggest that
this provision should be eliminated. One comment suggests that the term
``rally'' has no legal history or meaning under the NLRA, and that the
reference is misleading because it erroneously indicates that there
might be some legal protection for a rally on company property on non-
work time. Other comments similarly suggest that the provision is
flawed because it does not distinguish between types of protected and
unprotected rallies and is confusing. In addition to deleting the
reference to rallies, one labor organization's proposed revision
suggests deleting the reference to leafleting, discussed further below,
and establishing this provision as the ``action'' provision in
counterpoint to the ``communication'' provision above. Thus, this
comment suggests the following revision: ``Take action with one or more
of your co-workers to improve your working conditions by, among other
means, raising work-related complaints directly with your employer or
with a government agency, and seeking help from a union.''
e. Leafleting
Four of the five comments about the inclusion of the right to
leaflet on non-work time in non-work areas level criticisms similar to
criticisms of other provisions--that the provision is too general and
does not distinguish between types of leafleting conduct that are
protected and those that are unprotected. For instance, the comments
indicate that the provision fails to note limitations related to the
rights of off-duty employees to handbill, that leafleting can be
prohibited in patient care areas, and that some types of
communications, such as the disparagement or vilification of an
employer's reputation, are unprotected. The fifth comment on this topic
suggests elimination of the provision because the right to engage in
literature distribution is adequately addressed in the examples of
violations and need not be addressed in the statement of affirmative
rights.
f. Striking and Picketing
The notice's reference to the right to strike and picket received
eight comments, and the comments are aligned generally as they have
been with other provisions: Labor organizations suggest the removal of
the ``subject to certain other limitations'' language and the
suggestion that ``[i]n some circumstances, your employer may
permanently replace strikers,'' while comments representing employer
interests suggest the provision is flawed because of the absence of
further limitations, exceptions, and distinctions.
One labor organization suggests that the right to strike and picket
be presented as are the other rights in the notice, with a plain
affirmative statement of the right and without describing possible
limitation on the exercise of the right in question. The reference to
the limitation on the right in the presence of a contractual no-strike
clause both overstates and understates the possible limitations on the
right, this commenter submits, depending, for example, on the nature of
the no-strike clause in question. A second labor organization echoes
the criticism, and further suggests that the introduction of the
complex law regarding an employer's right to permanently replace
certain striking employees adds an unnecessary and ultimately confusing
limitation, which will lead employees to fear exercising the right.
Other labor organizations specifically endorse this criticism.
Among the permutations missed in the proposed formulation, other
commenters argue, are the distinctions that may lead to a determination
that certain strike activity is unprotected, such as whether the strike
is for recognition or bargaining, whether the strike has a secondary
purpose, whether picketing involves a reserved-gate, whether the strike
is a sit-down or minority strike, whether the conduct is a slow down
and not a full withholding of work, whether the strike is partial or
intermittent, whether the strike involves violence, and whether the
strike is an unfair labor practice strike or an economic strike. One
law firm suggests this area of law is so complex that it cannot be
reduced to a single provision in the notice, and thus should be
eliminated altogether.
g. Choosing To Refrain From Union Activity
All nine comments about the right to refrain from engaging in union
activity universally criticized its lack of prominence, two of these
comments asserting that the provision's prominence was so diminished
that they did not notice the statement at all. Some comments accused
the Department of ``burying'' the provision in the text far below the
other rights to
[[Page 28376]]
engage in union activity, further exemplifying, some say, that the
Department favors union activity. Suggested revisions to amplify the
prominence of the provision include stating that employees have the
right to refrain from protected, concerted activities and/or union
activities; stating that employees' right to refrain includes the right
to actively oppose unionization, to not sign union authorization cards,
to request a secret ballot election, to decertify a union
representative, to not be a member of a union or pay dues or fees
(addressed further below); and stating that employees have the right to
be fairly represented even if not a member of the union. One employer
suggested that if the notice retains its current emphasis favoring
union activity and disfavoring the freedom to refrain from such
activity, employers will be compelled to post their own notices, which
the commenter states is not unlawful, that emphasize and elaborate on
the right to refrain. Rather than subject employees to two posters, the
commenter suggests, the Department should better balance this notice.
h. Rights Related to Union Membership
Eight commenters want the notice to include a statement about an
employee's rights under Communication Workers v. Beck, 487 U.S. 735
(1988) (``Beck rights''). Typical of these comments is a submission
suggesting that the notice should include the right to not be a member
of a union, to not pay union dues or fees as condition of employment if
the employee is in a so-called right-to-work state, and not to pay full
union dues as condition of employment in non-right-to-work state. This
commenter suggests that the failure to include these rights would make
clear the Secretary's purpose to assist unions and union officials that
themselves enjoy no rights under the NLRA. Another commenter made a
somewhat different point about Beck rights, suggesting that the notice
must include the right to refrain from being a full dues-paying member
although an employee may have to pay representational fees; the right
to refuse to pay any dues in a right-to-work state; and the right to
withhold dues earmarked for political, lobbying or other non-
representational activities. A third commenter suggests that if Beck
rights are included, the Department may find it difficult to explain
``compulsory unionism.''
5. The Examples of Unlawful Conduct in the Notice
The proposed Notice contained the following examples of unlawful
conduct:
It is illegal for your employer to:
Prohibit you from soliciting for the union during non-work time
or distributing union literature during non-work time, in non-work
areas.
Question you about your union support or activities.
Fire, demote, or transfer you, or reduce your hours or change
your shift, or otherwise take adverse action against you, or
threaten to take any of these actions, because you join or support a
union, or because you engage in other activity for mutual aid and
protection, or because you choose not to engage in any such
activity.
Threaten to close your workplace if workers choose a union to
represent them.
Promise or grant promotions, pay raises, or other benefits to
discourage or encourage union support.
Prohibit you from wearing union hats, buttons, t-shirts, and
pins in the workplace except under special circumstances, for
example, as where doing so might interfere with patient care.
Spy on or videotape peaceful union activities and gatherings or
pretend to do so.
It is illegal for a union or for the union that represents you
in bargaining with your employer to: Discriminate or take other
adverse action against you based on whether you have joined or
support the union.
As a general matter and as noted earlier, there were many comments
about the disproportionate number of examples of employer misconduct as
compared to the single example of union misconduct. Thirteen comments
made this point, many relying on the number of paragraphs devoted to
illegal employer conduct (7) and the number of paragraphs devoted to
illegal union conduct (1). Several comments indicated that when one
compares the employer misconduct listed in Section 8(a) of the NLRA
with union misconduct listed in Section 8(b), no such imbalance appears
in the text of the statute. In order to comply with the Executive
Order's directive to accurately inform workers of their rights, several
comments indicated, additional examples of illegal union conduct must
be included. Many suggested reliance on the statutory text of Section 8
to achieve the proper balance. Several commenters provided additional
examples of union misconduct that may be listed, including the refusal
to process a grievance because the employee is not a union member,
requiring nonmembers to pay a fee to receive contract benefits,
videotaping non-striking employees, disciplining members for engaging
in activity adverse to a union-represented grievant, disciplining
members for refusing to engage in unprotected activity, engaging in
perfunctory or careless grievance handling, failing to notify employees
of their Beck rights, causing or attempting to cause an employer to
discriminate against an employee regarding union security, requiring
employees to agree to dues checkoff instead of direct payment,
discriminatorily applying hiring hall rules, and conditioning continued
employment on the payment of a fine.
Four commenters offered general comments about the examples of
unlawful employer conduct. Of those, two suggested relatively minor
revisions--one asked for more specific examples of violations and one
suggested the inclusion of the concept that low-level supervisors must
not engage in misconduct. A third suggested the inclusion of examples
of employer misconduct that interferes with or restrains an employee's
right to oppose unionization. The fourth, from a labor organization,
suggests that the Department should delete the specific references to
solicitation, distribution and insignia, and instead categorically
state that ``it is unlawful for employers to interfere with any and all
employee rights, including all examples of rights listed above.'' This
comment contends that this would be clearer and more accurate than the
current provision, which lists only some but not all violations.
As with the notice's statement of affirmative rights, the
individual provisions in this section of the notice each received
numerous comments and suggestions for improvement. The vast majority of
the comments about the specific provisions are from representatives of
employers, and most suggest that the examples are too broad and fail to
reflect the various permutations that would convert some conduct from
prohibited to permitted.
a. No Solicitation and No Distribution Rules
Seven commenters were critical of the provision stating that an
employer cannot lawfully prohibit employees from ``soliciting for the
union during non-work time or distributing union literature during non-
work time, in non-work areas.'' Of those, two labor organizations
suggest that the references to ``non-work time'' and ``non-work areas''
are too abstract, ambiguous and confusing, and suggest additions to the
text to explain the references. Thus, one labor organization proposes
that the notice state that employers may not ``prohibit you from
soliciting for a union during non-work time, such as before or
[[Page 28377]]
after work or during break times; or from distributing union literature
during such non-work time, in non-work areas, such as parking lots or
break rooms.'' \12\ The second labor organization offered the same
clarification of the reference to non-work time, but goes further. This
comment suggested that ``solicitation'' has a narrow meaning and
involves asking someone to join the union by signing an authorization
card, which is subject to the restrictions suggested in the notice. The
comment submits, however, that this should be distinguished from more
general ``union talk''--discussing the advantages and disadvantages of
unionization--which, the comment asserts, cannot be lawfully restricted
by employers.
---------------------------------------------------------------------------
\12\ This comment also suggested changing the reference in the
proposed provision from ``the union'' to ``a union'' to avoid the
suggestion that there is a preferred union, such as an incumbent
union. This suggestion has been adopted.
---------------------------------------------------------------------------
The remaining comments criticize the provision for failing to note
any limitations on employees' rights to solicit and distribute, such as
the limited rights of off-duty employees, and limitations in the retail
and health care establishments. One comment, in particular, wants the
notice to advise hospital employees that they do not enjoy a protected
right to solicit in immediate patient care areas or where their
activity might disturb patients, and proposes including the
qualification, ``except that a hospital or other health care employer
may prohibit all solicitation in immediate patient care areas or
outside those areas when necessary to avoid disrupting health care
operations or disturbing patients.'' Another comment suggested that the
law in this area is so complex that no meaningful but succinct
provision can be constructed, and therefore recommends deleting it
entirely.
b. Interrogating Employees About Union Activity
Four commenters, all representing employer interests, suggested
that the notice's provision indicating that it is unlawful for an
employer to question an employee about his or her union support or
activities is too broadly stated. Three of the four suggested that the
provision should include the Board's standard for analysis of
interrogation charges, i.e., whether the questioning interferes with an
employee's rights given the totality of the circumstances. Two of those
three suggested the inclusion of the circumstances that might be
considered to determine whether questioning is unlawful, including the
presence of employer hostility to unions, the identity of the
questioner, the place and method used, and the employee's response. The
fourth comment asserted that the provision should be stricken because
the law in this area is too complex to summarize.
c. Taking Adverse Action Against Employees for Engaging in Union-
Related Activity
Four comments, all from employer groups, disapprove of the
provision describing unlawful employer discrimination against employees
for engaging in union activity. Two of the four suggest that the
provision is inadequate because it does not recognize the application
of the Board's burden-shifting analysis in Wright Line, Inc., 251 NLRB
1083 (1980) to determine whether unlawful discrimination has occurred.
Another comment suggests that the provision is inaccurate because it
does not reflect that in states without right-to-work laws and where a
collective bargaining agreement contains a union security clause, some
employers may be required to terminate employees who choose not to join
the union or pay union dues or fees. The final comment complains that
this provision is inaccurate because it does not include or explain
protection for ``concerted activity.''
d. Threats To Close
Five comments, all from employer groups, criticize the
overgeneralization of the provision stating that it is unlawful to
threaten to close if a union is chosen to represent employees. Most
comments note that, as with unlawful interrogation, a threat to close
is evaluated under a totality of circumstances, and that an employer is
permitted to state the effects of unionization on the company so long
as the statement is based on demonstrably probable consequences of
unionization. Also, as with other provisions, one commenter suggested
that the provision should be eliminated because the law in this area is
too complex to capture. A final comment suggests that the provision
implies that a union can guarantee job security.
e. Promising Benefits
One comment from a group representing employer interests states
that this provision is ``the only substantive statement that the
Department has proposed in the notice that we do not find fault with.''
The only two other comments state that the provision fails to recognize
that an employer may promise or grant benefits that are not coercive in
nature.
f. Prohibitions on Union Insignia
Two labor organizations and six employer groups are critical of
this provision. One labor organization criticizes both the inclusion of
the ``special circumstances'' exception as well as the reference to
``patient care areas'' as an example of a special circumstance. In
addition to asserting that it inaccurately states the law because it
fails to include ``immediate'' as a characterization of ``patient care
areas,'' this comment suggests that the provision would be better
stated as an affirmative right rather than an employer unfair labor
practice. The second labor organization suggests the elimination of
``patient care area'' as an example of the ``special circumstances''
exception.
The six remaining comments suggest that the provision fails to
illuminate the conditions under which ``special circumstances'' may
exist, including in hotels or retail establishments where the insignia
may interfere with the employer's public image, or when the insignia is
profane or vulgar. Another comment indicates that the provision is
overly broad because it does not reflect that a violation depends on
the work environment and the content of the insignia. All either
suggest that more detail should be added to the provision to narrow its
meaning, or it should be stricken.
g. Spying or Videotaping
Five commenters challenged the accuracy of this provision,
asserting primarily that observation of union activity that occurs out
in the open and videotaping for security purposes is lawful. Aside from
the common suggestion that the provision be stricken, no specific
revisions were suggested in the comments.
h. Union Discrimination or Adverse Action
There were no comments specifically addressing the one example of
unlawful union conduct.
6. The Enforcement and Contact Information in the Notice
The proposed notice included NLRB contact information and basic
enforcement procedures to enable employees to find out more about their
rights under the Act and to proceed with enforcement if necessary.
Accordingly, the required notice stated that illegal conduct will not
be permitted, provided information regarding the NLRB and filing a
charge with that agency, and indicated that the Board will prosecute
violators of the Act. Furthermore, the notice indicated
[[Page 28378]]
that there is a 6-month statute of limitations applicable to making
allegations of violations and provides NLRB contact information for use
by employees. The Department invited suggested additions or deletions
to these procedural provisions that would improve the content of the
notice.
Three commenters offered suggestions for this section of the
notice. One commenter provided the following text to substitute for the
paragraph in the proposed notice that begins, ``If you believe your
rights * * *'':
If you believe your rights or the rights of others have been
violated, you should contact the NLRB immediately. You may inquire
concerning possible violations without your employer or anyone else
being informed of the inquiry. If the NLRB representative with whom
you speak believes that a violation might have occurred he or she
will inform you how you may file a charge seeking redress of the
violation. Charges may be filed by any person and need not be filed
by the employee directly affected by the violation.
The same commenter also suggested that the NLRB's telephone number
appear before its Web site information because, the comment asserts,
more people are likely to use the telephone to make the contact. A
second commenter suggested that the contact information provide the
important assurance that employees may raise employment questions or
concerns with the NLRB in confidence, which is a revision that the
first commenter's proposed paragraph incorporates. Finally, a third
commenter suggested that the admonition in the notice that an employee
``must contact the NLRB within six months of the unlawful treatment''
if the employee believes a violation has occurred suggests that
contacting the NLRB is mandatory and ignores those employees who may
not want to contact the NLRB. The commenter suggests that the provision
include the phrase, ``if you desire relief from the NLRB.''
7. Suggestions To Incorporate Three Additional Provisions
One comment suggested that the use in the proposed notice of the
second-person pronouns ``you'' and ``your'' is overly inclusive because
not all casual readers of the poster will be covered by the NLRA. This
comment suggested that the notice should clarify that the specified
rights apply only to covered employees in order to eliminate confusion
for employees who are not covered by the NLRA but may read the Notice.
Four commenters suggested that the Notice include a provision
referencing the NLRA's obligation on employers and labor organizations
to bargain in good faith. One of these comments requested the inclusion
as an express limitation on the provision that employees have the right
to bargain collectively, in order to clarify that the employer's
obligation was only to bargain in good faith and not necessarily to
reach an agreement.
One commenter from the retail industry noted generally that the
statement of affirmative rights should contain a qualification that
``certain types of speech and expression in the workplace are not
protected.'' As an example, the commenter indicated that some employers
may permissibly prohibit third-party solicitations or leafleting, or
wearing of any insignia, in a retail setting. Although this comment
suggests a statement indicating limitations on certain employee speech
rights, the Department has considered whether such a statement may be
appropriate more broadly for application to all the rights and
obligations listed in the notice, particularly in light of the many
comments criticizing the proposed notice because its provisions do not
indicate that the rights and obligations are subject to exceptions and
limitations.
8. Revisions to the Notice Based on the Comments
After fully considering these comments, the Department has decided
to revise the employee notice that will be included in the final rule
(``final notice'') as follows.
a. The Introduction to the Final Notice
The Department has substantially revised the preamble, or
introduction, to the final notice to achieve several goals. First, the
Department agrees with those comments suggesting that the preamble
included in the NPRM notice contained content that did not promote
employees' awareness of their specific rights under the NLRA, and that
such a prominent place on the notice merited text that better served
that goal. Second, the Department has included in this premier
paragraph the concept that the NLRA prohibits both employer and union
misconduct. Third, the Department agrees with comments suggesting that
the final notice should contain a provision indicating which employers
and employees are covered by the NLRA, and that coverage provision has
been added with an asterisk in the new introduction. Fourth, in
response to the many comments indicating that the NPRM notice included
only broad generalities and did not include exceptions or limitations
to the general rights listed in the notice based on particular facts or
circumstances, which, if heeded, would convert a simple employee notice
into a lengthy legal guide, the Department has included a cautionary
note at the outset that the stated rights are general in nature, and
the notice is not intended to provide specific advice about their
application in all circumstances. Finally, the Department has made
prominent the NLRB investigation and enforcement role, and has
suggested that that agency can assist employees with specific questions
or concerns should they arise. As a result, the final notice contains a
new introduction that better serves these goals, as follows
The NLRA guarantees the right of employees to organize and
bargain collectively with their employers, and to engage in other
protected concerted activity. Employees covered by the NLRA* are
protected from certain types of employer and union misconduct. This
Notice gives you general information about your rights, and about
the obligations of employers and unions under the NLRA. Contact the
National Labor Relations Board, the federal agency that investigates
and resolves complaints under the NLRA, using the contact
information supplied below if you have any questions about specific
rights that may apply in your particular workplace.
The coverage provision, associated with the asterisk in the
introduction, states:
The National Labor Relations Act covers most private-sector
employers. Excluded from coverage under the NLRA are public-sector
employees, agricultural and domestic workers, independent
contractors, workers employed by a parent or spouse, employees of
air and rail carriers covered by the Railway Labor Act, and
supervisors (although supervisors that have been discriminated
against for refusing to violate the NLRA may be covered).
b. The Statement of Affirmative Rights in the Final Notice
The Department concluded that no change was necessary to three of
the seven affirmative rights listed in the proposed notice. As
previously noted, the first two rights listed--the right to organize a
union to bargain collectively and the right to form, join and assist a
union--attracted no specific comments, either positive or negative, and
therefore these provisions are unmodified in the final notice. The
third right that the Department has left unchanged--the right to
refrain from union activity, including joining or remaining a member of
a union--received several comments suggesting that this right was given
diminished prominence in favor of rights that promote activity in
support of unions. This contention is misguided. The list of rights
included in
[[Page 28379]]
the notice is patterned after the list of rights in the NLRA, 29 U.S.C.
157, which includes the right to refrain last, after stating several
other rights before it. See, supra, n. 5. Similarly, the NLRB's Web
site page follows the same pattern, listing the right to refrain fifth
on a list of five specified rights. See http://www.nlrb.gov/Workplace_
Rights/employee_rights.aspx
In addition, the notice's examples of unlawful employer conduct
include the concept that it is illegal for an employer taking adverse
action against an employee `` because [the employee] choose[s] not to
engage in any such [union-related] activity[,]'' further underscoring
an employee's right to refrain. Accordingly, the Department concludes
that the notice sufficiently addresses this right among the list of
statutory rights.
