Union activity will likely dramatically increase during the current presidential term as a result of President Obama’s recent executive orders. Not surprisingly, Obama received organized labor’s endorsement during his campaign. Many describe him as the most vocally pro-union president since the New Deal. Shortly after inauguration, while signing three union-friendly executive orders, he announced, “I do not view the labor movement as part of the problem, to me it’s part of the solution” Recently, he signed a fourth and related order.

The President has also announced his support for the Employee Free Choice Act (EFCA), sometimes called “Card Check.” Unions hope EFCA will improve their ability to recruit members.

Employers that seek to preserve their union-free status cannot afford to ignore these developments.

Federal Labor Law: A Brief Overview

Although no recent presidents have endorsed union membership as strongly as Obama, federal law has favored unions for the last 80 years. Since the Franklin Roosevelt administration, federal labor law has guaranteed, and even encouraged, the right of employees to organize and join labor unions. Roosevelt’s first attempt to establish a labor relations board was declared unconstitutional. However, Congress subsequently passed the National Labor Relations Act in 1935 (“NLRA”). The National Labor Relations Board (“NLRB”) enforces the NLRA.

The NLRA’s sponsor, Senator Wagner of New York, never intended the NLRA to be a neutral law. On the contrary, York announced, “[t]he right to bargain collectively is at the bottom of social justice for the worker, as well as the sensible conduct of business affairs.” Sometimes called the “Wagner Act,” Congress has amended the NLRA several times. Interestingly, the NLRA’s procedural rules attract complaints from unions and management alike.

The NLRA protects employees’ and employers’ right to free speech. A New Jersey court recently ruled that the actions of union members who brought 10-foot tall inflatable rats to worksites during demonstrations accusing employers of anti-union practices were protected by the First Amendment. Similarly, during union campaigns, employers may tell employees they do not want a third party (i.e., a union) in the workplace, and that a union will negatively affect business and jobs. However, employers may not “threaten” or “harass” employees who support a union without drawing “unfair labor practices” charges from the NLRB.

Union participation has fluctuated since Congress passed the NLRA in 1935. In fact, union membership in the private sector is at a historical low. Union membership is strongest in the public sector, where the NLRA does not apply (although similar statutes protect union organizing rights for most government workers). According to the Bureau of Labor Statistics, 2008 marked the first net increase in union membership in decades. The recent increase may be attributable, at least in part, to the unions’ increased focus on organizing low wage and immigrant employees, such as janitors, in the private sector.

President Obama’s recent executive orders address union rights among federal contractors. Although the contractors are private enterprises, they are the easiest private sector employers for the President to regulate, by using the so-called “power of the purse.” Of course, in the government-stimulated economy now under development, federal contractors will represent a growing percentage of employers.

No Federal Reimbursement for Union Persuasion Campaigns

Executive Order 13494 is captioned “Economy in Federal Spending.” This order prohibits federal contractors from seeking reimbursement for expenses incurred by employers attempting to persuade employees not to form or join a union. The NLRA already prohibits employers from discriminating or retaliating against or otherwise punishing union supporters. However, employers may require employees to attend employer-sponsored meetings and presentations explaining why unionization would not be beneficial to the organization or the employees. Employers also may hire law firms and labor relations consultants to conduct these presentations.

Under Executive Order 13494, federal contractors may not seek reimbursement for any expenses related to union organizing campaigns. Such expenses include, for example: (1) “preparing and distributing materials” such as pamphlets and posters discussing union organization; (2) “hiring or consulting legal counsel or consultants” when the goal is related to union organizing; (3) “holding meetings (including paying the salaries of the attendees at meetings held for this purpose);” and (4) “planning or conducting activities by managers, supervisors, or union representatives during work hours.”

The Order “does not restrict the manner in which recipients of federal funds may expend those funds.” So, while the contractor may not bill the government for union persuasion activities, the contractor may spend its own money, including money it earned through the federal contract, on union-free activities.

Right of First Refusal Must Be Offered to Federal Contract Employees

Executive Order 13495 is captioned “Non-displacement of Qualified Workers Under Service Contracts.” This Order requires federal contractors taking over new contracts for the same services in the same location as previous contracts (“successor contractors”) to offer jobs to qualified employees of the previous contractor (“predecessor contractor”). The Order excludes managerial and supervisory employees from its provisions. A successor contractor may still reduce the number of employees its predecessor contractor used to perform a particular service. Moreover, a successor contractor is not required to offer employment “to any employee of the predecessor contractor whom the contractor believes, based on the particular employee’s past performance, that employee has failed to perform suitably on the job.” The Order also does not require successor contractors to pay employees the same rates for the same jobs paid by the predecessor contractor under the previous contract.

