Client Bulletins
Obama Rescinds Beck Rule: Requires "Union-Friendly" Posting Instead

Client Bulletin #405
February 9, 2009

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The Beck Rule regulations are still technically “on the books,” but the Office of Federal Contract Compliance Programs has indicated that it will no longer be investigating federal contractors for compliance, now that President Obama has revoked the rule. On January 30, 2009, the President signed an Executive Order revoking an earlier Executive Order from President George W. Bush, which had required federal contractors to post a notice in non-exempt worksites informing employees of their rights not to join a labor union and not to pay fees for union expenses unrelated to representation issues. This obligation in the Bush order was called the “Beck Rule” after the Supreme Court’s decision in Communications Workers of America v. Beck, which set forth such employee rights.

In addition to rescinding Bush’s Executive Order 13201, Obama’s new Executive Order requires federal contractors to post a new notice (which will be issued by the Secretary of Labor) in establishments where their employees are covered by the National Labor Relations Act. Government contractors, in turn, must include this requirement in their subcontracts. Failure to comply with the Executive Order may result in suspension or cancellation of the government contract.

Although we don't know exactly what the new notice will say, we expect it to inform employees of their right to associate with, form, and join unions. This is based on the following language from the Executive Order:

. . . to promote economy and efficiency in Government procurement. When the Federal Government contracts for goods and 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 attainment of industrial peace is most easily achieved and workers’ productivity is enhanced when workers are well informed of their rights under Federal labor laws, including the National Labor Relations Act. . . . As the Act recognizes, “encouraging the practice and 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” will “eliminate the causes of certain substantial obstructions to the free flow of commerce” and “mitigate and eliminate these obstructions when they have occurred.” . . . Relying on contractors whose employees are informed of such rights under Federal labor laws facilitates the efficient and economical completion of the Federal Government’s contracts.

The Department of Labor has 120 days to initiate rulemaking regarding the notice that contractors are required to post, which will inform employees of their rights under the NLRA, and other regulations related to enforcement of this Executive Order.

What should you do?

* If your company is a federal contractor and is not exempt from the requirements, you will need to post the Notice that the Department of Labor issues at your unionized facilities, both physically and electronically if you post other notices electronically.

* If your company is a federal contractor, you will need to include the required clause in all covered subcontracts, notifying your subcontractors of their compliance obligations.

Does this mean that contractors are required to remove their Beck posters?

Not necessarily. Although contractors are no longer required to post the Beck notice, no law or order prohibits an employer from providing that information to its employees. Moreover, as stated above, the Beck Rule regulations are still technically “on the books” although the OFCCP has said that it will no longer be investigating federal contractors for compliance.

Constangy will continue to track this topic and will issue an updated bulletin when the Department of Labor issues regulations.

For more information regarding this Executive Order, please contact a member of Constangy’s Affirmative Action or Labor Relations practice groups, or the Constangy attorney of your choice.

Constangy, Brooks & Smith, LLP has counseled employers on labor and employment law matters, exclusively, since 1946. A “Go To” Law Firm in Corporate Counsel and Fortune Magazine, it represents Fortune 500 corporations and small companies across the country. Its attorneys are consistently rated as top lawyers in their practice areas by publications such as Chambers USA, Super Lawyers, and Top One Hundred Labor Attorneys in the United States. More than 100 lawyers partner with clients to provide cost-effective legal services and sound preventive advice to enhance the employer-employee relationship. Offices are located in Georgia, Florida, South Carolina, North Carolina, Tennessee, Alabama, Virginia, Missouri, Illinois, Wisconsin, Texas and California. For more information, visit www.constangy.com.