The Department has amended the statement in the notice regarding
the right to bargain collectively. Based on comments discussed above,
this provision was modified to substitute the statutory phrase
``representatives of [employees'] own choosing'' for the phrase ``duly
selected union'' to eliminate the ambiguity of the latter. The
substituted phrase retains the intent of the original phrase, which was
to reflect that bargaining representatives can be elected or can be
voluntarily recognized by an employer based on a verifiable showing
that the labor organization enjoys majority support among employees in
the bargaining unit, but employs the words of the statute instead.
Thus, the final notice states that employees have the right to
``bargain collectively through representatives of employees' own
choosing for a contract with your employer setting your wages,
benefits, hours, and other working conditions.''
Based on comments, the next two provisions--discuss terms and
conditions of employment and take action--have been substantially
modified to achieve several goals. First, the Department agrees that
these two provisions as presented in the proposed notice could be
simplified and clarified by separating employees' communication rights
from their conduct rights. In addition, the Department agrees that
inclusion of the right to leaflet was duplicative of the provision
regarding employer interference with distribution of union literature,
and so this reference has been deleted from the final notice. Next, the
Department decided to delete the reference to the right to attend
rallies on non-work time so as not to complicate a list of essential
and fundamental rights under the NLRA. Finally, because the reference
in the proposed notice to ``seeking and receiving help from a union''
was moved to the following provision and in an effort to retain the
concept that employees can discuss union-related activity among
themselves, the Department added to the employee discussion provision
the right to talk about unions and union organizing. As a result, the
two provisions in the final notice state that employees have the right
to, ``discuss your terms and conditions of employment or union
organizing with your co-workers or a union'' and ``take action with one
or more co-workers to improve your working conditions by, among other
means, raising work-related complaints directly with your employer or
with a government agency, and seeking help from a union.''
As noted earlier, the provision in the proposed notice related to
the rights to strike and picket received several comments. Labor
organizations suggested the removal of the references to a contractual
no-strike provision, permanent replacements, and the phrase ``subject
to certain other limitations.'' By contrast, comments from employers
suggested the provision is flawed because of the absence of the many
limitations, exceptions, and distinctions related to these rights. By
necessity, the notice cannot contain an exhaustive list of limitations
on and exceptions to the rights to strike and picket, as suggested by
employers. Indeed, the various permutations of these rights
comprehensively documented by such comments reflect that in
highlighting just a few limitations, or referring to them ambiguously
as ``other limitations,'' the proposed notice fell short of the goal to
clearly inform employees about their rights. However, because
exercising the right to strike, in particular, can significantly affect
the livelihood of employees, the Department considers it vital to
reflect in one general phrase that there are caveats associated with
it. The Department is satisfied that the addition of a general caveat,
coupled with the admonition in the new introduction to contact the NLRB
with specific questions about the application of rights in certain
situations, provides sufficient guidance to employees about the
exercise of these rights while still staying within the constraints set
by a necessarily brief employee notice. Thus, this provision in the
final notice states that employees have the right to ``Strike and
picket, depending on the purpose or means of the strike or the
picketing.''
As noted, the Department received several comments suggesting that
the notice contain provisions related to Beck rights. The final notice
will retain, as part of the right to refrain, the provision stating
that an employee has the right to not join or remain a member of a
union that represents the employee's bargaining unit. However, further
explication of Beck rights will not be included because of space
limitations and because of the policy choice, as expressed in Executive
Order 13496, to revoke a more explicit notice to employees of Beck
rights. See Sec. 13, E.O. 13496, 74 FR at 6110.
c. The Examples of Unlawful Conduct in the Final Notice
The Department has decided that three examples of unlawful employer
conduct--regarding unlawful threats to close, promises or grants of
benefits, and spying or videotaping--need no revision for the final
notice. The comments related to these three provisions all shared a
common theme, as discussed above, that the provisions are
overgeneralizations that neither capture the legal standard associated
with evaluating allegations of unlawful conduct nor indicate factual
scenarios in which the highlighted conduct may be lawful. After review
of these comments and the case law cited therein, the Department
concludes that the provisions as proposed are accurate and informative,
and, as with the notice as a whole, strike an appropriate balance
between being simultaneously instructive and succinct.
The Department has decided to modify the remaining four examples of
illegal employer conduct in order to clarify them. First, the
Department has modified the provision related to employers' no-
solicitation and no-distribution rules for the final notice. The
Department agrees with those comments suggesting that the terms ``non-
work time'' and ``non-work areas,'' while used commonly in Board law,
are not readily ascertainable, and the addition of common examples of
each would assist employees in understanding their rights. Therefore,
the provision was modified to clarify the meaning of ``non-work time''
and ``non-work areas.'' The remaining comments suggesting the inclusion
of the various circumstances in which no-solicitation and no-
distribution rules may be lawful were rejected due to limitations
imposed by a notice format. More specifically, the Department
recognizes that under the NLRB's precedent, a hospital's prohibition of
solicitation or distribution of literature in immediate patient care
areas, even during employees' nonworking time, is presumptively lawful.
Brockton Hospital, 333 NLRB 1367, 1368 (2001).
[[Page 28380]]
Once again, however, the limitations on the format preclude the
inclusion of factual permutations in which a general right may not
apply or may only apply with qualifications, and hospital employees, as
well as other employees, can contact the NLRB with specific questions
about the lawfulness of their employers' rules governing solicitation
and literature distribution. Finally, the Department acknowledges, as
one comment noted, that the NLRB distinguishes between ``solicitation''
for a union, which generally means encouraging a coworker to
participate in supporting a union, and so-called ``union talk,'' which
generally refers to discussions about the advantages and disadvantages
of unionization. W.W. Grainger, 229 NLRB 161, 166 (1977), enforced, 582
F.2d 1118, (7th Cir.1978); Jensen Enterprises, Inc., 339 NLRB 877, 878
(2003). However, this provision is intended to expressly address the
former; the right to engage in ``union talk'' is now encompassed more
specifically by the revision, as noted above, to the ``discussion''
provision in the affirmative rights section of the final notice.
Accordingly, this provision in the final notice indicates that it is
illegal for employers to ``prohibit you from soliciting for a union
during non-work time, such as before or after work or during break
times; or from distributing union literature during non-work time, in
non-work areas, such as parking lots or break rooms.''
The comments about the next provision regarding employers'
questions about union support or activity correctly note that the
Board's test for determining the legality of such questions is whether
under all the circumstances the interrogation reasonably tends to
restrain, coerce, or interfere with rights guaranteed employees by the
Act. Rossmore House, 269 NLRB 1176, 1177 (1984), enforced, 760 F.2d
1006 (9th Cir. 1985). Under this totality of circumstances approach,
consideration is given to whether the interrogated employee is an open
or active supporter of the union, the background surrounding the
interrogation, the nature and purpose of the information sought, the
identity of the questioner, the place and/or method of the
interrogation, and the truthfulness of any reply by the questioned
employee. Id. The Board has said that these factors are not to be
mechanically applied but rather are useful indicia that serve as a
starting point for assessing the totality of the circumstances. Id. The
comments suggesting revisions of this provision, as with many of the
prior suggestions, request inclusion of substantial detail, much of
which is beyond the purview of this notice. However, the Department has
concluded that the provision would be clarified by reference to the
concepts that unlawful questioning interferes with employees' Section 7
rights and that the interference is judged under the circumstances of
the questioning. Thus, this provision in the final notice states that
it is unlawful for employers to ``question you about your union support
or activities in a manner that discourages you from engaging in that
activity.''
Comments about employers' taking, or threatening to take, adverse
action against employees because of their union-related or other
protected activity request the inclusion of complicated references to
legal complexities, such as the application of a burden-shifting
analysis to determine whether unlawful discrimination has occurred,
Wright Line, Inc., 251 NLRB 1083 (1980), or the consideration of the
impact of right-to-work laws. This provision is intended to supply
employees with notice of their fundamental right to be free from
discrimination based on union activity, and its accuracy and
instructiveness will be diminished by such complicated references.
However, the Department agrees with one comment suggesting that the
provision can be improved with the substitution of one word to
underscore that the protections of the NLRA attach to activity that is
concerted in nature. Thus, this provision in the final notice instructs
employees that it is unlawful for employers to ``fire, demote, or
transfer you, or reduce your hours or change your shift, or otherwise
take adverse action against you, or threaten to take any of these
actions, because you join or support a union, or because you engage in
concerted activity for mutual aid and protection, or because you choose
not to engage in any such activity.''
The final provision regarding unlawful employer conduct that the
Department decided to revise is related to union insignia in the
workplace. Generally, an employer may not prohibit the wearing of union
insignia, absent special circumstances. Airport 2000 Concessions, LLC,
346 NLRB 958, 960 (2006). For reasons of format, the notice cannot
accommodate those comments suggesting that this provision specify those
cases in which the Board has found ``special circumstances'' to exist,
such as where insignia might interfere with production or safety; where
it conveys a message that is obscene or disparages a company's product
or service; where it interferes with an employer's attempts to have its
employees project a specific image to customers; where it hinders
production; where it causes disciplinary problems in the plant; or
where it would have any other consequences that would constitute
special circumstances under settled precedent. Escanaba Paper Co., 314
NLRB 732 (1994), enforced, 73 F.3d 74 (6th Cir. 1996). In addition, as
noted earlier, an employer's prohibition on wearing union insignia in
immediate patient care areas is presumptively valid. London Memorial
Hospital, 238 NLRB 704, 708 (1978). This lengthy list supplied by some
comments highlights that the addition of only one example of ``special
circumstances''--the patient care example--may mislead or confuse
employees. Thus, the general caveat that special circumstances may
defeat the application of the general rule, coupled with the advice to
employees to contact the NLRB with specific questions about particular
issues, achieves the balance required for an employee notice of rights
about union insignia in the workplace.
The proposed notice had only one very broad description of union
conduct that is unlawful under the NLRA. Although this provision
generally encompassed a wide range of illegal union activity, it was
criticized in comments for lacking specificity, and thus resulting in
imbalance as compared to the examples of unlawful employer
activity.\13\ After reviewing the comments, the Department has revised
the notice in order to more thoroughly reflect the range of unlawful
union conduct.
---------------------------------------------------------------------------
\13\ The Department notes that the NLRB reported that in fiscal
year 2008, 22,497 unfair labor practice charges were filed. Seventy-
Third Annual Report of the National Labor Relations Board for the
Fiscal Year Ended September 30, 2008, at 5, available at http://
www.nlrb.gov/nlrb/shared_files/brochures/annual%20reports/
NLRB2008.pdf. Of these, 16,179 charges were against employers, and
6,210 charges were filed against unions. Id. Thirty-nine percent of
all charges were found to have merit, and 1108 complaints were
issued. Id. at 7. Of complaints issued, 86 percent were against
employers and 14 percent were against unions. Id. at 8.
---------------------------------------------------------------------------
Thus, the final notice contains the following five examples of
unlawful union conduct:
Threaten you that you will lose your job unless you
support the union.
Refuse to process a grievance because you have criticized
union officials or because you are not a member of the union.
Use or maintain discriminatory standards or procedures in
making job referrals from a hiring hall.
Cause or attempt to cause an employer to discriminate
against you because of your union-related activity.
[[Page 28381]]
Take other adverse action against you based on whether you
have joined or support the union.
d. The Inclusion of the Duty to Bargain in Good Faith
The Department agrees with those comments that suggested that
employees should be aware that their employer and their bargaining
representative have a statutory duty to bargain in good faith. Thus,
the final notice states that ``if you and your coworkers select a union
to act as your collective bargaining representative, your employer and
the union are required to bargain in good faith in a genuine effort to
reach a written, binding agreement setting your terms and conditions of
employment. The union is required to fairly represent you in bargaining
and enforcing the agreement.'' The latter sentence regarding the
union's duty of fair representation is somewhat duplicative of
provisions above exemplifying union misconduct, but the Department
concluded that it was important to note a union's duty to fairly
represent all bargaining unit members specifically in connection with
its obligation to bargain in good faith.
e. The Contact Information
The proposed notice contained two paragraphs about the NLRB, its
enforcement procedures, and its contact information, which have been
streamlined into one paragraph for the final notice. In doing so, and
after reviewing the comments, the Department has substituted the word
``should'' for the word ``must'' to indicate that it is not mandatory
that the NLRB be notified of unlawful conduct; retained the admonition
to employees to act promptly and within the six month statute of
limitations; added a sentence that underscores the confidentiality
associated with contacting the NLRB; added a sentence that indicates
that anyone can file a charge with the NLRB; and retained the sentence
relating to possible reinstatement, back pay and cease-and-desist
remedies. The final notice, as modified on the basis of comments
discussed above, is set forth in Appendix A to Subpart A of this rule.
D. Incorporation of the Contract Clause in Government Contracts and
Subcontracts
As proposed in Sec. 471.2(a), all nonexempt prime contractors and
subcontractors are required to include the employee notice contract
clause in each of their nonexempt contracts and subcontracts. In order
to ensure that contractors are made aware of their contractual
obligation to post the required notice, proposed Sec. 471.2(b)
provided that the employee notice contract clause must be set out
verbatim in a contract, subcontract or purchase order, rather than
being incorporated by reference in those documents. In the NPRM, the
Department requested comment regarding the utility of setting out the
employee notice clause verbatim, as opposed to incorporation of the
clause by reference.
The Department received ten comments about this requirement, only
one of which agreed with the Department that full inclusion of the
employee notice clause in every contract and subcontract will ensure
that contractors and subcontractors fully understand their obligations
under the rule. The other nine comments suggested that the rule should
permit the inclusion of the employee notice clause by reference for
various reasons, including that full inclusion provides little utility,
and is burdensome and unreasonable because many contractors would have
to substantially revise their procurement and contract documents, many
of which are purposefully brief, standard-form documents, in order to
comply. One commenter noted that because the content of the notice
itself may be subject to updating, the contract clause will also
require modification, and contractors who are unaware of the necessary
update may inadvertently rely on outdated contract documents or
provisions. Another commenter suggested that the notice in the contract
clause is very long and contains language that will confuse readers of
contracts and purchase orders. Finally, several commenters also noted
that the prohibition on incorporation by reference is inconsistent with
various laws--some of which are implemented by the Department--that
permit contract clause incorporation by reference, including Executive
Order 11246, Vietnam Era Veterans Readjustment Assistance Act, and
Section 503 of the Rehabilitation Act of 1973, among others.
Following full consideration of these comments, and in order to
ease contractor compliance with the requirements of this rule, the
Department has decided to permit inclusion of the employee notice
clause by reference. Therefore, in place of proposed Sec. 471.2(b)
that disallowed incorporation by reference, the final rule contains a
new Sec. 471.2(b), that permits incorporation by reference. The
Department has coordinated with the FAR Council to implement this
provision.
E. Application of the Rule to Contractors and Subcontractors;
Exceptions and Exemptions; Other Limitations
As proposed in Sec. 471.2(a), all nonexempt prime contractors and
subcontractors are required to include the employee notice contract
clause in each of their nonexempt subcontracts so that the obligation
to notify employees of their rights flows to subcontractors of a
government contract as well. The Executive Order expressly excepts from
its application two types of Government contracts: Collective
bargaining agreements as defined in 5 U.S.C. 7103(a)(8) and contracts
involving purchases below the simplified acquisition threshold as
defined in the Office of Federal Procurement Policy Act, 41 U.S.C. 403.
Sec. 2, 74 FR at 6107. The simplified acquisition threshold is
currently set at $100,000. 41 U.S.C. 403. Section 471.3(a)(1) and (2)
of the proposed rule implemented these exceptions. 74 FR at 38498. In
addition, the Executive Order's provision regarding its effective date
excepts contracts resulting from solicitations issued prior to the
effective date of the final rule promulgated pursuant to this
rulemaking. Sec. 16, 74 FR 6111. Proposed Sec. 471.3(a)(3) implemented
this provision of the Executive Order. 74 FR at 38498.
The NPRM concluded that the obligations of the rule apply to
government contractors and all subcontractors of the government
contract, regardless of whether the subcontractor is a first-tier
subcontractor or a more remote subcontractor. This conclusion was based
on the Department's construction of the interrelated terms of the
Executive Order. The NPRM noted that paragraph 4 of the contract clause
in the Executive Order requires the contractor to incorporate only
paragraphs 1 through 3 of the clause in its subcontracts. 74 FR at
38490. A narrow reading of the operation of this provision outside the
full context of the Executive Order, the NPRM noted, might suggest that
the obligation to include the contract clause is limited to contracts
between the government agency and the prime contractor. Id. Under this
reading, subcontractors would be required only to post the notice of
employee rights, and their subcontractors (sometimes called second-tier
contractors) would have no responsibilities under the Executive Order.
However, the NPRM reasoned that provisions of the Executive Order
establishing exemptions and exceptions for the application of the
Executive Order's obligations do not expressly specify that
[[Page 28382]]
its obligations do not flow past the first-tier subcontractor, a
significant limitation that would normally be made explicit in the text
of the Executive Order rather than by operation of the contract
clause's incorporation provision. In addition, the NPRM noted that in
the Department's past regulatory treatment of a similar issue, it had
adapted through regulation the application of an executive order's
contract inclusion provisions so that the obligation to abide by the
mandates of the orders flows to subcontractors below the first tier.
See, e.g., 69 FR 16378, Mar. 29, 2004 (final rule implementing E.O.
13201) (based on identical contract incorporation provision, ``the
intent of the Order was clearly that the clause be passed to
subcontractors below the first tier''); 57 FR 49591, Nov. 2, 1992
(final rule implementing E.O. 12800) (``It is clear, however, that the
intent of Executive Order 12800 was that the clause flow down below the
first-tier level''). The NPRM concluded that the Department's
experience with regulatory implementation of prior executive orders
establishing that the obligations of those orders flow past the first-
tier subcontractor supported the application of this rule to
subcontractors below the first tier, and best achieves the purposes of
this Executive Order. 74 FR at 38491. Accordingly, the Department
concluded that in order to fully implement the intent of Executive
Order 13496, proposed Sec. 471.2(a) was adapted to require the
inclusion of paragraphs 1 through 4, rather than 1 through 3, of the
contract clause. The Department specifically sought comments on this
proposal.
The NPRM also concluded that although the Executive Order clearly
did not apply to government contracts for purchases below the
simplified acquisition threshold, the Executive Order did not provide
for the same exception for subcontracts involving purchases below the
simplified acquisition threshold. However, the Department noted that
inclusion of the express limitation in the definition of
``subcontract'' that ``subcontracts'' consist only of those instruments
that are ``necessary to the performance of the government contract,''
NPRM Sec. 471.1(r), was intended as a control on the otherwise
universal application of the rule to subcontracts. 74 FR at 38491,
citing OFCCP v. Monongahela R.R., 85-OFC-2, 1986 WL 802025 (Recommended
Decision and Order, April 2, 1986), aff'd, (Deputy Under Secretary's
Final Decision and Order, Mar. 11, 1987) (railroad transporting coal to
power generation plant of energy company contracting with GSA was
subcontractor because delivery of coal is necessary for the power
company to perform under its contract with GSA). Thus, the NPRM noted
that although the rule may result in coverage of subcontracts with
relatively de minimis value in the overall scheme of government
contracts, covered subcontractors include only those who are performing
subcontracts that are necessary to the performance of the prime
contract. The Department invited comment on whether a further
limitation on the application of the rule to subcontracts is necessary,
and if it is, whether such a limitation is best accomplished through
the application of this or another standard, for instance, a threshold
related to the monetary value of the subcontract.
The Department received numerous comments about the application of
the rule to subcontractors below the first tier, the non-application of
the simplified acquisition threshold to subcontractors, and the
proposed ``necessary to the performance'' limitation on the application
of the rule to subcontractors. Four comments supported the application
of the rule to subcontractors below the first tier. These commenters
noted various reasons for their support, including that application of
the rule to more remote subcontractors would prevent circumvention of
the rule through subcontracting, would further the Executive Order's
goal of preventing labor unrest, and was similar to the Department's
implementation of prior executive orders. One commenter noted that it
is not unusual for a vast majority of laborers on a jobsite to be
employed by subcontractors of the prime contractor or its
subcontractors, and that the rule should apply equally to such jobsites
regardless of the remoteness of the subcontract to the prime contract.
