Stites & Harbison, PLLC

On January 30, 2009, President Obama signed Executive Order 13496 (“Notification of Employee Rights Under Federal Labor Laws”).  This Executive Order became effective on June 21, 2010.  It generally requires covered Federal Government contractors and subcontractors to provide notice of employee rights under the National Labor Relations Act (the “NLRA”) and applies to Federal Government contractors and subcontractors at any tier.  It does not, however, apply to, among other things, certain collective bargaining agreements, Federal Government contracts involving purchases under the Simplified Acquisition Threshold amount (currently $100,000), or to subcontracts below $10,000. 

To comply with this Executive Order, covered contractors and subcontractors must post a notice in conspicuous places in and about the employer’s plants and offices where employees covered by the NLRA perform the contract.  This includes all places where notices to employees are customarily posted both physically and electronically.  The required notice lists specific examples of rights that employees have under the NLRA.  It also provides examples of employer and union activities that are illegal under the NLRA.  Click here to see the required notice.

The Executive Order also requires covered Federal Government contracting departments and agencies to include clauses in their contracts with prime contractors pursuant to which the prime contractors must agree to, among other things, post the required notice, comply with the notice’s provisions, and include the same contract provisions in their subcontracts.  Penalties for failing to comply with these requirements include cancellation, suspension, or termination of the contract.  Contractors may also be declared ineligible for future Federal Government contract work.

Executive Order 13496 states that its purpose is “to promote economy and efficiency in Government procurement” and that the Federal Government “has a proprietary interest in ensuring that . . . contracts will be performed by contractors whose work will not be interrupted by labor unrest.”  Some may disagree that that requiring contractors and subcontractors to notify their employees of their right to organize unions, to picket, and to strike are consistent with these goals but, policy and political differences aside, it is important that contractors and subcontractors involved in Federal Government work be aware of Executive Order 13496 and comply with its terms.  A copy of the Final Rule Implementing Executive Order 13496 can be found at:  http://edocket.access.gpo.gov/2010/pdf/2010-11639.pdf.

Mr. Gillies is a Member in the Louisville office of Stites & Harbison where he focuses on providing legal services to the construction industry.  Matt, a graduate civil engineer, is the Chair of the Contract Documents Division (Division 2) of the American Bar Association’s Forum on the Construction Industry and has written and presented numerous programs associated with drafting and negotiating engineering and construction contracts.