President Obama Issues Executive Orders Affecting Federal Contractors


President Barack Obama has executed three executive orders covering contractors who receive money from the federal government.
In Executive Order 13495, entitled “Notification of Employee Rights Under Federal Labor Laws,” President Obama expressly revoked President Bush’s Beck Order which required federal contractors to inform employees of their right to refuse to pay union dues for non-collective bargaining activities.  In addition, the order requires that all federal contractors and subcontractors post a notice to employees informing the employees of their rights under federal labor laws.  This notice must be posted in a conspicuous place on the worksite where other notices are posted, and if other notices are posted electronically, the new notice must be posted electronically as well.
Penalties for a violation of this order include cancellation of the federal contract.  Prime contractors will be responsible for ensuring compliance by subcontractors.  Although the order indicates that this mandate is effective immediately, the contents of the notice were not released with the order.  The order directs the Secretary of Labor to issue rules and regulations regarding the notice within 120 days.  A copy of the new order can be found here.
The second order issued by President Obama is  Executive Order 13496, entitled “Economy in Government Contracting.” Under this order, federal contractors and subcontractors are prohibited from being reimbursed for the costs of activities undertaken to persuade or dissuade employees from exercising or not exercising their rights to organize and bargain collectively.  The executive order explicitly prohibits use of any government funds to (a) prepare and distribute materials; (b) hire or consult an attorney; (c) hold meetings; and (d) plan or conduct activities by managers, supervisors, or union representatives during work hours.  The Federal Acquisition Regulatory Council (FAR Council) has 150 days to adopt rules and regulations appropriate to carry out the Order.  The Order may be found here.
The third order issued is Executive Order 13497, entitled “Nondisplacement of Qualified Workers Under Service Contracts.” In this order, President Obama mandates that all contracts falling under the Service Contract Act contain a clause which requires contractors and subcontractors to offer the right of first refusal to employees under a predecessor contract if the contractor or subcontractor is awarded a contract that succeeds a contract for the same or similar services at the same location.  This rule will not require the successor contractor or subcontractor to offer the right of first refusal to managerial or supervisory employees, and contractors or subcontractors are free to employ fewer workers than were employed by the previous contractor.
The order also requires the predecessor contractor to provide the successor with a list of all service employees working under the contract or subcontract within the last month of performance not less than 10 days prior to the completion of the contract.  The Secretary of Labor has 180 days to issue regulations clarifying compliance with this Order.  The Order may be found here.
If you have any questions, please contact one of our Labor & Employment attorneys.