Obama Administration Says to Organized Labor: "Welcome Back to the White House."

On January 30 and February 6, 2009, President Barack Obama signed a series of executive orders governing the labor relations of federal contractors. Each of these orders reverses policy previously enacted by then-President George W. Bush.

These orders do the following: (1) prohibit federal contractors from passing on to the government the costs of opposing union organizing efforts; (2) require federal service contractors to offer continued employment to workers already on the job as employees of a predecessor; (3) require the conspicuous posting of federal labor laws in federal contractors' workplaces; and (4) encourage federal agencies to use "project labor agreements" for large-scale, federally funded construction projects.

In his remarks announcing the signing of the first three executive orders at a White House ceremony—where he also announced the formation of a "Middle Class Task Force"—President Obama stressed his view of the importance of the labor movement in strengthening the middle class, thus signaling a potential sea change in federal labor policy. After being introduced as head of the task force, Vice President Joe Biden told the audience, which included a number of labor leaders, "Welcome back to the White House."

"Economy in Government Contracting"

This executive order prohibits federal contractors from passing on to the government "certain costs not directly related to the contractor's provision of goods and services." Contracts shall exclude the costs of any activities undertaken to discourage employees from exercising their right to organize and bargain collectively. If the federal contractor wishes to engage in these activities, the contractor must pay those costs itself.

The following activities, if undertaken for the purpose of discouraging union organizing, are not reimbursable: (1) preparing and distributing materials; (2) hiring or consulting legal counsel or consultants; (3) holding meetings (including paying the wages of persons attending meetings held for this purpose); and (4) planning or conducting activities by managers or supervisors during work hours.

Federal contractors may be reimbursed for costs incurred in "maintaining satisfactory relations" between the contractor and its employees, including costs of labor management committees, employee publications and other related activities.

This executive order does not prohibit a contractor from engaging in activities to lawfully persuade its employees not to support unionization, provided the contractor does not claim reimbursement for such activities.

The Federal Acquisition Regulatory Council (the FAR Council) is instructed to issue rules and regulations interpreting this order no later than June 29, 2009.

"Nondisplacement of Qualified Workers Under Service Contracts"

Under this executive order, a federal contractor taking over a federal service contract covered by the Service Contract Act of 1965 is required to offer employees of the predecessor contractor continued employment at the same location. Failure to comply may result in termination of the contract and ineligibility for future federal contracts. This requirement applies only to non-managerial and non-supervisory employees who worked for the predecessor contractor for at least three months and who would not otherwise be laid off or discharged. Certain contracts, including those under the simplified acquisition threshold (worth less than $100,000) and those awarded to disabled persons under the Javits-Wagner-O'Day Act, are exempt.

The FAR Council and the Secretary of Labor will jointly issue regulations under this order no later than July 29, 2009. The Secretary of Labor is responsible for administration and enforcement.

"Notification of Employee Rights Under Federal Labor Laws"

This executive order requires federal contractors to post notices in the workplace notifying employees of their rights under the National Labor Relations Act. These notices must be posted in conspicuous places in and about the contractor's plants and offices, including all places where the contractor customarily posts notices, both physically and electronically. Failure to post these notices may result in termination or suspension of the federal contract. The Secretary of Labor must initiate rulemaking prescribing the size, form and precise content of this notice, as well as any applicable exemptions, by May 30, 2009.

This executive order also reverses a Bush administration policy that required federal contractors to post a so-called "Beck" notice (referring to a 1988 U.S. Supreme Court decision, Communications Workers v. Beck), which alerted workers that they did not have to join a union to keep their jobs.

"Use of Project Labor Agreements for Federal Construction Projects"

In accordance with this executive order, federal executive agencies awarding construction projects that cost at least $25 million may, if appropriate, require that the contractor use a "project labor agreement." A project labor agreement is essentially a pre-hire collective bargaining agreement with one or more labor organizations that establishes the terms and conditions of employment for a specific construction project. Where an agency requires the use of a project labor agreement, the agreement shall: (1) bind all contractors and subcontractors on the project; (2) allow all contractors and subcontractors to compete for contracts and subcontracts without regard to whether they are otherwise parties to collective bargaining agreements; (3) guarantee against strikes, lockouts and other work stoppages; (4) set forth procedures for resolving labor disputes; (5) provide other mechanisms for labor-management cooperation on matters of mutual interest and concern; and (6) fully conform to all statutes, regulations and executive orders.

Federal executive agencies are not required to use project labor agreements, nor are they precluded from using them in situations not covered by this order. Contractors and subcontractors are not required to enter into project labor agreements with any particular labor organization.

This order explicitly revokes two Bush administration executive orders prohibiting federal agencies from requiring project labor agreements on federal construction contracts.

The FAR Council must implement the provisions of this order no later than May 30, 2009. The director of the Office of Management and Budget shall recommend, no later than July 29, 2009, whether the order should be broadened to include a wider range of federal construction projects.