Three commenters argued that the Department should not apply the rule
to subcontractors below the first tier, and one commenter requested
clarification on the application of the rule below the first tier.
Those comments opposing lower-tier application suggested that the rule
has gone too far in its application, and that coverage of the rule
should be limited to first-tier subcontractors. One commenter in
particular disagreed with the Department's modification of the contract
inclusion provision discussed above, contending that the Department's
reliance on its prior regulatory implementation of Executive Orders
13201 and 12800 was inapt. The commenter noted that each of those
executive orders contained a provision, not present in Executive Order
13496, stating that the Secretary may exempt ``subcontracts below an
appropriate tier set by the Secretary,'' thus indicating that the
application of the rule to any tier of subcontractors was contemplated
by the executive order but subject to administrative limitation. See
Sec. 3(b)(v), E.O. 13201, 66 FR 11221, Feb. 22, 2001 (revoked by
Executive Order 13496); Sec. 3(b)(v), E.O. 12800, 57 FR 12985, April
13, 1992 (revoked by Executive Order 12836). By contrast, the commenter
notes, Executive Order 13496 contains no such language permitting the
Secretary to limit the application of the rule, thus indicating that
flow-down below the first tier is not contemplated by the plain
language of the Executive Order.
The Department received eleven comments regarding the proposal in
the NPRM to apply the simplified acquisition threshold only to
government contracts and not to subcontracts, and all universally
stated that the simplified acquisition threshold should apply to
subcontracts as well. Most comments noted the incongruity associated
with the application of the threshold to prime contracts but not to
subcontracts, asserting that it makes little sense to except prime
contracts below a set monetary limit but then apply the rule to reach
subcontracts below that same limit. Most negative comments similarly
noted that the failure to apply the simplified acquisition threshold to
subcontracts will result in coverage of very small contracts and
contractors, which, they argue, the Executive Order clearly intended to
avoid by requiring the application of the dollar limit to prime
contracts. Coverage of small subcontractors is burdensome to those
contractors, many commenters asserted, and will result in the
application of the rule to very small procurement contracts and will
discourage some contractors from bidding for work associated with a
government contract. Some commenters said they failed to see the policy
reason supporting the non-application of the threshold to subcontracts.
One commenter contended that the application of the rule to small
subcontractors violates a Congressional mandate in the Small Business
Act, 15 U.S.C. 637(d), that requires Federal agencies to give
preference to small and disadvantaged businesses. Another comment noted
the apparent inconsistency in proposed Sec. 471.3(a)(2)(ii), which
applies the simplified acquisition threshold to ``contracts and
subcontracts'' for an indefinite quantity, but not to contracts
[[Page 28383]]
for a defined quantity. As noted above in the discussion of comments
about the rule's definition section, because the definitions of
``contract'' and ``contractor'' include ``subcontract'' and
``subcontractor,'' commenters argued that the rule by its terms does in
fact apply the simplified acquisition threshold to limit its
application to subcontracts. Finally, one commenter suggested that if
the Department is concerned that application of the simplified
acquisition threshold to subcontractors will unnecessarily limit the
reach of the rule to small contractors, it should nevertheless include
some other limitation on the application of the rule to prevent its
application to very small contractors.
The Department's proposed limitation on the application of the rule
to only those subcontracts that are ``necessary to the performance of
the prime contract'' received little support from commenters. By
contrast, five commenters submitted that the term was so general and
vague as to be completely ineffective as a significant limitation on
the rule's application. Two commenters suggested that all subcontracts
in some manner, no matter how attenuated, are necessary to the
performance of the prime contract, or the subcontract would not have
been executed in the first place. In this vein, one commenter noted
that the Department's use of the phrase suggests pejoratively that some
subcontracts are unnecessary to the performance of the government
contract. Other commenters queried how a subcontractor at the time of
the execution of the subcontract is to know whether the subcontract is
necessary to the performance of the government contract, particularly
when such a determination by the Department will only be made during
subsequent enforcement proceedings that may have adverse consequences
for the subcontractor. One commenter noted that when a subcontractor or
vendor receives a purchase order from a firm, the subcontractor or
vendor may have no way of knowing of the purchase order's connection to
a government contract without conducting an investigation into the
purchaser's connections, which may be considered intrusive. One
commenter stated that the Department's reliance on OFCCP v. Monongahela
R.R., 85-OFC-2, 1986 WL 802025 (Recommended Decision and Order, April
2, 1986), aff'd, (Deputy Under Secretary's Final Decision and Order,
Mar. 11, 1987) to support explication of the phrase raised concerns
because the rule should not apply to subcontractors that only supply
material to a job site but do not install it.
Four commenters suggested alternative standards that would serve to
limit the application of the rule to subcontractors. Suggested
limitations included establishing a value for de minimis subcontracts
to which the rule would not apply, which was phrased by another
commenter as establishing an exemption for small contractors based on
the monetary value of the subcontract; creating an exception for
application of the rule to firms with a small, defined number of
employees; and application of the rule to only those contractors and
subcontractors that provide services, as opposed to supplies, to the
government. One commenter noted that the rule should include a
``minimum size threshold [below] which a contractor is exempt,'' but
the commenter did not indicate whether the limit should be connected to
the size of the subcontract's value, the size of the subcontractor's
workforce, or the size of the subcontractor's revenue. This same
commenter submitted that the rule must also provide some means by which
a subcontractor will be notified that the subcontract is covered by the
rule and some clarification on compliance in those situations in which
a subcontractor does not have control over the site where the prime
contract is being performed.
After carefully considering all the comments related to the
application of the rule to subcontractors, the Department has made the
following decisions. The Department will retain the provision, as
proposed in enumerated paragraph 4 of the contract clause set out in
Appendix A (``paragraph 4''), requiring government contractors to
incorporate paragraphs (1) through (4) in every subcontract. As noted
in the proposal, the contract inclusion provision in paragraph 4 cannot
be read in isolation, but rather it must be read in conjunction with
other operative words and phrases of paragraph 4 and in the Executive
Order as a whole in order to fully implement its purpose. Many aspects
of the Executive Order demonstrate the President's intent to apply the
obligations of the Order not just to government contracts, but also to
subcontracts of the government contract at all levels. As the proposal
noted, no other provision in the Executive Order, save for the
mechanical operation of paragraph 4, suggests that the intent of the
Executive Order was to except subcontracts below the first tier. The
Department concludes that silence in failing to include lower tier
subcontractors in the Executive Order's exemptions and exceptions
provisions indicates that they were meant to be covered. In addition,
the Department broadly interprets paragraph 4's directive that the
contractor ``will include the provisions of paragraphs 1 through 3
above in every subcontract entered into in connection with this
contract * * * so that such provisions will be binding upon each
subcontractor[.]'' The Department reads the terms ``will include'' in
``every subcontract'' to mean that the initial contractor will ensure,
to the extent possible, that the posting obligation will be included in
all subcontracts in connection with the prime contract, whether at the
first tier level or below. Read in this fashion, this directive can be
implemented only by requiring, as does the final rule, that every
subcontract pass through such an obligation to any lower tier
subcontractors. In addition, the Department interprets broadly the
reference to ``contractor'' in paragraph 4 (``The contractor will
include paragraphs (1) through (3) above * * *'') to encompass a
``subcontractor,'' so that the provision is read to require each
subcontractor on a government contract, regardless of tier, to include
posting requirements in any of its subcontracts.
Other provisions in the Executive Order outside paragraph 4 evince
an intent to apply the rule to subcontracts below the first tier.
References to ``contractors'' (Sec. 1), ``any Government contractor,
subcontractor, or vendor'' (Sec. 5), and ``a Government contractor or
subcontractor'' (Sec. 5) are unqualified or modified, and the
Department interprets the references to mean subcontractors at all
tiers. This broad interpretation is most fitting in application to the
statement of policy in Section 1 of the Executive Order, which provides
that ``[w]hen the Federal government contracts for goods or services,
it has a proprietary interest in ensuring that those contracts will be
performed by contractors whose work will not be interrupted by labor
unrest'' and ``relying 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.'' 74 FR
6107. Given the frequency with which the performance of government
contracts are subcontracted, the policy of the Executive Order is best
understood as reaching contracts below the first tier. This is
particularly true when the government contract is, for instance, a
large, multi-million dollar transaction, and its performance is
subcontracted in multiple tiers. The
[[Page 28384]]
economy and efficiency that is sought to be promoted by the Executive
Order would not be realized if subcontractors below the first tier of a
large government contract were not subject to this rule, and a labor
dispute at a lower tier subcontractor interfered with the delivery of
the large prime contract. In such a case, ``the efficient and
economical completion of the Federal Government's contracts'' would not
be realized. 74 FR 6107. As a result, the Department interprets the
Executive Order as a whole as seeking to avoid just such a scenario.
In addition, as noted in the proposal, the interpretation of
Executive Order 13496 has been informed by the interpretation of
Executive Orders 12800 and 13201. In both those cases, the Department
similarly interpreted the text of the orders, which had contract
incorporation provisions that were virtually identical to paragraph 4
of Executive Order 13496, to provide for application of the obligations
to subcontractors below the first tier. See 69 FR 16378, Mar. 29, 2004;
57 FR 49591, Nov. 2, 1992. The Department has concluded that Executive
Order 13496 was drafted with awareness of these earlier Executive
Orders, and that it was intended to be implemented in the same manner
as its predecessors.
One commenter emphasized that the regulatory implementation of
Executive Orders 12800 and 13201 was supportable because those orders
granted authority to the Secretary to exempt subcontracts below an
appropriate tier, suggesting application of the obligations of those
orders to lower contract tiers. See Section 3(b)(v) of Executive Orders
12800 and 13201, 57 FR 12986, Apr. 13, 1991; 66 FR 11222, Jan. 17, 2001
(``subcontracts below an appropriate tier set by the Secretary'' may be
exempted). In this case, the comment notes, Executive Order 13496 does
not grant the Secretary similar regulatory authority to exempt
contracts below an appropriate tier, thus suggesting that the Executive
Order does not contemplate reaching contracts other than first tier
subcontracts. However, the Department views the absence of such
regulatory authority to exempt contracts below a certain tier as
supporting its interpretation that the Executive Order intends that its
obligations are to apply to all subcontracts of the prime contract
regardless of tier. The President omitted from Executive Order 13496
any administrative authority to exempt lower tier subcontractors
because he did not intend to permit any tier-based exemption, and not
because it was contemplated that lower tier subcontractors would, at
some point, be outside the reach of the purposes of the Executive
Order. Thus, the Department interprets silence as to tier coverage
within the text of the Executive Order as reflecting an intent for all
tiers to be covered.
The Department's grant of authority to promulgate regulations under
the Executive Order is broad, and permits the Department to implement
the Order in a manner that is ``necessary and appropriate to achieve
the purposes'' of the Order. Sec. 3(a), 74 FR at 6108. In addition, the
Secretary has the express authority under the Executive Order to ``make
modification of the contractual provisions * * * necessary to achieve
purposes of this order[.]'' Sec. 3(c), 74 FR at 6108. Accordingly, in
order to implement the purpose, intent, and express provisions of the
Executive Order, which the Department concludes applies to nonexempt
government contracts and all subcontracts of the government contract,
the Department will retain paragraph 4 of the contract clause as
proposed.
The Department will also retain the interpretation set out in the
proposal that the exception for contracts below the simplified
acquisition threshold applies only to the prime contract. The
Department views as plain and unambiguous the text of the Executive
Order on this point. Section 2 of the Order states that ``all
Government contracting departments and agencies shall, to the extent
consistent with law, include the [contract clause] in every Government
contract, other than * * * purchases under the simplified acquisition
threshold. * * *'' 74 FR 6107 (emphasis added). Based on this
provision, the exception for contracts below the simplified acquisition
threshold applies only to the original government contract, and has no
application to subsequent subcontracts. In response to comments, the
Department does not consider the result--excepting prime contracts
below the simplified acquisition threshold and covering subcontracts
below that threshold--to be incongruous. The Department concludes that
the Executive Order embodies a sound policy choice that when the
Federal government enters into a large prime contract (defined as
exceeding the simplified acquisition threshold), all employees working
under the umbrella of that prime contract will be notified of their
rights under federal labor law, including employees of lower tier
subcontractors. Indeed, it would be incongruous to seek economical and
efficiency improvements in government procurement through a well-
informed contractor workforce and yet not apply those standards to all
subcontracts flowing from the covered prime contract regardless of
their size. The Department notes that the application of the rule to
subcontracts below the simplified acquisition threshold presents no
greater notice-posting obligation than many of those employers already
have with other notice-posting obligations under various labor and
employment laws. For instance, the notice-posting obligation of USERRA,
the Uniformed Services Employment and Reemployment Rights Act, requires
all employers regardless of size to post notices to their employees
about their USERRA rights. 38 U.S.C. 4334; 20 CFR 1002 (implementing
regulations). The reach of this rule is not incompatible or
inconsistent with the reach of other labor and employment notice-
posting obligations.
After full consideration of comments about the application of the
rule to de minimis value subcontracts, the Department has concluded
that it is ``necessary and appropriate,'' Sec. 3 of the Executive
Order, to establish a de minimis value standard for subcontracts below
which the rule will not apply. Such a standard expressly employs the
principle that certain activity is of such modest concern to the
application of the legal standard that it can be set apart from its
application. Wisconsin Dept. of Revenue v. William Wrigley, Jr., Co.,
505 U.S. 214 (1992) (the maxim--``the law cares not for trifles''--is
part of the established background of legal principles against which
all enactments are adopted, and which all enactments (absent contrary
indication) are deemed to accept). A de minimis standard based on the
dollar value of the subcontract also has the advantage of permitting
subcontractors to ascertain at the time of entry into the subcontract
that this rule will or will not apply to them. In implementing the
equal opportunity contract clause requirements of Executive Order
11246, the Department has established a $10,000 threshold for contracts
and subcontracts below which that rule will not apply. See 41 CFR 60-
1.5(a). The Department considers suitable the application of a similar
$10,000 threshold for subcontracts below which this rule will not
apply, and this de minimis standard has been added to Sec.
471.3(a)(4). In addition, as with the admonition in Sec.
471.3(a)(2)(i) that agencies and contractors may not enter into
contracts so as to avoid the application of the rule, contractors and
subcontractors similarly may not enter into contracts so as to avoid
application of the rule, and that constraint has also
[[Page 28385]]
been added to Sec. 471.3(a)(4). In addition to the exception for de
minimis contracts, the definition of subcontract, as proposed in the
NPRM, will continue to be limited to those that are ``necessary to the
performance of'' the government contract.
In addition to the exceptions for certain contracts, the Executive
Order establishes two exemptions that the Secretary, in her discretion,
may provide to contracting department or agencies that the Secretary
finds appropriate for exemption. Sec. 4, 74 FR 6108. These provisions
permit the Secretary to exempt a contracting department or agency or
group of departments or agencies from the requirements of any or all of
the provisions of the Order with respect to a particular contract or
subcontract or any class of contracts or subcontracts if she finds
either that the application of any of the requirements of the Order
would not serve its purposes or would impair the ability of the
government to procure goods or services on an economical and efficient
basis, or that special circumstances require an exemption in order to
serve the national interest. Id. Proposed Sec. 471.3(b) implemented
these exemptions, and provided for the submission of written requests
for exemptions to the Director of OLMS. It also provided that the
Director may withdraw an exemption if a determination is made that such
action is necessary or appropriate to achieve the purposes of the rule.
The Department invited comments on the standards and procedures for
requesting an exemption and the Department's withdrawal of a granted
exemption, but received no comments applicable to these proposed
revisions. Therefore, the proposed provisions implementing the
exemptions stated in the Executive Order have been carried over to the
final rule unchanged. See Sec. Sec. 471.3(b) and (c).
F. Physical and Electronic Posting Requirements
1. Physical Posting Requirements
The contract clause in the Executive Order requires a contractor to
post the employee notice ``in conspicuous places in and about its
plants and offices where employees covered by the National Labor
Relations Act engage in activities relating to the performance of the
contract, including in all places where notices to employees are
customarily posted both physically and electronically.'' Sec. 2, 74 FR
6107. This provision from the Executive Order establishes a number of
criteria for posting, including ``conspicuous'' posting, posting in
locations where NRLA-covered employees work, posting in locations where
contract-related activity is performed, and posting where employee
notices are customarily placed. The NPRM summarized the physical
posting criteria by stating that the provision establishes that a
contractor is required to post the notice physically at its place of
operation where employees are likely to see it. 74 FR at 38491. In
addition, proposed Sec. 471.2(d) provided that the Department will
print the required employee notice poster and supply it to Federal
contractors through the Federal contracting agency. The NPRM also noted
the poster may be obtained from OLMS, whose contact information was
provided in this subsection of the proposed rule, or can be downloaded
from OLMS's Web site, http://www.olms.dol.gov. The NPRM observed that
the Department's printing of the poster and provision of it to Federal
contractors will reduce the burden on those contractors to comply with
the Executive Order and this regulation, and will ensure conformity and
consistency with the Secretary's specifications for the notice.
Proposed Sec. 471.2(d) also permitted contractors to reproduce in
exact duplicate the poster supplied by the Department to satisfy their
obligations under the Executive Order and this rule. The Department
invited comment on its proposal to make available print and electronic
format posters containing the employee notice.
The Department received nine comments on issues related to the
physical posting requirements. As a general matter, a few comments
stated support for the requirements for physical posting, and a few
complained that the posting would create workplace clutter. However,
most comments requested clarification of the criteria for posting and
the meaning of specific terms, including ``customary'' placement and
``activities related to the performance of the contract.''
The contract clause in the Executive Order requires covered
contractors to post notices in ``places where notices to employees are
customarily posted.'' 74 FR 6107. One comment sought guidance on this
provision, asking whether ``customary'' postings means placement where
the employer posts routine notices to employees such as general
personnel information, or whether it instead means placement where the
employer posts other legally mandated notices, which may be different.
One comment suggests that the contract clause establishes two
independent requirements for posting: First, a contractor must post the
notice where NLRA-covered employees perform work related to the
contract, and second, they must post it in all places where notices to
employees are customarily posted. This comment suggests that the first
requirement is separate from the second, so the notice must be posted
where contract work is being performed, even if not where customary
employee notices are posted, and a notice must also be posted where
employee notices are customarily posted. Under this interpretation, a
contractor must post, for example, on the work floor and where other
notices are posted. In a similar vein, a second commenter suggests that
DOL ``mandate effective physical posting'' because ``employees working
at diverse or remote locations may not always pay attention to
electronic notices but do take note of physical postings in their work
areas'' (emphasis added).
Several commenters raised concerns about the application of the
phrase ``activities relating to the performance of the contract.'' One
commenter submitted that the meaning of where employees ``engage in
activities relating to the performance of the contract'' is vague and
unclear. Must a contractor post the notice, the commenter asks, in a
location in which employees indirectly engage in contract activities,
such as where employees provide some but not all products and/or
services related to the contract; where employees spent only 20% of
their work time on products and/or services that would ``eventually''
be used at a second facility in performance of the contract; where the
product or service was altered prior to fulfillment of the contract; or
where human resources personnel work at a separate location by
providing support to employees working on the contract? In short, the
commenter posits, what ``nexus'' must exist between an employee and
work related to the performance of the contract?
A second commenter suggests that posting should be required only
where employees work directly on the contract. The comment argues that
requiring employers to post where employees are not working directly on
the government contract may cause compliance challenges and would give
contractors ``significant pause'' before entering into future
government contracts. This commenter requests guidance from the
Department regarding employees that do not directly perform contract
work but perform supportive work, such human resources and accounting
employees. Similarly, a third comment requests clarification on posting
where the contractor's employees perform ``remote tasks,'' such as
payroll employees at a separate
[[Page 28386]]
facility, or employees at a distribution center that sends parts to the
assembly facility where the contract work is performed. This comment
also proposes that the Department interpret the provision to mean work
performed directly on the contract, thus eliminating ``upstream'' and
``downstream'' employees. To the extent the rule covers administrative
functions, the comment requests more specific guidance on how such work
is ``related to the performance of the contract.''
