United States: Federal Court Upholds Federal Contractor Union Notice Requirement

Executive Summary: A federal court in the District of Columbia has upheld the validity of the Department of Labor's (DOL) rule requiring covered federal contractors to post a notice informing employees of their rights under the National Labor Relations Act (NLRA). In National Ass'n of Manufacturers v. Perez (D.D.C. May 7, 2015), the court held that the rule does not violate employers' First Amendment rights, was properly adopted, and is not preempted by the NLRA.

Background

As discussed in our prior Alert, on May 20, 2010, the DOL issued a final regulation implementing Executive Order 13496, which requires non-exempt federal contractors and subcontractors to post a notice informing employees of their rights under the NLRA. After the regulation was issued, trade groups representing government contractors challenged it in federal court. On May 7, 2015, the federal district court for the District of Columbia rejected these challenges.

No Violation of First Amendment Rights

The court held that the posting requirement does not violate employers' First Amendment rights because the rule does not compel a federal contractor to speak at all. "Rather, the contractor is required to host government speech as a condition of receipt of a federal contract." The court noted that a contractor has a choice between posting the notice or foregoing federal contracting. The court also noted that the rule does not interfere with an employer's right to express its own views on union organizing. "Indeed, nothing in the rule prevents a contractor from creating its own posting" and placing it next to the DOL's notice to make it clear that the DOL's notice does not express the employer's opinion. Federal contractors may want to consider posting the Beck Notice, which stemmed from President George W. Bush's executive order requiring federal contractors to post a notice informing employees of their right to not join a labor union and not to pay fees for union expenses which were unrelated to labor representation matters. One of President Obama's first executive orders revoked the Beck Notice requirement but federal contractors may still voluntarily post such a notice.

Additionally, the court held that the decision of the District of Columbia Circuit Court of Appeals in NAM v. NLRB does not compel a finding that the DOL's rule is unconstitutional. In NAM, the Court of Appeals held that the NLRB's notice, which is substantially identical to the DOL's notice, violates § 8(c) of the NLRA. Because the decision in NAM was based on § 8(c), the district court declined to read it as requiring a determination that the DOL's rule violates the First Amendment.

Promulgation of Rule

The court also held that the President did not exceed his authority under the federal Procurement Act in issuing EO 13496. Citing an earlier decision that found the Procurement Act authorized an executive order requiring contractors to post a notice informing employees of their right to refrain from joining a union, the court held that EO 13496 was, similarly, a valid exercise of Presidential authority under the Procurement Act. Relying on that same case, the court also held that the posting rule has a sufficiently close nexus to procurement policy that it was not arbitrary and capricious.

No Preemption by the NLRA

The court also found that the DOL's authority to require the posting was not preempted by the NLRA. "The court is aware of no authority, and Plaintiffs have pointed to none, holding that the NLRA so occupies the field of labor law that an agency of the federal government other than the NLRB cannot promote the government's proprietary interest in efficient and stable contracting through the posting of a labor rights notice."

The Bottom Line:

Federal contractors covered by the DOL's notice posting rule should continue to post the notice as required by the rule. The notice posting rule does not apply to public sector employers and employers covered by the Railway Labor Act.

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