Executive Order 13495 does not explicitly mention unions. However, it closes a loophole that would have allowed federal contractors to terminate or replace the employees of a prior contractor if those employees were members of a labor union. As explained above, the NLRB already enforces the NLRA’s prohibition against anti-union discrimination in hiring. However, the Department of Labor, a different federal agency, enforces Executive Order 13495. Consequently, a successor federal contractor who selectively replaces the prior contractor’s union-supporter employees with non-union replacements could be investigated by both agencies.

The prospect of two federal agencies pursuing a contractor for similar labor violations may seem unlikely. The Department of Labor does not have jurisdiction to enforce the vast majority of labor laws under the NLRA. However, President Obama’s nominee to head the Department of Labor, Hilda Solis, has already expressed her commitment to support unions. This Orders may be another tool for her to demonstrate that support.

New Poster Requirements for Federal Contractors

Executive Order 13496 is captioned “Notification of Employee Rights Under Federal Labor Laws.” This Order requires every federal contractor to display a poster notifying employees of the federal laws “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.” The Department of Labor will determine the actual wording, size, and placement of the poster.

This Order revokes one of President Bush’s prior executive orders requiring employees to be notified of their rights to “opt out” of certain portions of union dues that were not directly related to the administration of the collective bargaining agreement. For example, employees can be required to contribute to the union attorney’s fees at the bargaining table, but employees cannot be required to contribute to a union political action committee if they do not agree with the PAC’s philosophy. Under the new Order, employees still have the right to opt out of contributing to a PAC, but the government no longer requires that they be informed of that right in a poster.

Employers that do not comply with the new Order may face the cancellation, termination, or suspension of the federal contract. For obvious reasons, some see this punishment as negatively affecting employees more than not seeing the new poster.

While Executive Order 13496 may seem more symbolic than informative, posters have a long tradition in labor law. Almost every NLRB decision finding that an employer committed an unfair labor practice includes a requirement that employer post a notice to its employees explaining the violation.

Project Labor Agreements for Federal Construction Projects

Executive Order 13502 is captioned “Use of Project Labor Agreements for Federal Construction Projects.” This order authorizes “project labor agreements” in certain “large scale” federal construction contracts. In other words, contracting agencies may now require private-sector contractors to sign on to a union contract for the life of the project. The order applies only to construction projects worth more than $25 million.

The stated impetus for issuing the order is the underlying assumption that construction employers typically do not have a “permanent” workforce, which makes it difficult for them to predict labor costs when bidding on contracts and therefore to ensure a steady supply of labor on contracts being performed. Moreover, large scale projects generally require multiple employers at a single location. A labor dispute involving one employer can delay the entire project.

This order asserts the use of a project labor agreement may prevent these problems from developing by providing structure and stability to large-scale construction projects, thereby promoting the efficient and expeditious completion of federal construction contracts. Accordingly, the order “encourages” executive agencies to consider requiring the use of project labor agreements in connection with large-scale construction projects to promote economy and efficiency in federal procurement. In so doing, an executive agency may require that every contractor or subcontractor on the project agree, for that project, to negotiate or become a party to a project labor agreement with one or more appropriate labor organizations.

Interestingly, Executive Order 13502 requires that by August 5, 2009, the Director of Office Management and Budget (OMB), in consultation with the Secretary of Labor and with other officials as appropriate, provide the President with recommendations regarding whether “broader” use of project labor agreements would “help to promote the economical, efficient, and timely completion of such projects.”

Conclusion

President Obama’s recent executive orders in some ways take the “bargaining” out of the NLRA’s bargaining process. Federal contractors must now account for federal contracting invoices to prove no money was spent on any “anti-union activity,” keep a predecessor contractor’s pro-union employees, display a poster explaining their employees’ right to unionize (but not their right to refrain from joining or supporting a union), and in certain “large” construction projects, face requirements that they use project labor agreements with their subcontractors. Many commentators view these recent executive orders as harbingers of things to come in the union organizing arena. Stay tuned.

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