Finally, two commenters contended that the rule's posting
requirements conflict with the Executive Order. Specifically, they
observe that Sec. 471.10(b)(1) requires that the notice be posted at
``each of the contractor's establishments and/or construction work
sites* * *[,]'' which appears to be broader than the contract clause
requirement to post where employees engage in activities related to
contract performance. The comment recommends revision to regulatory
text to state that posting is only required where employees engage in
contract's performance.
The Department received several comments about the physical poster
itself. Two comments suggested that the poster be printed in other
languages, particularly Spanish. Two agree with the Department that in
order to ensure that the notice is not reduced or otherwise modified,
the poster as supplied by the Department cannot be altered in size or
substance and that only exact duplicates of the Department-supplied
poster can be utilized. By contrast, two commenters noted that this no-
alteration requirement prevents contractors from purchasing the poster
through a commercial source that consolidates Federally mandated
posters into a single poster, provides updates to posters when the
content is revised by the implementing agency, or both.
After carefully reviewing the comments related to the physical
posting requirements, the Department has concluded the following. The
Executive Order requires a contractor to post the employee notice ``in
conspicuous places in and about its plants and offices[,] including all
places where notices to employees are customarily posted * * *
physically.'' Sec. 2, para. 1, 74 FR 6107. Because the Department
received no comments raising issues regarding the meaning of posting
``in conspicuous places[,]'' the Department concludes that contractors
are accustomed to such a requirement and it has a well-accepted
meaning. A notice is conspicuously posted if it is placed in a central
location where employees are likely to see it. Dunham v. McLaughlin
Body Co., 812 F. Supp 867, 872 (DC Ill. 1992) (notice required under
Age Discrimination in Employment Act). See also 29 CFR 825.300, which
requires covered employers to ``post and keep posted'' the notice
required by the Family and Medical Leave Act (``FMLA''), 29 U.S.C. 2601
et seq., ``on its premises, in conspicuous places where employees are
employed,'' which means ``prominently where it can be readily seen by
employees and applicants for employment.'' Accordingly, for the
purposes of this rule, a contractor meets the requirement to post the
employee notice conspicuously if the notice is prominent and can be
readily seen by employees. This standard has been incorporated into a
new subsection of Sec. 471.2(d), which establishes the regulatory
standards for a contractor's physical posting of the employee
notice.\14\
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\14\ Subsequent subsections of Sec. 471.2 have been re-lettered
following the insertion of new subsection (d).
---------------------------------------------------------------------------
The requirement to post ``in and about [a contractor's] plants and
offices * * *, including in all places where notices to employees are
customarily posted[,]'' when read together with the ``conspicuous''
requirement, requires widespread posting that is prominent and readily
observable throughout the contractor's plants and offices, and
emphasizes that among these locations is placement where other employee
notices are posted. ``Other notices to employees'' is not limited to
Federally mandated legal notices, but includes notices to employees
regarding the terms and conditions of their employment. See Sec.
471.2(d)(1).
In response to comments, the Department has determined that it is
necessary and appropriate to require a contractor that employs a
significant number of employees who are not proficient in English to
post the employee notice in languages other than English to achieve the
purposes of the Order, and this requirement has been incorporated into
Sec. 471.2(d). In implementing a similar requirement under the FMLA,
29 CFR 825.300(a)(4), the Department stated that ``when the employer
employs a significant portion of employees who are not literate in
English, the employer [must] provide the poster and general notice to
employees in a language in which they are literate.'' 73 FR 67991, Nov.
17, 2008. The Department similarly adopts this standard for application
in this rule, and will require a contractor to post the employee notice
in a language or languages spoken by a significant portion of the
contractor's workforce. See Sec. 471.2(d). Employers with multiple
locations may post notices in different languages at different
locations, if the posted notices are provided in languages in which the
employees are literate at each location. The Department will provide
necessary translations of the poster. See Sec. 471.2(e). With regard
to the requirement in Sec. 471.2(e) that the poster not be altered by
the contractor, the Department clarifies that this prohibition is not
intended to, and should not, impair the ability of contractors to
utilize a commercial poster service that might provide the instant
employee notice consolidated onto one poster with other Federally
mandated labor and employment notices, so long as such consolidation
does not alter the size, color, or content of the poster provided by
the Department.
Finally, the Department agrees with the comments that additional
guidance is needed to advise contractors and employees regarding the
meaning of the requirement to post where employees ``engage in
activities relating to the performance of the contract.'' 74 FR 6107.
The starting point for interpretation and implementation of this phrase
is two prior executive orders that similarly obligated notice-posting
through contract clause incorporation. Although neither Executive Order
11246 nor 13201 included the operative phrase as a provision setting
the outside bounds of the posting requirement, they each employed the
operative phrase inversely to establish the basis of a coverage
exemption.\15\ As a result, both Executive Orders 11246 and 13201
provided that the Department may grant exemptions to facilities of a
contractor that are ``in all respects separate and distinct from
activities of the contractor related to the performance of the
contract.'' See E.O. 11246, Sec. 204(d), as amended (available at
http://www.dol.gov/ofccp/regs/statutes/eo11246.htm); E.O. 13201, Sec.
3(c), 66 FR 11222-23 (emphasis added).
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\15\ The contract clause prescribed by Executive Order 13201
specified that ``[d]uring the term of this contract, the contractor
agrees to post a notice, of such size and in such form as the
Secretary of Labor shall prescribe, in conspicuous places in and
about its plants and offices, including all places where notices to
employees are customarily posted.'' Sec. 2(a)(1), 66 FR 11221.
Section 202 of Executive Order 11246 requires that ``[t]he
contractor agrees to post in conspicuous places, available to
employees and applicants for employment, notices to be provided by
the contracting officer setting forth the provisions of this
nondiscrimination clause.'' Sec. 202(1), E.O. 11246 (available at
http://www.dol.gov/ofccp/regs/statutes/eo11246.htm).
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In implementing the ``separate and distinct facilities'' exemption
for
[[Page 28387]]
Executive Order 11246, the Department has adopted a multi-factor
analysis to determine whether activity at a certain facility is
separate and distinct from activity related to the performance of the
contract.\16\ Although these exemption factors are facility-based, and
are inherently intended to analyze whether entire facilities are
contract-related, they are nevertheless instructive because they
suggest that indirect support of or benefit from the government
contract may cause the denial of an exemption or waiver request.
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\16\ These factors are found in Office of Federal Contractor
Compliance Programs Directive, Separate Facility Waivers/Exemptions
(Sept. 13, 2002) (available at http://www.dol.gov/ofccp/regs/
compliance/directives/dir260.pdf). Other factors that may be
considered include the number of facilities connected to the
contractor's Government contracts and the nature of the contractor's
contractual relationship with the Government. Id. at 4. The
Department's implementation of now revoked Executive Order 13201
concluded that the identical factors would be used to consider
requests for waivers for separate and distinct facilities under that
rule. See 69 FR 16384.
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In addition to analyzing the implementation of the phrase as it
operated in the two predecessor executive orders, the Department has
also looked to the implementation of a similar phrase that
affirmatively established the bounds of a contractor's obligations
without regard to the possibility of waivers or exemptions. The
Department's previous experience implementing Section 503 of the
Rehabilitation Act, 29 U.S.C. 793, provides such an analog. Prior to a
statutory amendment in 1992, the affirmative action requirements of
Section 503 required government contracts in excess of $10,000 to
``contain a provision requiring that, in employing persons to carry out
such contract, the party contracting with the United States shall take
affirmative action to employ and advance in employment qualified
individuals with disabilities.'' 29 U.S.C. 793 (1991 compilation)
(emphasis added). Accordingly, the affirmative action provision of
Section 503 applied only insofar as the contractor was employing
persons to ``carry out'' or, as with Executive Order 13496, ``engage in
activities related to the performance of,'' the government contract.
The similar focus of these provisions is thus directed to the specific
nature of the employees' work, and is not based on the conduct of the
work at a facility.
To determine whether contractors were ``employing persons to carry
out'' a government contract for the purposes of Section 503, the
Department established a disjunctive test. 29 CFR 60-741.4(a)(2). Under
that test, the Department considered a position to have been engaged in
carrying out a contract if:
(A) The duties of the position included work that fulfilled a
contractual obligation, or work that was necessary to, or that
facilitated, performance of the contract or a provision of the
contract; or
(B) The cost or a portion of the cost of the position was
allowable as a cost of the contract under the principles set forth
in the Federal Acquisition Regulation at 48 CFR Ch. 1, part 31:
Provided, That a position shall not be considered to have been
covered by this part by virtue of this provision if the cost of the
position was not allocable in whole or in part as a direct cost to
any Government contract, and only a de minimis (less than 2%)
portion of the cost of the position was allocable as an indirect
cost to Government contracts, considered as a group.
29 CFR 60-741.4(a)(2)(A)-(B). In proposing this regulatory test, the
Department explained that subsection A includes ``work that is
necessary to or that facilitates contract performance, even if not
directly required by an express contract term, [which] is intended to
reflect the practical reality that performance of a contract generally
requires the cooperation of a variety of individuals engaged in
auxiliary and related functions beyond direct production of the goods
or provision of the services that are the object of the contract.'' 57
FR 48092, Oct. 21, 1992.
The Department has uniformly concluded in each of these
prototypes--Executive Orders 11246 and 13201, and Section 503--that
contract-related work includes more than direct work that effectuates
that product or service that is the subject of the contract. Under the
Department's interpretations, included in contract-related activity is
indirect or auxiliary work without which the contract could not be
effectuated, such as maintenance, repair, personnel and payroll work.
Accordingly, the Department will adopt the disjunctive test
previously used for implementing the affirmative action requirements of
Section 503 of the Rehabilitation Act to determine whether, under
Executive Order 13496, particular employees are ``engage[d] in
activities relating to the performance of the contract.'' See Sec.
471.2(d)(2).\17\ In determining whether employees are engaging in
activities relating to the performance of the contract under Sec.
471.2(d)(2)(i), the Department notes that a contract for production and
sale of goods to the Government commonly requires the work not only of
the production employees assembling the goods, but also of those
engaged in functions such as repairing the machinery used in producing
the goods; maintaining the plant; assuring quality control and
security; storing the goods after production; delivering them to the
Government; hiring, paying, and providing personnel services for the
employees engaged in contract-related work; keeping financial and
accounting records; performing related office and clerical tasks; and
supervising or managing the employees engaged in such tasks. This list
is not intended to be exhaustive, but only to illustrate that a variety
of functions may commonly be involved in activities related to the
performance of the contract. Whether a particular employee is engaged
in activities related to the performance of the contract depends on the
facts. In each case, the question is whether the duties of the
employee's position include work that contributes to or furthers the
performance of the contract, or work whose omission would impede the
contract's performance.
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\17\ In addition, Proposed Sec. 471.10(b)(1), which stated that
compliance evaluations will determine whether the notice is posted
``in an about each of the contractor's establishments and/or
construction worksites,'' has been modified to reflect that
compliance evaluations will assess conformity with the applicable
physical and electronic posting standards contained in Sec.
471.2(d) and (f).
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2. Electronic Posting Requirements
The NPRM stated that those contractors that customarily post
notices to employees electronically must also post the required notice
electronically. In proposed Sec. 471.2(e), the Department indicated
that such contractors may satisfy the electronic posting requirement on
any Web site that is maintained by the contractor or subcontractor and
customarily used for employee notices, whether external or internal.
The NPRM noted that a contractor must display prominently on its Web
page or electronic site where other employee notices are customarily
placed a link to the DOL's Web page that contains the full text of the
employee notice. The contractor must also place the link in the
prescribed text contained in Sec. 471.2(e). The prescribed text is the
introductory language of the notice. The Department sought comments on
this proposal for electronic compliance, and particularly requested
feedback regarding whether it should prescribe standards regarding the
size, clarity, location, and brightness with regard to the link,
including how to prescribe electronic postings that are at least as
large, clear and conspicuous as the contractor's other posters.
The Department received numerous comments about the electronic
posting requirements of the rule. About half of those comments sought
additional
[[Page 28388]]
guidance on the meaning of particular terms used in the rule that
establish the electronic posting requirement, and the other half
commented on the text prescribed to accompany the electronic link to
the notice. In addition, the Department received one comment responding
particularly to whether the Department should adopt standards regarding
display of the link. Finally, one comment challenged the requirement to
post electronically as unnecessary, redundant and ultimately burdensome
because, the commenter submitted, most employees are accustomed to
finding notices on employee bulletin boards. This comment also
suggested that posting this notice electronically, when other Federally
mandated notices are required to be posted only physically, heightens
the impact of this notice and suggests that it may have priority over
other required notices. The comment suggests that this outcome is not
supported by the requirements of the Executive Order.
Two comments suggested additional limitations on the meaning of
``customarily post[ing] notices to employees electronically,'' which is
the threshold standard that triggers the obligation to post this notice
electronically as well. The first comment applauds the use of
electronic notification to employees, but suggests that the requirement
to post electronically be limited to those cases in which the employer
posts only other Federally mandated notices electronically. The comment
suggests that employers may post a variety of notices to employees
electronically, and the mere use of electronic communications would
trigger the e-posting requirement for this notice. The second comment
suggests that in those cases in which an employer posts notices to
employees both physically and electronically, the rule should be
modified to give employers the option to post only physically. The
comment supports the optional requirement with the example of firms
that engage in manufacturing that may post some notices electronically.
The most effective way to reach the employees engaged in the
manufacturing process, the comment contends, is to physically post
notices on the shop floor. This comment suggests the electronic posting
in such instances would be needless and burdensome, and defeat the
intent of the Executive Order. The comment suggests that the
requirement to post electronically be limited to those cases in which
employees engaged in activities related to the contract have regular
access to electronic postings and access to electronic postings may be
limited to employees engaged in activities related to the contract.
Three comments sought clarification of the requirement to ``display
prominently'' the link to the Department's Web site containing the full
text of the notice. The first comment suggests that many employers have
intranet sites that are devoted entirely to communication with
employees, and absent further guidance on prominent display, such
employers will be uncertain where on those sites to include the link to
the required notice. One labor organization suggested that placement of
the link be required ``immediately'' on any page referencing employee
notices so that successive clicks are avoided. A second labor
organization suggested that the rule require the link to be no less
prominent than the employer's display of other comparable notices.
Finally, in response to the Department's specific query regarding
whether it should prescribe standards regarding the size, clarity,
location and brightness of the link, one commenter responded
negatively, arguing that such regulation would be ``intrusive,
overreaching and over-regulating.'' Instead of assuming that
contractors may try to minimize the link, the comment suggested that
the Department simply require that the link be displayed in the same
size and clarity as other information on the employer's Web site.
The Department received six comments on the text required to be
included with the link to the notice, and because the prescribed text
is identical to the preamble of the notice, the comments were analogous
to comments discussed earlier about the text of the preamble--some
favored the statement regarding encouraging collective bargaining and
some opposed it. In addition to comments about the content of the text,
two commenters objected to the length of the prescribed text, one
suggesting that it is cumbersome and impractical and the other
suggesting that the prescribed text simply state, ``Your Rights Under
the National Labor Relations Act.'' Two labor organizations favored the
inclusion of the prescribed text, and suggested that it include the
heading, ``Important notice of Your Federal Rights with Regard to
Collective Bargaining.''
After full consideration of the comments about the rule's
electronic posting requirements, the Department has made the following
decisions. The Executive Order requires posting in ``all places where
notices to employees are customarily posted both physically and
electronically.'' Sec. 2, para. 1, 74 FR 6107 (emphasis added). Thus,
the Order indicates that the physical and electronic posting
requirements are simultaneous, and one cannot be used in lieu of, or as
a substitute for, the other. Accordingly, if an employer customarily
posts employee notices both physically and electronically, it must post
this notice both physically and electronically. As with the physical
posting requirements, the Department concludes that a contractor
``customarily posts employee notices electronically'' within the
meaning of the rule when the contractor posts messages to employees
electronically about the terms and conditions of their employment, and
such messages are not limited to Federally mandated communications and
employee rights. Thus, a contractor must post this notice
electronically in those places that it customarily posts electronically
other messages to employees about the terms and conditions of their
employment. Further, inherent in the concept of a contractor's
``customary'' electronic posting is employee access to those
communications. Presumably, a contractor would not electronically post
notices to employees about the terms and conditions of their employment
if its employees did not have regular access to those notices.
Therefore, the Department need not at this time provide guidance or set
standards regarding employee access to electronic postings.
The Executive Order's requirement to post ``conspicuously'' was
interpreted in proposed Sec. 471.2(e) of the NPRM as requiring the
``prominent display'' of the link to the Department's Web site, and
comments reflected uncertainty regarding the meaning of this provision.
In particular, as noted in the comments, large contractors may have
entire intranets that are available for communication to employees.
Other contractors may maintain a Web site on which notices to employees
are not consolidated into one location. Until compliance experience is
further developed, the Department will not adopt a standard for
``prominent display'' that precisely regulates the location of
electronic notice by a set number of successive ``clicks'' away from a
starting page, as suggested in some comments. Instead, the Department
will consider that the electronic notice is displayed prominently if
the link to the Department's Web site containing the notice is no less
prominent than the contractor's other notices to employees. In
addition, at this time the Department will not set regulatory standards
[[Page 28389]]
regarding the clarity or brightness of the link to the Department's Web
site. Further, in response to comments and for a variety of reasons,
including limitations on space available for electronic notices, the
Department has eliminated the requirement to include text specified in
proposed Appendix B with the link to the Department's Web site
containing the employee notice. Instead, the link to the Department's
Web site must read, ``Important Notice about Employee Rights to
Organize and Bargain Collectively with Their Employers,'' and this
requirement has been included with the other requirements for
electronic posting in Sec. 471.2(f).
Finally, as with the requirement to post translations of the
physical employee notice, where a significant portion of a contractor's
workforce is not proficient in English, the contractor must provide the
required electronic notice in the language the employees speak. This
requirement will be satisfied by prominent display, as required in
Sec. 471.2(f), of a link to the Department of Labor's Web site that
contains the full text of the poster in the language or languages the
employees speak. In such cases, the Office of Labor-Management
Standards will provide translations of the link to the Department's Web
site that must be displayed on the contractor's or subcontractor's Web
site.
G. Application of the Rule to Employers of ``Employees Covered by the
NLRA''
Proposed Sec. 471.4 implemented the policy noted above that the
Executive Order requires notice-posting in those workplaces in which
employees covered by the NLRA perform work related to the Federal
contract. Thus, Sec. 471.4 of the proposed regulatory text established
coverage of the rule that is coterminous with NLRA coverage, and stated
that the rule did not apply to employers excluded from the definition
of ``employer'' in the NLRA, 29 U.S.C. 152(2), and employers of
employees excluded from the definition of ``employee'' under the NLRA,
29 U.S.C. 152(3).\18\
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\18\ Under the NLRA, the term ``employer'' excludes the United
States, any wholly owned Government corporation, any Federal Reserve
Bank, any State or political subdivision thereof, any person subject
to the Railway Labor Act [45 U.S.C. 151 et seq.], any labor
organization (other than when acting as an employer), or anyone
acting in the capacity of officer or agent of such labor
organization. 29 U.S.C. 152(2). Section 471.4(a)(3) of the NPRM
contained an inadvertent drafting error, which combined two employer
exclusions into one subparagraph. The two exclusions--any State or
political subdivision of a State and any person subject to the
Railway Labor Act--have been listed in separate subparagraphs in the
final rule, thus increasing by one the number of employer exclusions
listed in Sec. 471.4(a).
The NLRA's definition of ``employee'' also excludes those
employed as agricultural laborers, in the domestic service of any
person or family in a home, by a parent or spouse, as an independent
contractor, as a supervisor, or by an employer subject to the
Railway Labor Act, such as railroads and airlines. 29 U.S.C. 152(3).
