On January 30, 2009, President Obama signed three executive orders, effective immediately, that he stated will help “reverse many of the policies towards organized labor that we’ve seen these last eight years, policies with which I’ve sharply disagreed.” According to the President, the first order will “prevent taxpayer dollars from going to reimburse federal contractors who spend money trying to influence the formation of unions.” The second order will “require that federal contractors inform their employees of their rights under the National Labor Relations Act.” The third order will allow qualified employees to keep their jobs when a successive employer obtains the contract.

The first Executive Order requires departments and agencies to treat certain costs as unallowable when they enter into, receive proposals for, or make disbursements pursuant to a federal contract. The order provides that costs of any activities undertaken to persuade employees either to exercise or not to exercise their right to organize and bargaining collectively are unallowable. Specifically, the following activities, when undertaken to persuade employees to exercise or not to exercise their right to organize and bargain collectively, are unallowable: (1) preparing and distributing materials; (2) hiring or consulting legal counsel or consultants; (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.

However, costs incurred in “maintaining satisfactory relations between the contractor and its employees, including costs of labor-management committee, employee publications (other than those undertaken to persuade employees to exercise or not to exercise, or concerning the manner of exercising, right to organize and bargain collectively), and other related activities” are allowable.

The second Executive Order requires that federal contractors inform their employees of their rights under the National Labor Relations Act. The order revokes Executive Order 13021, signed by President Bush on February 17, 2001, which required contractors to inform employees of their rights regarding the payment of union fees or dues through “Beck rights” notices, in accordance with the Supreme Court’s decision in Communications Workers v. Beck, 487 U.S. 735 (1988).

President Obama’s order does not limit the notification requirement to information regarding union fees or dues. Instead, federal contractors must include all information required by the Secretary of Labor in a rulemaking that must be initiated within 120 days of the order. A contractor must comply with all provisions of the rulemaking, including posting a notice of information that describes the rights of employees under federal labor law. If a contractor does not comply with these requirements, the contract may be cancelled, terminated, or suspended and the contractor may be declared ineligible from future government contracts. The contractor must also include these requirements in any subcontract it enters into in connection with its government contract. This order does not apply to collective bargaining agreements or any contract exempted by the rulemaking.

The third Executive Order requires that all service contracts, and solicitations for the contracts, include a provision requiring the contractor and subcontractors to offer a right of first refusal of employment to workers employed under the predecessor contract. This order does not allow a contractor to offer employment under the contract until it provides the right of first refusal to previously employed workers.

This order does not apply to the following: (1) contracts or subcontracts under the simplified acquisition threshold, as defined in 41 U.S.C. § 403; (2) contracts or subcontracts awarded pursuant to the Javits-Wagner-O’Day Act, 41 U.S.C. § 46-48c; (3) certain guard, elevator operator, messenger, or custodial services provided to the federal government; (4) agreements for vending facilities covered under the Randolph-Sheppard Act, 20 U.S.C. § 107; or (5) employees hired to work under a federal contract and one or more nonfederal contracts as part of a single job if the manner of employment is not designed to avoid the order’s requirements.

The order explicitly revokes President Bush’s Executive Order 13204, which eliminated the requirement that successive contractors must offer a right of first refusal of employment to employees of the prior contractor.