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President Obama Issues Executive Orders Reversing Bush Labor Policies

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February 4, 2009

On January 30, 2009, President Obama signed three executive orders targeted to "level the playing field" for employees and labor unions in their relationships with management. The orders represent a clear revocation of President Bush's labor policies in certain areas and are intended to strengthen organized labor. A brief summary follows of each of these orders.

Economy in Government Contracting

The first order is designed to limit federal contractors from spending taxpayer money to persuade employees regarding their choice of union representation. The executive order provides that, in order to promote economy and efficiency in government contracting, certain costs that are not directly related to a contractor's provision of goods and services to the federal government shall not be reimbursed. The order is consistent with the policy of the United States to remain neutral in any labor-management dispute that involves federal contractors.

The executive order directs federal agencies to treat as "unallowable" the costs of any activities undertaken to persuade employees whether "to exercise or not to exercise . . . the right to organize and bargain collectively through representatives of their own choosing." According to the order, costs associated with "holding meetings" or "preparing and distributing materials" regarding union organizing would be considered "unallowable" for payment. The order directs that the Federal Acquisition Regulatory Council (FARC) adopt rules and regulations necessary to implement this order within 150 days.

Although it was just issued, serious constitutional issues are already being raised regarding this order. For example, in Chamber of Commerce v. Brown (2008), the Supreme Court held that a California law prohibiting employers from using state grant money to promote or deter union organizing was preempted by the National Labor Relations Act. Similar arguments may be raised to challenge the constitutionality of this order.

Notification of Employee Rights Under Federal Labor Laws

The second order requires that federal contractors post a notice informing employees of their rights under federal labor laws, including the National Labor Relations Act (NLRA). According to the order, when the federal government contracts for goods or services, it has a proprietary interest in ensuring that those contracts will be performed by contractors whose work will not be interrupted by labor unrest. The executive order provides that industrial peace is most easily achieved when workers are well informed of their rights under federal labor laws.

This order would result in required postings of rights under the NLRA similar to postings that are now required of employee rights under equal employment and wage/hour laws. The order requires the Secretary of Labor to develop the required posting within 120 days. In addition, this order revokes a prior executive order issued by President Bush in 2001 requiring federal contractors to post a notice of employee rights under the Supreme Court's 1998 decision in Communication Workers of America v. Beck not to join a union and not to pay agency fees for non-representational union expenditures.

Nondisplacement of Qualified Workers Under Service Contracts

The third order concerns the continued employment of qualified workers under service contracts with the federal government. According to the executive order, when a service contract expires, and the federal government awards that contract to another contractor to perform the same service, the new or "successor" contractor often hires the prior or "predecessor" contractor's employees. The order maintains that the government's procurement interests in economy and efficiency are served when the successor contractor hires its predecessor's employees, as the carryover workforce reduces disruption to the delivery of services during the transition period between contractors. The order therefore requires that successor contractors that have service contracts with the federal government provide a right of first refusal to the predecessor contractor's employees for positions for which they are qualified.

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