Section 471.4(b) has been modified to include the NLRA's catchall
definition of excluded employees, i.e., someone who is employed ``by
any other person who is not an employer as defined'' in the NLRA. 29
USC 152(3).
---------------------------------------------------------------------------
One commenter agreed with proposed Sec. 471.4 as a starting point,
but suggested that the rule must clarify several points with respect to
NLRA coverage. First, the comment suggests that the rule should state
that it does not apply to contractors without employees. Second, the
comment suggests that the rule should exempt employers that do not fall
within the NLRB's discretionary jurisdictional standards related to the
volume and character of the business done by the employer. Third, the
comment states that the rule should indicate that the Board's
jurisdiction does not extend to some employers, such as religious
school and tribal enterprises. A second comment agrees that the
Department should state that employers who are not covered by the
Board's discretionary jurisdictional standards, or are exempted from
coverage for other reasons, such as certain religious educational
institutions or the horse-racing industry, should be expressly excluded
from the rule's application. Two comments raised the issue of
application of the rule to foreign operations. The first comment urges
the exemption of posting requirements for [presumably U.S. firms with]
``employees performing work outside of the United States'' because
``the nations in which our companies operate overseas have labor
management requirements of their own.'' The second comment raises the
concern that requiring notice-posting ``in foreign contracts and
subcontracts would be confusing to employees working abroad who would
not be subject to the statute.'' This comment notes that OFCCP has
incorporated a similar exclusion in its regulations at 41 CFR 60-
1.5(a)(3), and suggests a similar exemption for work performed on
contracts and subcontracts outside the U.S.
As noted, Section 2 of the Executive Order requires contractors to
post the required notice ``where employees covered by the National
Labor Relations Act'' perform contract-related activities. The NLRA
applies to employers and employees that are not excluded from coverage
under the definitions of those terms in the Act. 29 U.S.C. 152(2)-(3).
Section 10(a) of the Act empowers the Board ``to prevent any person
from engaging in any unfair labor practice affecting commerce,'' and
Sec. 9 of the Act extends the jurisdiction to representation cases
where commerce would be affected. 29 U.S.C. 160(a), 159. Sections 2(6)
and 2(7) provide statutory definitions of ``commerce'' and ``affecting
commerce.'' 29 U.S.C. 152(6), (7).
The Supreme Court has determined that Congress granted the Board
with ``the fullest jurisdictional breadth constitutionally permissible
under the Commerce Clause.'' NLRB v. Reliance Fuel Corp., 371 U.S. 224,
226 (1963). Although the NLRA's statutory jurisdiction is coextensive
with congressional power to legislate under the Commerce Clause, the
Board has established discretionary standards that limit the assertion
of its broad statutory authority to those cases which, in its opinion,
have a substantial effect on commerce. These discretionary standards
are based on the volume and character of the business done by the
employer. See ``An Outline of Law and Procedure in Representation
Cases,'' Chapter 1, Jurisdiction (August 2008) (available at http://
www.nlrb.gov/nlrb/legal/manuals/outline_chap1.html). However, even
where an employer fails to meet the appropriate discretionary monetary
standard, the Board will assert its jurisdiction to the extent
necessary to address alleged violations of Section 8(a)(4), which
prohibits retaliation against employees who give testimony or file
charges under the Act, if it can be established that the Board has
statutory jurisdiction, i.e., a greater than de minimis flow of goods
or services across State lines. Pickle Bill's, Inc., 224 NLRB 413
(1976).
After due consideration, the Department declines to limit the
application of the notice-posting requirements based on the Board's
discretionary jurisdictional standards for the following reasons.
First, had the President wanted the application of the rule to be
limited in such a fashion, the words of the Executive Order would
create such a limitation, but no such text appears in the Order.
Second, the Board's discretionary jurisdictional standards were
established to better effectuate the purposes of the Act to ``promote
the prompt handling of major cases'' by limiting the exercise of its
jurisdiction ``to enterprises whose operations have, or at which labor
disputes would have, a pronounced impact upon the flow of interstate
commerce.'' Hollow Tree Lumber Company, 91 NLRB 635, 636 (1950). The
application of the notice-posting
[[Page 28390]]
rule to employers outside the Board's discretionary jurisdictional
limits raise no similar concerns related to the prompt handling of
major unfair labor practice or representation cases, and thus no
similar rationale demands the inclusion of such a limitation. Third,
the Board's discretionary jurisdictional standards are numerous and
unwieldy for the purposes of this rule. The jurisdictional standards
that have the broadest application are those for retail and non-retail
operations, but the Board has established numerous separate individual
standards to address certain industries and types of enterprises,
including health care organizations, newspapers, and educational
institutions, among others. See ``An Outline of Law and Procedure in
Representation Cases,'' supra, Chapter 1, Jurisdiction (discussing
jurisdictional standards applicable by industry). Finally, as
illustrated in Pickle Bill's, Inc., supra, 224 NLRB at 413, certain
public policies, such as remedying an employer's unlawful interference
with the statutory right of all employees freely to resort to and
participate in the Board's processes, demand that the Board's
discretionary jurisdictional standards not apply. The Department
likewise concludes that the public policy underlying this rule favoring
notification to employees of their rights similarly demands that the
Board's discretionary jurisdictional standards not apply. Therefore,
the Department has determined that the rule applies to employers of
``employees covered by the National Labor Relations Act,'' Sec. 2, 74
FR at 6107, without regard to the Board's discretionary jurisdictional
limitations.\19\
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\19\ As one comment notes, the Board has declined completely to
exercise jurisdiction over the horseracing and dogracing industries
because they are peculiarly related to, and regulated by, local
governments, and because further regulation of them would not
contribute to stability in labor relations in those industries. See
29 CFR 103.3. Because the Board has expressly found that its
jurisdiction would not enhance labor-management stability in those
industries, and because the purpose of this rule is to promote labor
peace and reduce labor unrest, the Department will follow this
jurisdictional standard and not apply the rule to the horseracing or
dogracing industries.
---------------------------------------------------------------------------
These comments also raise the issue of the application of the rule
to certain contractors that might implicate the First Amendment, such
as religiously affiliated employers. See NLRB v. Catholic Bishop of
Chicago, 440 U.S. 490 (1979) (reading the NLRA in light of the Religion
Clauses of the First Amendment, NLRB lacks jurisdiction over church-
operated schools). Because such limits to the NLRA's jurisdiction are
constitutional in nature and similarly implicate the Department's
action under the Executive Order with respect to such contractors, the
rule will not apply to contractors that hold themselves out to the
public as a religious institution, that are nonprofit, and are
religiously affiliated. See University of Great Falls v. NLRB, 278 F.3d
1335 (DC Cir. 2002) (employing three-part test for implementing
Catholic Bishop); Universidad Central de Bayamon v. NLRB, 793 F.2d 383
(1st Cir. 1985) (en banc) (Breyer, Circuit Judge) (same).
As noted, the comments also raise the issue of the application of
the rule to U.S. firms doing business abroad. The Supreme Court has
stated that the statutory jurisdiction of the NLRA extends only to
employees ``of our own country and its possessions.'' Benz v. Compania
Naviera Hidalgo, S.A., 353 U.S. 138, 144 (1957). More precisely, the
Act only applies to employees in the territorial United States, and not
to American employees located abroad. See, e.g., RCA Oms, 202 NLRB 228
(1973); Range Sys's. Eng'g Support, 326 NLRB 1047 (1998); Computer
Sci.'s Raytheon, 318 NLRB 966 (1995); GTE Automatic Elec. Inc., 226
NLRB 1222 (1976). Similarly, the regulations implementing Executive
Order 11246 exempt from coverage ``work performed outside the United
States by employees who were not recruited within the United States.''
41 CFR. 60-1.5(a)(3). For these reasons, the Department has determined
that this rule will not apply to government contracts for work
performed exclusively by employees of U.S. firms operating outside the
territorial United States, and Sec. 471.3(a)(5) has been added to
reflect this determination.
Finally, the comments raise the issue regarding the application of
the rule to tribal governments. The NLRA is a statute of general
applicability, and therefore may be applicable to the activities of
Indian tribes. NLRB v. Chapa-De Indian Health Program Inc., 316 F.3d
995 (9th Cir. 2003). The Board's standard for determining the
circumstances under which it will exercise jurisdiction over Indian-
owned and -operated enterprises is based on the nature of the
enterprise and not its location. San Manuel Indian Bingo & Casino, 341
NLRB 1055 (2004). In San Manuel, the Board overruled prior precedent
and applied the statute to the conduct of Indian tribes, unless the law
touches the exclusive rights of self-government in purely intramural
matters, the application of the law would abrogate treaty rights, or
there is evidence in the statute or legislative history that Congress
did not intend the law to apply to Indian tribes. Id. The Department
will utilize the same standard, and apply this rule to Federal
contractors that are Indian-owned or -operated enterprises, unless one
of the exceptions articulated by the Board in San Manuel applies.
Subpart B--General Enforcement; Compliance Review and Complaint
Procedures
Subpart B of the proposed rule established standards and procedures
the Department will use to determine compliance with obligations of the
rule, take complaints regarding noncompliance, address findings of
violations, provide hearings for certain matters, impose sanctions,
including debarment, and provide for reinstatement in the case of
debarment. The standards and procedures proposed in the NPRM were taken
largely from the Department's prior rule administering and enforcing
Executive Order 13201, 66 FR 11221. See 29 CFR Part 470 (2008),
rescinded under authority of E.O. 13496, 74 FR 14045, March 30, 2009.
The Department invited comment on the administrative and enforcement
procedures proposed in Subpart B.
The NPRM noted that OFCCP administers and enforces several laws
that ban discrimination and require Federal contractors and
subcontractors to take affirmative action to ensure that all
individuals have an equal opportunity for employment. Therefore, OFCCP
already has responsibility for monitoring, evaluating and ensuring that
contractors doing business with the Federal government conduct
themselves in a manner that complies with certain Federal laws.
Proposed Sec. 471.10 built on this practice and expertise, and
established authority in the Director of OFCCP to conduct evaluations
to determine whether a contractor is in compliance with the
requirements of this rule. Under proposed Sec. 471.10(a), such
evaluations may be done solely for the purpose of assessing compliance
with this rule, or may be undertaken in conjunction with an assessment
of a Federal contractors' compliance with other laws under OFCCP's
jurisdiction. This proposed section also established standards
regarding location of the posted notice that will be used by OFCCP to
assess compliance and indicates that an evaluation record will reflect
efforts made toward conciliation, corrective action and/or
recommendations regarding enforcement actions.
The Department received three comments that each raised concerns
about OFCCP evaluations to determine
[[Page 28391]]
whether a contractor is in compliance with the contract clause-
inclusion and notice-posting requirements of the rule. The thrust of
these comments is that OFFCP compliance evaluators do not have
substantive expertise about the rights and obligations contained in the
NLRA, and therefore should not be permitted to dispense advice to
employees regarding those rights and obligations during compliance
reviews. One comment noted that employees are likely to be confused by
OFCCP's role in implementing the rule, because the NLRB has enforcement
authority regarding the rights stated in the notice. A second commenter
noted that the Department should delegate authority for compliance to
the NLRB, since it has the proper enforcement authority. Two commenters
noted that the Department must ensure that OFCCP compliance evaluators
refer any questions regarding substantive rights and obligations under
the NLRA to the NLRB. In response to these concerns, the Department
notes that the purpose of an OFCCP compliance evaluation is to
determine whether a contractor is in compliance with the requirements
of this rule, in particular, whether the contractor has satisfied the
notice-posting and contract clause-inclusion requirements applicable to
that contractor. To the extent that questions are raised regarding the
substantive provisions of the notice during a compliance evaluation,
the OFCCP reviewer will refer such questions to the NLRB. Therefore, no
change to the proposed Sec. 471.10 is required.
Proposed Sec. 471.11 provided for the Department's acceptance of
written complaints alleging that a contractor doing business with the
Federal government has failed to post the notice required by this rule.
The proposed section established that no special complaint form is
required, but that complaints must be in writing. In addition, as
proposed in Sec. 471.11, written complaints must contain certain
information, including the name, address and telephone number of the
person submitting the complaint, and the name and address of the
Federal contractor alleged to have violated this rule. This proposed
section established that written complaints may be submitted either to
OFCCP or OLMS, and the contact information for each agency was
contained in this subsection. Finally, proposed Sec. 471.11
established that OFCCP will conduct investigations of complaints
submitted under this section, make compliance findings based on such
investigations, and include in the investigation record any efforts
made toward conciliation, corrective action, and recommended
enforcement action.
The Department received one comment regarding the ``informality''
of the complaint submission process. The comment suggests that because
the complaint is not required to be submitted under penalty of perjury
or similar standard, the process permits the filing of false complaints
for harassment or other wrongful purposes. Unlike most other complaints
alleging an employer's violation of a legal obligation, however, a
complaint filed under Sec. 471.11 requires only a straightforward
allegation that an employer has not posted the required notice
physically and/or electronically, or has not included the contract
clause in its covered contracts or subcontracts. Once notified that
such a complaint has been received, the alleged violation is either
easily remedied or easily disproved, providing virtually no opportunity
for harassment or other misuse of the complaint process. In addition,
because the factual basis underlying a complaint is easily corrected,
an employee who files a true complaint may be vulnerable to retaliation
by an employer who quickly corrects the violation and then subjects the
complaining employee to repercussions that may result from a penalty-
of-perjury standard. Finally, the complaint process for the
Department's former and now-revoked employee notice rule, 29 CFR 470.11
(2008) was identical to this process. For these reasons, the Department
has decided to retain the complaint process as proposed in the NPRM.
See Sec. 471.11.
Proposed Sec. 471.12 set out the initial steps that the Department
will take in the event that a contractor is found to be in violation of
this rule, including making reasonable efforts to secure compliance
through conciliation. Under this proposed section, a noncompliant
contractor must take action to correct the violation and commit in
writing to maintain compliance in the future. If the contractor fails
to come into compliance, OLMS may proceed with enforcement efforts
proposed in Sec. 471.13.
One comment regarding the conciliation process requested that the
Department clarify the extent of a contractor's liability for penalties
if the contractor has fully cooperated with reasonable conciliation
effort and complies with the requirements of the rule. The same comment
suggests that a contractor be given notice of the conciliation process
and an opportunity to appear at that stage before the Director for
Federal Contract Compliance, and that if compliance results, a written
decision be issued to that effect.
The comment misconstrues the conciliation and enforcement processes
of the rule. Enforcement proceedings against a contractor, discussed
further below, will result when a violation has not been corrected
through conciliation. Sec. 471.13(a)(2). If, during the conciliation
process, a contractor comes into full compliance with the requirements
of the rule and commits in writing not to repeat the violation, Sec.
471.12(b), there is no need to refer the matter for enforcement, and no
attendant penalties can result. Similarly, because of the informality
of the conciliation process and the absence of any penalties associated
with it, there is no basis to provide a contractor with formal notice,
an opportunity to be heard, or a decision on the record at that stage
of the process.
Proposed Sec. 471.13 implemented Section 6 of the Executive Order,
74 FR 6108-09, and established steps that the Department will take in
the event that conciliation efforts fail to bring a contractor into
compliance with this rule. Under this proposed section, enforcement
proceedings may be initiated if violations are found as a result of
either a compliance evaluation or a complaint investigation, or in
those cases in which a contractor refuses to allow a compliance
evaluation or complaint investigation or refuses to cooperate with the
compliance evaluation or complaint investigation, including failing to
provide information sought during those procedures. The enforcement
procedures proposed in Sec. 471.13 relied primarily on the
Department's regulations at 29 CFR part 18, which govern administrative
hearings before an Administrative Law Judge (``ALJ''), and on the
provisions for expedited hearings at 29 CFR 18.42. The procedures in
this proposed section established that an ALJ will make recommended
findings and conclusions regarding any alleged violation to the
Assistant Secretary for Employment Standards (``Assistant Secretary''),
who would issue a final administrative order. The final administrative
order may include a cease-and-desist order or other appropriate
remedies in the event that a violation is found. The procedures in this
proposed section also established timetables for submitting exceptions
to the ALJ's recommended order to the Assistant Secretary, and also
provided for the use of expedited proceedings. Other than the
substitution of the Administrative Review Board for the Assistant
Secretary, as noted earlier, no changes were made to proposed
[[Page 28392]]
Sec. 471.13, and it is unchanged in the final rule.
Proposed Sec. 471.14 addressed the imposition of sanctions and
penalties in cases in which violations are found, and established post-
hearing procedures related to such sanctions or penalties. Section 7 of
the Executive Order provides the framework for the scope and nature of
remedies the Department may order in the event of a violation. 74 FR
6109.
Section 7(a) of the Executive Order provides that the Secretary may
issue a directive that the contracting department or agency cancel,
terminate, suspend, or cause to be cancelled, terminated or suspended
any contract or portion of a contract for noncompliance. Id. In
addition, the Executive Order indicates that contracts may be
cancelled, terminated or suspended absolutely, or their continuance may
be conditioned on a requirement for future compliance. Id. Prior to
issuing such a directive, the Secretary must offer the head of the
contracting department or agency an opportunity to object in writing to
the remedy contemplated, and the objections must contain reasons why
the contract is essential to the agency's mission. Id. Finally, Section
7 of the Executive Order prevents the imposition of such a remedy if
the head of the contracting department or agency, or his or her
designee, continues to object to the issuance of the directive. Id.
Proposed Sec. 471.14(a), (b), (c), and (d)(1) fully implemented the
standards and procedures established in Section 7(a) of the Executive
Order.
Section 7(b) of the Executive Order provides that the Secretary may
issue an order debarring noncompliant contractors ``until such
contractor has satisfied the Secretary that such contractor has
complied with and will carry out the provisions of the order.'' 74 FR
6109. As with the remedies discussed above, prior to the imposition of
debarment, the Secretary must offer the head of the contracting
department or agency an opportunity to object in writing to debarment,
and the objections must contain reasons why the contract is essential
to the agency's mission. Id. Finally, Section 7(b) of the Executive
Order prevents the imposition of debarment if the head of the
contracting department or agency, or his or her designee, continues to
object to it. Id. Proposed Sec. 471.14(d)(3) of the rule established
the availability of the debarment remedy. Section 471.14(f) of the
proposed rule indicated that the Assistant Secretary will periodically
publish and distribute the names of contractors or subcontractors that
have been debarred for noncompliance. Other than the substitution of
the Director of OLMS for the Assistant Secretary, as noted earlier, no
changes were made to proposed Sec. 471.14, and it is unchanged in the
final rule.
Proposed Sec. 471.15 permitted a contractor or subcontractor to
seek a hearing before the Assistant Secretary before the imposition of
any of the remedies outlined above. Other than the substitution of the
Director of OLMS for the Assistant Secretary, as noted earlier, no
changes were made to proposed Sec. 471.15, and it is unchanged in the
final rule. Proposed Sec. 471.16 provides contractors or
subcontractors that have been debarred under this rule an opportunity
to seek reinstatement by requesting such in a letter to the Assistant
Secretary. Under this proposed provision, the Assistant Secretary may
reinstate the debarred contractor or subcontractor if he or she finds
that the contractor or subcontractor has come into compliance with this
rule and has shown that it will fully comply in the future.
As noted above, Sec. 471.2(a) required all nonexempt prime
contractors and subcontractors to include the employee notice contract
clause in each of its nonexempt subcontracts so that the obligation to
notify employees of their rights is binding upon each successive
subcontractor. Regarding enforcement of the requirements of the rule as
to subcontractors, the Executive Order requires the contractor to
``take such action with respect to any such subcontract as may be
directed by the Secretary of Labor as a means of enforcing such
provisions, including sanctions for noncompliance.'' Sec. 2, para. 4,
74 FR 6108. Accordingly, in the event that the Department determines
that a subcontractor is out of compliance with the requirements of this
rule regarding employee notice or inclusion of the contract clause in
the subcontractor's own subcontracts, the Secretary may direct the
contractor to require the noncompliant subcontractor to come into
compliance. As indicated in the Executive Order, if such a directive
causes the contractor to become involved in litigation with the
subcontractor, the contractor may request the United States to enter
the litigation in order to protect the interests of the United States.
Sec. 2, para. 4, 74 FR 6108. If the contractor is unable to compel
subcontractor compliance on its own accord, the compliance review,
complaint, investigation, conciliation, hearing and decision procedures
established in Sec. Sec. 471.10 through 471.16 to assess and resolve
contractor compliance with the requirements of this rule are also
applicable to subcontractors. In those instances in which a contractor
fails to take the action directed by the Secretary regarding a
subcontractor's noncompliance, the contractor may be subject to the
same enforcement and remedial procedures that apply to noncompliance
with requirements to provide employee notice or include the contract
clause in its contracts. See Sec. 471.13(a)(1).
The Department received a number of comments regarding the
enforcement procedures of the rule, the vast majority of which raised
concerns regarding the Department's purported enforcement of the
substantive provisions of the notice. Eight comments raised the issue
with respect to the second paragraph of the contract clause, which
states that the ``contractor will comply with all provisions of the
Secretary's notice, and related rules, regulations, and orders of the
Secretary of Labor.'' 74 FR 6107. These comments note that this
provision, when taken together with the rule's enforcement procedures,
suggest that the Department will be adjudicating violations of the
substantive provisions of the notice, which they correctly indicate is
solely within the purview of the National Labor Relations Board. Other
commenters raise the same issue more generically, and suggest that the
Department's enforcement against contractors that violate the
Department's rule interferes with the NLRB's exclusive jurisdiction.
Overall, the comments indicate that the Department's interference with
the NLRB's adjudicatory role would violate principles of preemption and
primary jurisdiction, and incorrectly impose sanctions precluded by the
NLRA.
In response to these comments, the Department assures the
contractor community that it cannot, nor will it, attempt to enforce
the substantive provisions of the notice against contractors or
subcontractors. As the comments correctly note, such enforcement
authority is within the exclusive jurisdiction of the National Labor
Relations Board. The primary purpose of the Executive Order is to
reduce the government's contracting costs by ensuring that employees
are well-informed of their rights under the NLRA. 74 FR 6107. The
mechanism by which the Executive Order achieves this goal is through
requiring that a contractor agree in the government contract to post a
notice, developed by the Department, to its employees about those
rights. The grant of enforcement authority to the Department in
Sections 6 and 7 of the Executive Order is limited, and the Order
sanctions the Department's enforcement activity only
[[Page 28393]]
as to a contractor's compliance with the contract clause-inclusion
requirements and the notice-posting requirements of this final rule.
The Department does not construe the second paragraph of the contract
clause as establishing an independent basis of authority for the
enforcement of the substantive provisions of the notice. Of course, the
substantive provisions of the notice are an accurate reflection of NLRA
law. As a result, if a contractor is failing or refusing to comply with
those provisions, the contractor may be in violation of the NLRA, and
in that case charges may be lodged solely with and adjudicated solely
by the NLRB.
Beyond questions related to alleged overlapping jurisdiction,
comments regarding enforcement of the rule made general observations
and consisted of some requests for clarification. Two commenters
submitted general support for the administrative and enforcement
procedures of the rule. One comment indicated that these same
enforcement procedures worked well in implementing the now-revoked
Executive Order 13201, and urged the Department to similarly emphasize
compliance assistance rather than ``heavy-handed enforcement.'' One
commenter described the available sanctions, particularly debarment, as
``unduly extreme,'' and is concerned that a contractor might face such
sanctions in the event of an unintentional or inadvertent violation,
such as when a notice has fallen off the wall. Another comment
requested more guidance on reinstatement from debarment under Sec.
471.16, including the steps a contractor must take to seek
reinstatement and the requirement of a written decision on the request.
This comment offers as an example the reinstatement procedures
established in 41 CFR 60-1.31. Another comment requests that the
Department clarify that a contractor has no affirmative obligation to
compel a subcontractor's compliance with the rule, and that a
contractor can only be compelled to itself comply. This comment
suggests that it is unrealistic of the Department to require that
contractors police their subcontractors for compliance, and that the
Department should take enforcement action directly against a
subcontractor in the event of the subcontractor's noncompliance. The
final comment regarding enforcement suggests that the rule must be
revised to reflect the Department's elimination of the Employment
Standards Administration and the abolition of the position of Assistant
Secretary for Employment Standards, which, as previously noted, has
been done.
In response to these comments, the Department notes that
contractors will not receive harsh sanctions for inadvertent or
unintentional violations of the rule. Indeed, the primary purpose of
the conciliation procedures is to seek a contractor's cooperation and
compliance with the rule, so inadvertent and unintentional
noncompliance will be addressed long before any sanctions may be
imposed. Further, the Department has decided to clarify the standards
for reinstatement of a debarred contractor, and, as suggested, those
standards are modeled on the regulation governing reinstatement of
contractors debarred under Executive Order 11246, 41 CFR 60-1.31. Thus,
under amended Sec. 471.16, in connection with a reinstatement request
to the Director of OLMS, debarred contractors are required to show that
they have established and will carry out policies and practices in
compliance with the Executive Order and implementing regulations.
Before reaching a decision, the Director of OLMS may request that a
compliance evaluation of the contractor be conducted, and may require
the contractor to supply additional information regarding the request
for reinstatement. If the Director of OLMS finds that the contractor or
subcontractor has come into compliance with and will carry out the
Executive Order and the regulation, the contractor or subcontractor may
be reinstated. In addition, under the revised provision, the Director
of OLMS shall issue a written decision on the request. See Sec.
471.16.
Finally, in response to the comment suggesting that contractors not
be compelled to police their subcontractors to determine compliance,
the Department concludes that the operative provision in paragraph 4 of
the contract clause of the Executive Order does not support the
position suggested in the comment. This provision requires a contractor
to ``take such action with respect to any such subcontract as may be
directed by the Secretary of Labor as a means of enforcing such
provisions, including the imposition of sanctions for non-compliance.''
74 FR 6108. The provision thus indicates that a prime contractor cannot
turn a blind eye toward noncompliance of its subcontractors, and should
the Department become aware that a prime contractor has a significant
number of subcontractors that are out of compliance with this rule, the
Department may order that prime contractor to require its
subcontractors to come into compliance. In the event that the
contractor disregards such an order to seek compliance among its
subcontractors, such disregard may make the prime contractor liable for
penalties and sanctions in the same manner as if the contractor had
failed to incorporate the contract clause or post the employee notice.
In this regard, however, the prime contractor is liable for penalties
and sanctions only insofar as it fails or refuses to seek compliance
among subcontractors following an order by the Department to do so. If
a prime contractor diligently seeks subcontractor compliance following
such an order, but a subcontractor's compliance is not forthcoming, the
prime contractor will not be liable for the subcontractor's
noncompliance. As noted above, only Sec. 471.16 of this subpart was
modified in response to comments.
Subpart C--Ancillary Matters
A number of discrete issues unrelated to the issues addressed in
the two previous subparts merit attention in this rule, and they are
set out in this subpart. Consequently, this subpart addresses
delegations of authority within and outside the Department to
administer and enforce this rule, rulings under or interpretations of
the Executive Order, standards prohibiting intimidation, threats,
coercion or other interference with rights protected under this rule,
and other provisions of the Executive Order that are included in this
rule. The Department invited comment on these provisions and received
none, save the suggestion discussed earlier in the context of
enforcement that the Department delegate its enforcement role to the
NLRB. Therefore, the provisions as proposed in this subpart will be
retained, except that, as noted earlier, the roles and responsibilities
given to the Assistant Secretary for ESA have been reassigned.
Section 471.20 implements Section 11 of the Executive Order, 74 FR
6110, which permits the delegation of the Secretary's authority under
the Order to Federal agencies within or outside the Department. Revised
Sec. 471.21 of the rule indicates that the Directors of OLMS and OFCCP
will share the authority to make rulings under or interpretations of
this rule, as appropriate and in accordance with their respective
responsibilities under the rule. In this connection, requests for such
rulings or interpretations must be submitted to the Director of OLMS,
who will consult with the Director of OFCCP to the extent necessary and
appropriate to issue the requested ruling or interpretation. Section
471.22 seeks to prevent intimidation or interference with rights
[[Page 28394]]
protected under this rule, so it indicates that the sanctions and
penalties available for noncompliance set out in Sec. 471.14 will be
available should a contractor or subcontractor fail to take all steps
necessary to prevent such intimidation or interference. Activities
protected by this section include filing a complaint, furnishing
information, or assisting or participating in any manner in a
compliance evaluation, a complaint investigation, hearing or any other
activity related to the administration and enforcement of this rule.
Finally, Sec. 471.23 implements Section 9 of the Executive Order, 74
FR 6109, which requires that contracting departments and agencies
cooperate with the Secretary in carrying out her functions under the
Order, and implements Section 15 of the Executive Order, 74 FR 6110,
which establishes general guidelines for the Order's implementation.
IV. Regulatory Procedures
Executive Order 12866
This final rule has been drafted and reviewed in accordance with
Executive Order 12866, Section 1(b), Principles of Regulation. 58 FR
51735-36, Oct. 4, 1993. The Department has determined that this rule is
not an ``economically significant'' regulatory action under Section
3(f)(1) of Executive Order 12866. 58 FR 51738. Based on the
Department's analysis, including a cost impact analysis set forth more
fully below with regard to the Regulatory Flexibility Act, 5 U.S.C. 601
et seq., this rule is not likely to: (1) Have an annual effect on the
economy of $100 million or more or adversely affect in a material way
the economy, a sector of the economy, productivity, competition, jobs,
the environment, public health or safety, or state, local, or tribal
governments or communities; (2) create a serious inconsistency or
otherwise interfere with an action taken or planned by another agency;
(3) materially alter the budgetary impact of entitlements, grants, user
fees, or loan programs or the rights and obligations of recipients
thereof, or (4) raise novel legal or policy issues. 58 FR 51738. As a
result, the Department has concluded that a full economic impact and
cost/benefit analysis is not required for the rule under section
6(a)(3)(B) of the Executive Order. 58 FR 51741. However, because of its
importance to the public, the rule was reviewed by the Office of
Management and Budget.
Regulatory Flexibility Act
The Regulatory Flexibility Act of 1980 (``RFA'') requires agencies
promulgating final rules to prepare a final regulatory flexibility
analysis and to develop alternatives wherever possible, when drafting
regulations that will have a significant impact on a substantial number
of small entities. 5 U.S.C. 601 et seq. The focus of the RFA is to
ensure that agencies ``review rules to assess and take appropriate
account of the potential impact on small businesses, small governmental
jurisdictions, and small organizations, as provided by the [RFA].''
E.O. 13272, Sec. 1, 67 FR 53461 (``Proper Consideration of Small
Entities in Agency Rulemaking''). However, an agency is relieved of the
obligation to prepare a final regulatory flexibility for a final rule
if the Agency head certifies that the rule will not, if promulgated,
have a significant economic impact on a substantial number of small
entities. 5 U.S.C. 605(b). Based on the analysis below, in which the
Department has estimated the financial burdens to covered small
contractors and subcontractors associated with complying with the
requirements contained in this final rule, the Department has certified
to the Chief Counsel for Advocacy of the Small Business Administration
(``SBA'') that this rule will not have a significant economic impact on
a substantial number of small entities.
The primary goal of Executive Order 13496 and these implementing
regulations is the notification to employees of their rights with
respect to collective bargaining and other protected, concerted
activity. This goal is achieved through the incorporation of a contract
clause in all covered Government contracts. The Executive Order and
this rule impose the obligation to ensure that the contract clause is
included in all Government contracts not on private contractors, but on
Government contracting departments and agencies, which are not ``small
entities'' that come within the focus of the RFA. Therefore, the costs
attendant to learning of the obligation to include the contract clause
in Government contracts and modifying those contracts in order to
comply with that obligation is a cost borne by the Federal government,
and is not incorporated into this analysis.
Once the required contract clause is included in the Government
contract, contractors then begin to assume the burdens associated with
compliance. Those obligations include posting the required notice and
incorporating the contract clause into all covered subcontracts, thus
making the same obligations binding on covered subcontractors. For the
purposes of the RFA analysis, the Department estimates that, on
average, each prime contractor will subcontract some portion of its
prime contract three times, and the prime contractor therefore will
expend time ensuring that the contract clause is included in its
subcontracts and notifying those subcontractors of their attendant
obligations. To the extent that subcontractors subcontract any part of
their contract with the prime contractor, they, in turn, will be
required to expend time ensuring that the contract clause is included
in the next tier of subcontracts and notifying the next-tier
subcontractors of their attendant obligations. Therefore, for the
purpose of determining time spent on compliance, the Department will
not differentiate between the obligations of prime contractors and
subsequent tiers of subcontractors in assessing time spent on
compliance; the Department assumes that all contractors, whether prime
contractor or subcontractor, will spend equivalent amounts of time
engaging in compliance activity.
The Department estimates that each contractor will spend a total of
3.5 hours per year in order to comply with this rule, which includes 90
minutes for the contractor to learn about the contract and notice
requirements, train staff, and maintain records; 30 minutes for
contractors to incorporate the contract clause into each subcontract
and explain its contents to subcontractors; 30 minutes acquiring the
notice from a government agency or Web site; and 60 minutes posting
them physically and electronically, depending on where and how the
contractor customarily posts notices to employees. The Department
assumes that these activities will be performed by a professional or
business worker, who, according to Bureau of Labor statistics data,
earned a total hourly wage of $31.02 in January 2009, including
accounting for fringe benefits. The Department then multiplied this
figure by 3.5 hours to estimate the average annual costs for
contractors and subcontractors to comply with this rule. Accordingly,
this rule is estimated to impose average annual costs of $108.57 per
contractor (3.5 hours x $31.02). These costs will decrease in
subsequent years based on a contractor's increasing familiarity with
the rule's requirements and having already satisfied its posting
requirements in earlier years.\20\ Based
[[Page 28395]]
upon figures obtained from USASpending.gov, which compiles information
on federal spending and contractors across government agencies, the
Department concludes that there were 186,536 unique Federal contractors
holding Federal contracts in FY 2008.\21\ Although this rule does not
apply to Federal contracts below the simplified acquisition threshold,
the Department does not have a means by which to calculate what portion
of all Federal contractors hold only contracts with the government
below the simplified acquisition threshold. Therefore, in order to
determine the number of entities affected by this rule, the Department
counted all Federal contractors, regardless of the size of the
government contract held. Based on data analyzed in the Federal
Procurement Data System (fpds.gov), which compiles data about types of
contractors, of all 186,536 unique Federal prime contractors,
approximately 35% are ``small entities'' as defined by the Small
Business Administration (SBA) size standards.\22\ Therefore, for the
purposes of the RFA analysis, the Department estimates that this rule
will affect 65,288 small Federal prime contractors.
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\20\ The Department received two comments suggesting that the
annual compliance costs were underestimated in the proposed rule.
The first comment indicated that contractors will spend time each
year reviewing the notice to assess whether it is consistent with
legislation, or Board or court decisions. This comment also
suggested that contractors would be ``working under contract terms
which would not only be out-of-sync which [sic] the updated law, but
also potentially in conflict with the updated law, thereby
needlessly exposing them to potential liabilities or penalties.''
The second comment indicated that the time allocated for
incorporation in full of the contract clause was too low, but the
comment did not suggest an alternate figure for that allocation.
The Department concludes that neither of these comments provides
an adequate basis to reassess the annual compliance cost estimates
in the proposed rule. First, a contractor will not need to review
legislation and Board or court decisions to ensure that the notice
in the contract clause is accurate; this is the job of the
Department. Second, the time allotment for the incorporation of the
contract clause, whether by reference or in full, is essentially the
same--the contractor must ensure that its subcontracts are revised
to include a standard-form provision that establishes the duty to
post the notice. After the first time the contractor ensures the
accuracy of the provision that must be incorporated, the time a
contractor devotes to ensuring the proper inclusion of the provision
on an ongoing basis should not increase as a result of the length of
the provision. In any event, as noted above, the Department has
revised the prohibition against incorporation of the contract clause
by reference proposed in the NPRM, and the final rule now permits
incorporation of the contract clause by reference. Finally, the
Department rejects the premise that the notice or the contract
clause containing it will be ``out-of-sync'' with the state of the
law, thereby exposing a contractor to liabilities or penalties.
\21\ The Federal Funding Accountability and Transparency Act of
2006, Pub. L. 109-282 (Sept. 26, 2006), requires that the Office of
Management and Budget establish a single searchable Web site,
accessible by the public for free, that includes for each Federal
award: (1) The name of the entity receiving the award; (2) the
amount of the award; (3) information on the award including
transaction type, funding agency, etc.; (4) the location of the
entity receiving the award; and (5) a unique identifier of the
entity receiving the award. See 31 U.S.C.A. Sec. 6101 note. In
compliance with this requirement, USASpending.gov was established.
\22\ The Federal Procurement Data System (``FPDS'') compiles
data regarding small business ``actions'' and small business
``dollars'' using the criteria employed by SBA to define ``small
entities.'' In FY 2008, small business actions accounted for 50% of
all Federal procurement action. However, deriving a percentage of
contractors that are small using the ``action'' data would overstate
the number of small contractors because contract actions reflect
more than just contracts; they include modifications, blanket
purchase agreement calls, task orders, and federal supply schedule
orders. As a result, there are many more contract actions than there
are contracts or contractors. Accordingly, a single small contractor
might have hundreds of actions, e.g., delivery or task orders,
placed against its contract. These contract actions would be counted
individually in the FPDS, but in fact represent only one small
business.
Also reflected in FPDS, in FY 2008, small business ``dollars''
accounted for 19% of all Federal dollars spent. However, deriving a
percentage of contractors that are small using the ``dollars'' data
would understate the number of small contractors. Major acquisitions
account for a disproportionate share of the dollar amounts and are
almost exclusively awarded to large businesses. For instance,
Lockheed Martin was awarded $34 billion in contracts in FY 2008,
which accounted for 6% of all Federal spending in that year. The top
five federal contractors, all large businesses, accounted for over
20% of contract dollars in FY 2008. As a result, because the largest
Federal contractors disproportionately represent ``dollars'' spent
by the Federal government, the FPDB's data on small ``dollars''
spent understates the number of small entities with which the
Federal government does business.
The Department concludes that the percentage of all Federal
contractors that are ``small'' is probably somewhere between 19% and
50%, the two percentages derived from the FPDS figures on small
``actions'' and small ``dollars.'' The mean of these two percentages
is approximately 35%, and the Department will use this figure above
to estimate how many of all Federal contractors are ``small
entities'' in SBA's terms.
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As noted above, for the purposes of this analysis, the Department
estimates that each prime contractor subcontracts a portion of the
prime contract three times, on average. However, the community of prime
contractors does not utilize a unique subcontractor for each
subcontract; the Department assumes that subcontractors may be working
under several prime contracts for either a single prime contractor or
multiple prime contractors, or both. In addition, some subcontractors
may also be holding prime contracts with the government, so they may
already be counted as affected entities. Therefore, in order to
determine the unique number of subcontractors affected by this rule,
the Department estimates there are the same number of unique
subcontractors as prime contractors, resulting in the estimate that
186,536 subcontractors are affected by this rule. Further, for the
purposes of this analysis, the Department assumes that all
subcontractors are ``small entities'' as defined by SBA size standards.
Therefore, in order to estimate the total number of ``small''
contractors affected by this rule, the Department has added together
the estimates for the number of small prime contractors calculated
above (65,288) with the estimate of all subcontractors (186,536), all
of which we assume are small. Accordingly, the Department estimates
that 251,824 small prime and subcontractors are affected by this rule.
Based on this analysis, the Department concludes that this final
rule will not have a significant economic impact on a substantial
number of small entities. The Regulatory Flexibility Act does not
define either ``significant economic impact'' or ``substantial'' as it
relates to the number of regulated entities. 5 U.S.C. 601. In the
absence of specific definitions, ``what is `significant' or
`substantial' will vary depending on the problem that needs to be
addressed, the rule's requirements, and the preliminary assessment of
the rule's impact.'' See A Guide for Government Agencies: How to Comply
with the Regulatory Flexibility Act, Office of Advocacy, U.S. Small
Business Administration at 17 (available at http://www.sba.gov) (``SBA
Guide''). As to economic impact, one important indicator is the cost of
compliance in relation to revenue of the entity or the percentage of
profits affected. Id. In this case, the Department has determined that
the average cost of compliance with this rule in the first year for all
Federal contractors and subcontractors will be $108.57. The Department
concludes that this economic impact is not significant. Furthermore,
the Department has determined that of the entire regulated community of
all 186,536 prime contractors and all 186,536 subcontractors, 67%
percent of that regulated community constitute small entities (251,824
small contractors divided by all 373,072 contractors). Although this
figure represents a substantial number of federal contractors and
subcontractors, because Federal contractors are derived from virtually
all segments of the economy and across industries, this figure is a
small portion of the national economy overall. Id. at 20 (``the
substantiality of the number of businesses affected should be
determined on an industry-specific basis and/or the number of small
businesses overall'').\23\
[[Page 28396]]
Accordingly, the Department concludes that the rule does not impact a
substantial number of small entities in a particular industry or
segment of the economy. Therefore, under 5 U.S.C. 605, the Department
concludes that the final rule will not have a significant economic
impact on a substantial number of small entities.
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\23\ The Department received one comment asserting that the
Department erroneously concluded in the proposed rule that an effect
on an estimated 67% of the federal contractor community was
insubstantial. To the contrary, the Department noted in the proposed
rule, as here, that the rule was likely to affect a ``substantial
number of federal contractors and subcontractors.'' 74 FR at 38495.
However, the purpose of the RFA, and it focus, is to minimize the
impact of agency regulations on particular industries or sectors of
the economy. See SBA Guide at 15-20. As stated in the proposed rule
and above, federal contractors and subcontractors represent all
industries and sectors of the economy, thus the effect of the rule
is dissipated across the economy. As an alternative approach, the
comment urged the Department to recognize federal contractors and
subcontractors as a discrete ``industry,'' which the Department
declines to do because the adoption of such a standard would defeat
the focus of the analysis. Finally, in assuming both here and in the
proposed rule that 100% of subcontractors were small within SBA's
terms, the Department employed an expansive estimate that
undoubtedly inflated of the overall number of affected entities. The
use of the broad assumption serves to illustrate the point that even
if a substantial number of federal contractors and subcontractors
are affected by the final rule, the effect of the rule on the
economy as a whole is not substantial.
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Unfunded Mandates Reform
For purposes of the Unfunded Mandates Reform Act of 1995, this rule
would not include any Federal mandate that might result in increased
expenditures by State, local, and tribal governments, or increased
expenditures by the private sector of more than $100 million in any one
year.
Paperwork Reduction Act
As part of its continuing effort to reduce paperwork and respondent
burden, the Department of Labor conducts a public consultation program
to provide the general public and Federal agencies with an opportunity
to comment on proposed and continuing collections of information in
accordance with the Paperwork Reduction Act of 1995 (``PRA'') (44
U.S.C. 3506(c)(2)(A)). This helps to ensure that the public understands
the Department's collection instructions; respondents can provide the
requested data in the desired format, reporting burden (time and
financial resources) is minimized, collection instruments are clearly
understood, and the Department can properly assess the impact of
collection requirements on respondents.
Certain sections of this rule, including Sec. 471.11(a) and (b),
contain information collection requirements for purposes of the PRA. In
accordance with the PRA, the August 3, 2009 NPRM solicited comments on
the information collections as they were proposed. Additionally, the
Department separately requested comments on the information collections
in a 60 day notice published in the Federal Register on September 8,
2009 (74 FR 46236), and submitted a contemporaneous request for OMB
review of the proposed collection of information. The Department did
not receive any comments in response to either the NPRM PRA analysis or
the September 8, 2009 notice. OMB did not approve the collections of
information contained in the NPRM stage of this rulemaking, and
directed the Department to resubmit the relevant PRA documentation to
OMB at the final rulemaking stage.
The rule requires contractors to post notices and cooperate with
any investigation in response to a complaint or as part of a compliance
evaluation. It also permits employees to file complaints with the
Department alleging that a contractor has failed to comply with those
requirements. The application of the PRA to those requirements is
discussed below.
The final rule imposes certain minimal burdens associated with the
posting of the employee notice poster required by the Executive Order
and Sec. 471.2(a). As noted in Sec. 471.2(e), the Department will
supply the notice, and contractors will be permitted to post exact
duplicate copies of the notice. Under the regulations implementing the
PRA, ``[t]he public disclosure of information originally supplied by
the Federal government to [a] recipient for the purpose of disclosure
to the public'' is not considered a ``collection of information'' under
the Act. See 5 CFR 1320.3(c)(2). Therefore, the posting requirement is
not subject to the PRA.
The final rule will also impose certain burdens on the contractor
associated with cooperating with an investigation into failure to
comply with Part 471. The regulations implementing the PRA exempt any
information collection requirements imposed by an administrative agency
during the conduct of an administrative action against specific
individuals or entities. See 5 CFR 1320.4. Once the agency opens a case
file or equivalent about a particular party, this exception applies
during the entire course of the investigation, before or after formal
charges or complaints are filed or formal administrative action is
initiated. Id. Therefore, this exemption would apply to the
Department's investigation of complaints alleging violations of the
Order or this rule as well as compliance evaluations.
As for the burden hour estimate for employees filing complaints,
the Department estimates, based on the experience of OFCCP
administering other laws applicable to Federal contractors, that it
will take an average of 1.28 hours for such a complainant to compose a
complaint containing the necessary information and to send that
complaint to the Department. This number is also consistent with the
burden estimate for filing a complaint under E.O. 13201 and the now-
revoked Part 470 regulations.
The Department has estimated it would receive a total of 50
employee complaints in any given year, which is significantly larger
than the estimate contained its most recent PRA submission for
Executive Order 13201. In that submission, the Department estimated it
would receive 20 employee complaints. This number itself had been
revised downwards because the Department never received any employee
complaints pursuant to the now-revoked Part 470 regulations. Because
the applicability of the final rule and Executive Order 13496 is
greater in scope than the now-revoked Part 470 and Executive Order
13201 in terms of geography (the now-revoked Part 470 regulations only
applied to states without right-to-work laws, whereas this rule applies
nationwide), the Department has revised upwards its estimate of
employee complaints under this rule from 20 to 50.
Section 471.3(b) permits contracting departments to submit written
requests for an exemption from the obligations of the Executive Order
(waiver request) as to particular contracts or classes of contracts
under specified circumstance. The PRA does not cover the costs to the
Federal government for the submission of waiver requests by contracting
agencies or departments or for the processing of waiver requests by the
Department of Labor. The regulations implementing the PRA define the
term ``burden,'' in pertinent part, as ``the total time, effort, or
financial resources expended by persons to generate, maintain, retain,
or disclose or provide information to or for a Federal agency.'' 5 CFR
1320.3(b)(1). The definition of the term ``person'' in the same
regulations includes ``an individual, partnership, association,
corporation (including operations of government-owned contractor-
operated facilities), business trust, or legal representative, an
organized group of individuals, a State, territorial, tribal, or local
government or branch thereof, or a political subdivision of a State,
territory, tribal, or local government or a branch of a political
subdivision.'' 5 CFR 1320.3(k). It does not include the Federal
government or any branch, political subdivision, or employee thereof.
Therefore, the cost to the Federal
[[Page 28397]]
government for the submission of waiver requests by contracting
agencies and departments need not be taken into consideration.
The Department invited the public to comment on whether each of the
proposed collections of information: (1) Ensures that the collection of
information is necessary to the proper performance of the agency,
including whether the information will have practical utility; (2)
estimates the projected burden, including the validity of the
methodology and assumptions used, accurately; (3) enhances the quality,
utility, and clarity of the information to be collected; and (4)
minimizes the burden of the collection of information on those who are
to respond, including through the use of appropriate automated,
electronic, mechanical, or other technological collection techniques or
other forms of information technology (e.g., permitting electronic
submission of responses). As noted above, the Department received no
comments on the PRA analysis.
The Department notes that a federal agency cannot conduct or
sponsor a collection of information unless it is approved by OMB under
the PRA, and displays a currently valid OMB control number, and the
public is not required to respond to a collection of information unless
it displays a currently valid OMB control number. Also, notwithstanding
any other provisions of law, no person shall be subject to penalty for
failing to comply with a collection of information if the collection of
information does not display a currently valid OMB control number.
As instructed by OMB and in accordance with the PRA (5 CFR 1320.11
(h)), in connection with this final rule, the Department submitted an
ICR to OMB for its request of the new information collection
requirements contained in this rule. OMB approved the ICR on May 5,
2010, under OMB Control Number 1215-0209, which will expire on May 31,
2013.
Executive Order 13132 (Federalism)
The Department has reviewed this rule in accordance with Executive
Order 13132 regarding federalism, and has determined that the rule does
not have ``federalism implications.'' The employee notice required by
the Executive Order and part 471 must be posted only by employers
covered under the NLRA. Therefore, the rule does not ``have substantial
direct effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government.''
Executive Order 13084 (Consultation and Coordination With Indian Tribal
Governments)
The Department certifies that this final rule does not impose
substantial direct compliance costs on Indian tribal governments.
Small Business Regulatory Enforcement Fairness Act of 1996
This rule is not a major rule as defined by Section 804 of the
Small Business Regulatory Enforcement Fairness Act of 1996. This rule
will not result in an annual effect on the economy of $100 million or
more; a major increase in costs or prices; or significant adverse
effects on competition, employment, investment, productivity,
innovation, or on the ability of the United States-based companies to
compete with foreign-based companies in domestic and export markets.
List of Subjects in 29 CFR Part 471
Administrative practice and procedure, Government contracts,
Employee rights, Labor unions.
Text of Final Rule
0
Accordingly, a new Subchapter D, consisting of Part 471, is added to 29
CFR Chapter IV to read as follows:
Subchapter D--Notification of Employee Rights Under Federal Labor Laws
PART 471--OBLIGATIONS OF FEDERAL CONTRACTORS AND SUBCONTRACTORS;
NOTIFICATION OF EMPLOYEE RIGHTS UNDER FEDERAL LABOR LAWS
Subpart A--Definitions, Requirements for Employee Notice, and
Exceptions and Exemptions
Sec.
471.1 What definitions apply to this part?
471.2 What employee notice clause must be included in Government
contracts?
471.3 What exceptions apply and what exemptions are available?
471.4 What employers are not covered under the rule?
Appendix A to Subpart A of Part 471--Text of Employee Notice Clause
Sec.
Subpart B--General Enforcement; Compliance Review and Complaint
Procedures
471.10 How will the Department determine whether a contractor is in
compliance with Executive Order 13496 and this part?
471.11 What are the procedures for filing and processing a
complaint?
471.12 What are the procedures to be followed when a violation is
found during a complaint investigation or compliance evaluation?
471.13 Under what circumstances, and how, will enforcement
proceedings under Executive Order 13496 be conducted?
471.14 What sanctions and penalties may be imposed for
noncompliance, and what procedures will the Department follow in
imposing such sanctions and penalties?
471.15 Under what circumstances must a contractor be provided the
opportunity for a hearing?
471.16 Under what circumstances may a contractor be reinstated?
Subpart C--Ancillary Matters
471.20 What authority under this part or Executive Order 13496 may
the Secretary delegate, and under what circumstances?
471.21 Who will make rulings and interpretations under Executive
Order 13496 and this part?
471.22 What actions may the Director of OLMS take in the case of
intimidation and interference?
471.23 What other provisions apply to this part?
Authority: 40 U.S.C. 101 et seq.; Executive Order 13496, 74 FR
6107, February 4, 2009; Secretary's Order 7-2009, 74 FR 58834, Nov.
13, 2009; Secretary's Order 8-2009, 74 FR 58835, Nov. 13, 2009.
Subpart A--Definitions, Requirements for Employee Notice, and
Exceptions and Exemptions
Sec. 471.1 What definitions apply to this part?
Construction means the construction, rehabilitation, alteration,
conversion, extension, demolition, weatherization, or repair of
buildings, highways, or other changes or improvements to real property,
including facilities providing utility services. The term construction
also includes the supervision, inspection, and other on-site functions
incidental to the actual construction.
Construction work site means the general physical location of any
building, highway, or other change or improvement to real property
which is undergoing construction, rehabilitation, alteration,
conversion, extension, demolition, weatherization or repair, and any
temporary location or facility at which a contractor or subcontractor
meets a demand or performs a function relating to the contract or
subcontract.
Contract means, unless otherwise indicated, any Government contract
or subcontract.
Contracting agency means any department, agency, establishment, or
instrumentality in the executive branch of the Government, including
any wholly owned Government corporation, that enters into contracts.
[[Page 28398]]
Contractor means, unless otherwise indicated, a prime contractor or
subcontractor.
Department means the U.S. Department of Labor.
Director of OFCCP means the Director of the Office of Federal
Contract Compliance Programs in the Department of Labor.
Director of OLMS means the Director of the Office of Labor-
Management Standards in the Department of Labor.
Employee notice clause means the contract clause set forth in
Appendix A that Government contracting departments and agencies must
include in all Government contracts and subcontracts pursuant to
Executive Order 13496 and this part.
Government means the Government of the United States of America.
Government contract means any agreement or modification thereof
between any contracting agency and any person for the purchase, sale,
or use of personal property or non-personal services. The term
``personal property,'' as used in this section, includes supplies, and
contracts for the use of real property (such as lease arrangements),
unless the contract for the use of real property itself constitutes
real property (such as easements). The term ``non-personal services''
as used in this section includes, but is not limited to, the following
services: utilities, construction, transportation, research, insurance,
and fund depository. The term Government contract does not include:
(1) Agreements in which the parties stand in the relationship of
employer and employee; and
(2) Federal financial assistance, as defined in 29 CFR 31.2.
Labor organization means any organization of any kind, or any
agency or employee representation committee or plan, in which employees
participate and which exists for the purpose, in whole or in part, of
dealing with employers concerning grievances, labor disputes, wages,
rates of pay, hours of employment, or conditions of work.
Modification of a contract means any alteration in the terms and
conditions of that contract, including amendments, renegotiations, and
renewals.
Order or Executive Order means Executive Order 13496 (74 FR 6107,
Feb. 4, 2009).
Person means any natural person, corporation, partnership,
unincorporated association, State or local government, and any agency,
instrumentality, or subdivision of such a government.
Prime contractor means any person holding a contract with a
contracting agency, and, for the purposes of subparts B and C of this
part, includes any person who has held a contract subject to the
Executive Order and this part.
Related rules, regulations, and orders of the Secretary of Labor,
as used in Sec. 471.2 of this part, means rules, regulations, and
relevant orders issued pursuant to the Executive Order or this part.
Secretary means the Secretary of Labor, U.S. Department of Labor,
or his or her designee.
Subcontract means any agreement or arrangement between a contractor
and any person (in which the parties do not stand in the relationship
of an employer and an employee):
(1) For the purchase, sale or use of personal property or non-
personal services that, in whole or in part, is necessary to the
performance of any one or more contracts; or
(2) Under which any portion of the contractor's obligation under
any one or more contracts is performed, undertaken or assumed.
Subcontractor means any person holding a subcontract and, for the
purposes of subparts B and C of this part, any person who has held a
subcontract subject to the Executive Order and this part.
Union means a labor organization as defined above.
United States means the several States, the District of Columbia,
the Virgin Islands, the Commonwealth of Puerto Rico, Guam, American
Samoa, the Commonwealth of the Northern Mariana Islands, and Wake
Island.
Sec. 471.2 What employee notice clause must be included in Government
contracts?
(a) Government contracts. With respect to all contracts covered by
this part, Government contracting departments and agencies must, to the
extent consistent with law, include the language set forth in Appendix
A to Subpart A of Part 471 in every Government contract, other than
those contracts to which exceptions are applicable as stated in Sec.
471.3.
(b) Inclusion by reference. The employee notice clause need not be
quoted verbatim in a contract, subcontract, or purchase order. The
clause may be made part of the contract, subcontract, or purchase order
by citation to 29 CFR Part 471, Appendix A to Subpart A.
(c) Adaptation of language. The Director of OLMS may find that an
Act of Congress, clarification of existing law by the courts or the
National Labor Relations Board, or other circumstances make
modification of the contractual provisions necessary to achieve the
purposes of the Executive Order and this part. In such circumstances,
the Director of OLMS will promptly issue rules, regulations, or orders
as are needed to ensure that all future government contracts contain
appropriate provisions to achieve the purposes of the Executive Order
and this part.
(d) Physical Posting of Employee Notice. A contractor or
subcontractor that posts notices to employees physically must also post
the required notice physically. Where a significant portion of a
contractor's workforce is not proficient in English, the contractor
must provide the notice in the language employees speak. The employee
notice must be placed:
(1) In conspicuous places in and about the contractor's plants and
offices so that the notice is prominent and readily Seen by employees.
Such conspicuous placement includes, but is not limited to, areas in
which the contractor posts notices to employees about the employees'
terms and conditions of employment; and
(2) Where employees covered by the National Labor Relations Act
engage in activities relating to the performance of the contract. An
employee shall be considered to be so engaged if:
(i) The duties of the employee's position include work that
fulfills a contractual obligation, or work that is necessary to, or
that facilitates, performance of the contract or a provision of the
contract; or
(ii) The cost or a portion of the cost of the employee's position
is allowable as a cost of the contract under the principles set forth
in the Federal Acquisition Regulation at 48 CFR Ch. 1, part 31:
Provided, That a position shall not be considered covered by this part
by virtue of this provision if the cost of the position was not
allocable in whole or in part as a direct cost to any Government
contract, and only a de minimis (less than 2%) portion of the cost of
the position was allocable as an indirect cost to Government contracts,
considered as a group.
(e) Obtaining a poster with the employee notice. A poster with the
required employee notice, including a poster with the employee notice
translated into languages other than English, will be printed by the
Department, and will be provided by the Federal contracting agency or
may be obtained from the Division of Interpretations and Standards,
Office of Labor-Management Standards, U.S. Department of Labor, 200
Constitution Avenue, NW., Room N-5609, Washington, DC 20210, or from
any
[[Page 28399]]
field office of the Department's Office of Labor-Management Standards
or Office of Federal Contract Compliance Programs. A copy of the poster
in English and in languages other than English may also be downloaded
from the Office of Labor-Management Standards Web site at http://
www.olms.dol.gov. Additionally, contractors may reproduce and use exact
duplicate copies of the Department's official poster.
(f) Electronic postings of employee notice. A contractor or
subcontractor that customarily posts notices to employees
electronically must also post the required notice electronically. Such
contractors or subcontractors satisfy the electronic posting
requirement by displaying prominently on any Web site that is
maintained by the contractor or subcontractor, whether external or
internal, and customarily used for notices to employees about terms and
conditions of employment, a link to the Department of Labor's Web site
that contains the full text of the poster. The link to the Department's
Web site must read, ``Important Notice about Employee Rights to
Organize and Bargain Collectively with Their Employers.'' Where a
significant portion of a contractor's workforce is not proficient in
English, the contractor must provide the notice required in this
subsection in the language the employees speak. This requirement will
be satisfied by displaying prominently on any Web site that is
maintained by the contractor or subcontractor, whether external or
internal, and customarily used for notices to employees about terms and
conditions of employment, a link to the Department of Labor's Web site
that contains the full text of the poster in the language the employees
speak. In such cases, the Office of Labor-Management Standards will
provide translations of the link to the Department's Web site that must
be displayed on the contractor's or subcontractor's Web site.
Sec. 471.3 What exceptions apply and what exemptions are available?
(a) Exceptions for specific types of contracts. The requirements of
this part do not apply to any of the following:
(1) Collective bargaining agreements as defined in the Federal
Service Labor-Management Relations Statute, entered into by an agency
and the exclusive representative of employees in an appropriate unit to
set terms and conditions of employment of those employees.
(2) Government contracts that involve purchases below the
simplified acquisition threshold set by Congress under the Office of
Federal Procurement Policy Act. Therefore, the employee notice clause
need not be included in government contracts for purchases below that
threshold, provided that
(i) No agency or contractor is permitted to procure supplies or
services in a manner designed to avoid the applicability of the Order
and this part; and
(ii) The employee notice clause must be included in government
contracts for indefinite quantities, unless the contracting agency or
contractor has reason to believe that the amount to be ordered in any
year under such a contract will be less than the simplified acquisition
threshold set in the Office of Federal Procurement Policy Act.
(3) Government contracts resulting from solicitations issued before
the effective date of this rule.
(4) Subcontracts of $10,000 or less in value, except that
contractors and subcontractors are not permitted to procure supplies or
services in a manner designed to avoid the applicability of the Order
and this part.
(5) Contracts and subcontracts for work performed exclusively
outside the territorial United States.
(b) Exemptions for certain contracts. The Director of OLMS may
exempt a contracting department or agency or groups of departments or
agencies from the requirements of this part with respect to a
particular contract or subcontract or any class of contracts or
subcontracts when the Director finds that either:
(1) The application of any of the requirements of this part would
not serve its purposes or would impair the ability of the Government to
procure goods or services on an economical and efficient basis; or
(2) Special circumstances require an exemption in order to serve
the national interest.
(c) Procedures for requesting an exemption and withdrawals of
exemptions. Requests for exemptions under this subsection from a
contracting department or agency must be in writing, and must be
directed to the Director of OLMS, U.S. Department of Labor, 200
Constitution Avenue, NW., Room N-5603, Washington, DC, 20210. The
Director of OLMS may withdraw an exemption granted when, in the
Director's judgment, such action is necessary or appropriate to achieve
the purposes of this part.
Sec. 471.4 What employers are not covered under this part?
(a) The following employers are excluded from the definition of
``employer'' in the National Labor Relations Act (NLRA), and are not
covered by the requirements of this part:
(1) The United States or any wholly owned Government corporation;
(2) Any Federal Reserve Bank;
(3) Any State or political subdivision thereof;
(4) Any person subject to the Railway Labor Act;
(5) Any labor organization (other than when acting as an employer);
or
(6) Anyone acting in the capacity of officer or agent of such labor
organization.
(b) Additionally, employers exclusively employing workers who are
excluded from the definition of ``employee'' under the NLRA are not
covered by the requirements of this part. Those excluded employees are
employed:
(1) As agricultural laborers;
(2) In the domestic service of any family or person at his home;
(3) By his or her parent or spouse;
(4) As an independent contractor;
(5) As a supervisor as defined under the NLRA;
(6) By an employer subject to the Railway Labor Act; or
(7) By any other person who is not an employer as defined in the
NLRA
Appendix A to Subpart A of Part 471--Text of Employee Notice Clause
``1. During the term of this contract, the contractor agrees to
post a notice, of such size and in such form, and containing such
content as the Secretary of Labor shall prescribe, in conspicuous
places in and about its plants and offices where employees covered
by the National Labor Relations Act engage in activities relating to
the performance of the contract, including all places where notices
to employees are customarily posted both physically and
electronically. The ``Secretary's notice'' shall consist of the
following:
``Employee Rights Under The National Labor Relations Act''
``The NLRA guarantees the right of employees to organize and
bargain collectively with their employers, and to engage in other
protected concerted activity. Employees covered by the NLRA* are
protected from certain types of employer and union misconduct. This
Notice gives you general information about your rights, and about
the obligations of employers and unions under the NLRA. Contact the
National Labor Relations Board, the Federal agency that investigates
and resolves complaints under the NLRA, using the contact
information supplied below, if you have any questions about specific
rights that may apply in your particular workplace.
``Under the NLRA, you have the right to:
Organize a union to negotiate with your employer
concerning your wages, hours, and other terms and conditions of
employment.
Form, join or assist a union.
[[Page 28400]]
Bargain collectively through representatives of
employees' own choosing for a contract with your employer setting
your wages, benefits, hours, and other working conditions.
Discuss your terms and conditions of employment or
union organizing with your co-workers or a union.
Take action with one or more co-workers to improve your
working conditions by, among other means, raising work-related
complaints directly with your employer or with a government agency,
and seeking help from a union.
Strike and picket, depending on the purpose or means of
the strike or the picketing.
Choose not to do any of these activities, including
joining or remaining a member of a union.
``Under the NLRA, it is illegal for your employer to:
Prohibit you from soliciting for a union during non-
work time, such as before or after work or during break times; or
from distributing union literature during non-work time, in non-work
areas, such as parking lots or break rooms.
Question you about your union support or activities in
a manner that discourages you from engaging in that activity.
Fire, demote, or transfer you, or reduce your hours or
change your shift, or otherwise take adverse action against you, or
threaten to take any of these actions, because you join or support a
union, or because you engage in concerted activity for mutual aid
and protection, or because you choose not to engage in any such
activity.
Threaten to close your workplace if workers choose a
union to represent them.
Promise or grant promotions, pay raises, or other
benefits to discourage or encourage union support.
Prohibit you from wearing union hats, buttons, t-
shirts, and pins in the workplace except under special
circumstances.
Spy on or videotape peaceful union activities and
gatherings or pretend to do so.
``Under the NLRA, it is illegal for a union or for the union
that represents you in bargaining with your employer to:
Threaten you that you will lose your job unless you
support the union.
Refuse to process a grievance because you have
criticized union officials or because you are not a member of the
union.
Use or maintain discriminatory standards or procedures
in making job referrals from a hiring hall.
Cause or attempt to cause an employer to discriminate
against you because of your union-related activity.
Take other adverse action against you based on whether
you have joined or support the union.
``If you and your coworkers select a union to act as your
collective bargaining representative, your employer and the union
are required to bargain in good faith in a genuine effort to reach a
written, binding agreement setting your terms and conditions of
employment. The union is required to fairly represent you in
bargaining and enforcing the agreement.
``Illegal conduct will not be permitted. If you believe your
rights or the rights of others have been violated, you should
contact the NLRB promptly to protect your rights, generally within
six months of the unlawful activity. You may inquire about possible
violations without your employer or anyone else being informed of
the inquiry. Charges may be filed by any person and need not be
filed by the employee directly affected by the violation. The NLRB
may order an employer to rehire a worker fired in violation of the
law and to pay lost wages and benefits, and may order an employer or
union to cease violating the law. Employees should seek assistance
from the nearest regional NLRB office, which can be found on the
Agency's Web site: http://www.nlrb.gov. ``Click on the NLRB's page
titled ``About Us,'' which contains a link, ``Locating Our
Offices.'' You can also contact the NLRB by calling toll-free: 1-
866-667-NLRB (6572) or (TTY) 1-866-315-NLRB (6572) for hearing
impaired.
``* The National Labor Relations Act covers most private-sector
employers. Excluded from coverage under the NLRA are public-sector
employees, agricultural and domestic workers, independent
contractors, workers employed by a parent or spouse, employees of
air and rail carriers covered by the Railway Labor Act, and
supervisors (although supervisors that have been discriminated
against for refusing to violate the NLRA may be covered).
``This is an official Government Notice and must not be defaced
by anyone.
``2. The contractor will comply with all provisions of the
Secretary's notice, and related rules, regulations, and orders of
the Secretary of Labor.
``3. In the event that the contractor does not comply with any
of the requirements set forth in paragraphs (1) or (2) above, this
contract may be cancelled, terminated, or suspended in whole or in
part, and the contractor may be declared ineligible for further
Government contracts in accordance with procedures authorized in or
adopted pursuant to Executive Order 13496 of January 30, 2009. Such
other sanctions or remedies may be imposed as are provided in
Executive Order 13496 of January 30, 2009, or by rule, regulation,
or order of the Secretary of Labor, or as are otherwise provided by
law.
``4. The contractor will include the provisions of paragraphs
(1) through (4) herein in every subcontract or purchase order
entered into in connection with this contract (unless exempted by
rules, regulations, or orders of the Secretary of Labor issued
pursuant to Section 3 of Executive Order 13496 of January 30, 2009),
so that such provisions will be binding upon each subcontractor. The
contractor will take such action with respect to any such
subcontract or purchase order as may be directed by the Secretary of
Labor as a means of enforcing such provisions, including the
imposition of sanctions for non-compliance: Provided, however, if
the contractor becomes involved in litigation with a subcontractor,
or is threatened with such involvement, as a result of such
direction, the contractor may request the United States to enter
into such litigation to protect the interests of the United
States.''
Subpart B--General Enforcement; Compliance Review and Complaint
Procedures
Sec. 471.10 How will the Department determine whether a contractor is
in compliance with Executive Order 13496 and this part?
(a) The Director of OFCCP may conduct a compliance evaluation to
determine whether a contractor holding a covered contract is in
compliance with the requirements of this part. Such an evaluation may
be limited to compliance with this part or may be included in a
compliance evaluation conducted under other laws, Executive Orders,
and/or regulations enforced by the Department.
(b) During such an evaluation, a determination will be made
whether:
(1) The employee notice required by Sec. 471.2(a) is posted in
conformity with the applicable physical and electronic posting
requirements contained in Sec. 471.2(d) and (f); and
(2) The provisions of the employee notice clause are included in
government contracts, subcontracts or purchase orders entered into on
or after June 21, 2010, or that the government contracts, subcontracts
or purchase orders have been exempted under Sec. 471.3(b).
(c) The results of the evaluation will be documented in the
evaluation record, which will include findings regarding the
contractor's compliance with the requirements of the Executive Order
and this part and, as applicable, conciliation efforts made, corrective
action taken and/or enforcement recommended under Sec. 471.13.
Sec. 471.11 What are the procedures for filing and processing a
complaint?
(a) Filing complaints. An employee of a covered contractor may file
a complaint alleging that the contractor has failed to post the
employee notice as required by the Executive Order and this part; and/
or has failed to include the employee notice clause in subcontracts or
purchase orders. Complaints may be filed with the Office of Labor-
Management Standards (OLMS) or the Office of Federal Contract
Compliance Programs (OFCCP) at 200 Constitution Avenue, NW.,
Washington, DC 20210, or with any OLMS or OFCCP field office.
(b) Contents of complaints. The complaint must be in writing and
must include:
(1) The employee's name, address, and telephone number;
(2) The name and address of the contractor alleged to have violated
the Executive Order and this part;
[[Page 28401]]
(3) An identification of the alleged violation and the
establishment or construction work site where it is alleged to have
occurred;
(4) Any other pertinent information that will assist in the
investigation and resolution of the complaint; and
(5) The signature of the employee filing the complaint.
(c) Complaint investigations. In investigating complaints filed
with the Department under this section, the Director of OFCCP will
evaluate the allegations of the complaint and develop a case record.
The record will include findings regarding the contractor's compliance
with the requirements of the Executive Order and this part, and, as
applicable, a description of conciliation efforts made, corrective
action taken, and/or enforcement recommended.
Sec. 471.12 What are the procedures to be followed when a violation
is found during a complaint investigation or compliance evaluation?
(a) If any complaint investigation or compliance evaluation
indicates a violation of the Executive Order or this part, the Director
of OFCCP will make reasonable efforts to secure compliance through
conciliation.
(b) Before the contractor may be found to be in compliance with the
Executive Order or this part, the contractor must correct the violation
found by the Department (for example, by posting the required employee
notice, and/or by amending its subcontracts or purchase orders with
subcontractors to include the employee notice clause), and must commit,
in writing, not to repeat the violation.
(c) If a violation cannot be resolved through conciliation efforts,
the Director of OFCCP will refer the matter to the Director of OLMS,
who may take action under Sec. 471.13.
(d) For reasonable cause shown, the Director of OLMS may
reconsider, or cause to be reconsidered, any matter on his or her own
motion or in response to a request.
Sec. 471.13 Under what circumstances, and how, will enforcement
proceedings under Executive Order 13496 be conducted?
(a) General. (1) Violations of the Executive Order or this part may
result in administrative enforcement proceedings. The bases for a
finding of a violation may include, but are not limited to:
(i) The results of a compliance evaluation;
(ii) The results of a complaint investigation;
(iii) A contractor's refusal to allow a compliance evaluation or
complaint investigation to be conducted; or
(iv) A contractor's refusal to cooperate with the compliance
evaluation or complaint investigation, including failure to provide
information sought during those procedures.
(v) A contractor's refusal to take such action with respect to a
subcontract as directed by the Director of OFCCP or the Director of
OLMS as a means of enforcing compliance with the provisions of this
part.
(vi) A subcontractor's refusal to adhere to requirements of this
part regarding employee notice or inclusion of the contract clause in
its subcontracts.
(2) If a determination is made by the Director of OFCCP that the
Executive Order or the regulations in this part have been violated, and
the violation has not been corrected through conciliation, he or she
will refer the matter to the Director of OLMS for enforcement
consideration. The Director of OLMS may refer the matter to the
Solicitor of Labor to begin administrative enforcement proceedings.
(b) Administrative enforcement proceedings. (1) Administrative
enforcement proceedings will be conducted under the control and
supervision of the Solicitor of Labor, under the hearing procedures in
29 CFR part 18, Rules of Practice and Procedure for Administrative
Hearings Before the Office of Administrative Law Judges.
(2) The administrative law judge will certify his or her
recommended decision issued under 29 CFR 18.57 to the Administrative
Review Board. The decision will be served on all parties and amicus
curiae.
(3) Within 25 days (10 days if the proceeding is expedited) after
receipt of the administrative law judge's recommended decision, either
party may file exceptions to the decision. Exceptions may be responded
to by the other parties within 25 days (7 days if the proceeding is
expedited) after receipt. All exceptions and responses must be filed
with the Administrative Review Board.
(4) After the expiration of time for filing exceptions, the
Administrative Review Board may issue a final administrative order, or
may otherwise appropriately dispose of the matter. In an expedited
proceeding, unless the Administrative Review Board issues a final
administrative order within 30 days after the expiration of time for
filing exceptions, the administrative law judge's recommended decision
will become the final administrative order. If the Administrative
Review Board determines that the contractor has violated the Executive
Order or the regulations in this part, the final administrative order
will order the contractor to cease and desist from the violations,
require the contractor to provide appropriate remedies, or, subject to
the procedures in Sec. 471.14, impose appropriate sanctions and
penalties, or any combination thereof.
Sec. 471.14 What sanctions and penalties may be imposed for
noncompliance, and what procedures will the Department follow in
imposing such sanctions and penalties?
(a) After a final decision on the merits has issued and before
imposing the sanctions and penalties described in paragraph (d) of this
section, the Director of OLMS will consult with the affected
contracting agencies, and provide the heads of those agencies the
opportunity to respond and provide written objections.
(b) If the contracting agency provides written objections, those
objections must include a complete statement of reasons for the
objections, which must include a finding that, as applicable, the
completion of the contract, or further contracts or extensions or
modifications of existing contracts, is essential to the agency's
mission.
(c) The sanctions and penalties described in this section will not
be imposed if:
(1) The head of the contracting agency, or his or her designee,
continues to object to the imposition of such sanctions and penalties,
or
(2) The contractor has not been given an opportunity for a hearing.
(d) In enforcing the Executive Order and this part, the Director of
OLMS may take any of the following actions:
(1) Direct a contracting agency to cancel, terminate, suspend, or
cause to be canceled, terminated or suspended, any contract or any
portions thereof, for failure to comply with its contractual provisions
required by Section 7(a) of the Executive Order and the regulations in
this part. Contracts may be canceled, terminated, or suspended
absolutely, or continuance of contracts may be conditioned upon
compliance.
(2) Issue an order of debarment under Section 7(b) of the Executive
Order providing that one or more contracting agencies must refrain from
entering into further contracts, or extensions or other modification of
existing contracts, with any non-complying contractor.
(3) Issue an order of debarment under Section 7(b) of the Executive
Order providing that no contracting agency may enter into a contract
with any non-complying subcontractor.
[[Page 28402]]
(e) Whenever the Director of OLMS exercises the authority in this
section, the contracting agency must report the actions it has taken to
the Director of OLMS within such time as the Director of OLMS will
specify.
(f) Periodically, the Director of OLMS will publish and distribute
to all executive agencies a list of the names of contractors and
subcontractors that have, in the judgment of the Director of OLMS,
failed to comply with the provisions of the Executive Order and this
part, or of related rules, regulations, and orders of the Secretary of
Labor, and as a result have been declared ineligible for future
contracts under the Executive Order and the regulations in this part.
Sec. 471.15 Under what circumstances must a contractor be provided
the opportunity for a hearing?
Before the Director of OLMS takes either of the following actions,
a contractor or subcontractor must be given the opportunity for a
hearing:
(a) Issues an order for cancellation, termination, or suspension of
any contract or debarment of any contractor from further Government
contracts under Sections 7(a) or (b) of the Executive Order and Sec.
471.14(d)(1) or (2) of this part; or
(b) Includes the contractor on a published list of non-complying
contractors under Section 7(c) of the Executive Order and Sec.
471.14(f) of this part.
Sec. 471.16 Under what circumstances may a contractor be reinstated?
Any contractor or subcontractor debarred from or declared
ineligible for further contracts under the Executive Order and this
part may request reinstatement in a letter to the Director of OLMS. In
connection with a request for reinstatement, debarred contractors and
subcontractors shall be required to show that they have established and
will carry out policies and practices in compliance with the Executive
Order and implementing regulations. Before reaching a decision, the
Director of OLMS may request that a compliance evaluation of the
contractor or subcontractor be conducted, and may require the
contractor or subcontractor to supply additional information regarding
the request for reinstatement. If the Director of OLMS finds that the
contractor or subcontractor has come into compliance with the Executive
Order and this part and has shown that it will carry out the Executive
Order and this part, the contractor or subcontractor may be reinstated.
The Director of OLMS shall issue a written decision on the request.
Subpart C--Ancillary Matters
Sec. 471.20 What authority under this part or Executive Order 13496
may the Secretary delegate, and under what circumstances?
Section 11 of the Executive Order grants the Secretary the right to
delegate any functions or duties under the Order to any officer in the
Department of Labor or to any other officer in the executive branch of
the Government, with the consent of the head of the department or
agency in which that officer serves.
Sec. 471.21 Who will make rulings and interpretations under Executive
Order 13496 and this part?
The Director of OLMS and the Director of OFCCP will make rulings
under or interpretations of the Executive Order or the regulations
contained in this part in accordance with their respective
responsibilities under the regulations. Requests for a ruling or
interpretation must be submitted to the Director of OLMS, who will
consult with the Director of OFCCP to the extent necessary and
appropriate to issue such ruling or interpretation.
Sec. 471.22 What actions may the Director of OLMS take in the case of
intimidation and interference?
The Director of OLMS may impose the sanctions and penalties
contained in Sec. 471.14 of this part against any contractor or
subcontractor who does not take all necessary steps to ensure that no
person intimidates, threatens, or coerces any individual for the
purpose of interfering with the filing of a complaint, furnishing
information, or assisting or participating in any manner in a
compliance evaluation, complaint investigation, hearing, or any other
activity related to the administration or enforcement of the Executive
Order or this part.
Sec. 471.23 What other provisions apply to this part?
(a) The regulations in this part implement only the Executive
Order, and do not modify or affect the interpretation of any other
Department of Labor regulations or policy.
(b) Each contracting department and agency must cooperate with the
Director of OLMS and the Director of the OFCCP, and must provide any
information and assistance that they may require, in the performance of
their functions under the Executive Order and the regulations in this
part.
(c)(1) This subpart does not impair or otherwise affect:
(i) Authority granted by law to a department, agency, or the head
thereof; or
(ii) Functions of the Director of the Office of Management and
Budget relating to budgetary, administrative, or legislative proposals.
(2) This subpart must be implemented consistent with applicable law
and subject to the availability of appropriations.
(d) Neither the Executive Order nor this part creates any right or
benefit, substantive or procedural, enforceable at law or in equity by
any party against the United States, its departments, agencies, or
entities, its officers, employees, or agents, or any other person.
Signed in Washington, DC, May 7, 2010.
John Lund,
Director, Office of Labor-Management Standards.
Patricia A. Shiu,
Director, Office of Federal Contract Compliance Programs.
[FR Doc. 2010-11639 Filed 5-19-10; 8:45 am]
BILLING CODE 4510-CP-P