Delivering for Best-in-Class Wholesaler-Distributors
June 2010

The Labor Department has issued its final rule requiring certain federal contractors and their subcontractors to post a notice informing employees of their rights as employees under the National Labor Relations Act to join a union and engage in collective bargaining. (75 Fed.Reg. 28368, May 20, 2010). The final rule may be viewed at (“Rule”). Wholesaler-distributors who are Federal contractors or subcontractors are covered by this Rule. The “employee notice” may be viewed at:

The Rule goes into effect on June 21, 2010.

The Rule implements Executive Order 13496 signed by the President on January 30, 2009, which included sanctions, penalties (including debarment) and remedies that can be imposed if a covered Federal contractor or subcontractor fails to comply with the employee notice requirements.

In September 2009, NAW and numerous other organizations provided comments to the Labor Department that criticized the proposed employee notice as an inaccurate and incomplete overview of employee rights under Federal labor laws, and for suggesting that such laws favor a collective bargaining environment. For the most part, public comments did not alter the tone or content of the final version of the Rule, reflecting the strong union bias of the Administration.

Prime Contractors and Subcontractors Subject to the Rule

The Rule applies to any prime contractor with a Federal government contract of $100,000 or more. A contract for an indefinite quantity is covered unless the contractor or the contracting agency reasonably believes that total amount in any year will be below the $100,000 threshold. The dollar threshold set by the Rule is the simplified acquisition threshold set in the Office of Federal Procurement Policy Act—which is currently $100,000.

The Rule also applies to any subcontractor (at any tier) to a covered prime contractor with a subcontract value of more than $10,000.

The Rule does not apply to any contract resulting from solicitations issued before June 21, 2010. Every covered contract must include a contract clause requiring that the contractor post the employee notice during the term of the contract in accordance with the requirements in the Rule. The contracting agency is responsible for including the contract clause in the contract with the prime contractor. The prime contractor is responsible for including the contract clause in its contract with a covered subcontractor. The clause may be incorporated into a contract by reference to 29 CFR Part 471, Appendix A to Subpart A.

Contractors and Subcontractors Required to Post Employee Notice

Physical Posting – A contractor or subcontractor that posts notices to employees physically in the workplace must also post the employee notice physically. Where a significant portion of the workforce fulfilling the contract is not proficient in English, the employee notice must be provided in the language employees speak. The employee notice must be placed in conspicuous places in the workplace so the notice is readily seen by the employees engaged in activities relating to the performance of the contract.  Only an exact duplicate of the Labor Department-supplied employee notice may be used.  No alterations in size, content or color may be used.

Electronic Posting – A contractor or subcontractor that customarily posts notices to employees electronically must also post an exact copy of the Department-supplied employee notice electronically. The contractor may use a link to the Labor Department website that contains the full text of the notice, provided the link reads in the employees’ spoken language: “Important Notice about Employee Rights to Organize and Bargain Collectively with Their Employers.” The Labor Department website provides translation of the notice text.

Enforcement of the Rule

The Labor Department’s Office of Federal Contract Compliance Programs is authorized to conduct compliance reviews to determine if a contractor or subcontractor is in compliance with the Rule or other laws, Executive Orders or regulations enforced by the Labor Department. Employees may also file complaints claiming that the contractor or subcontractor has not complied with the Rule. In case of a violation, conciliation and administrative enforcement proceedings will follow. Sanctions for a violation include cancellation of the contract, or debarment of the contractor with one, several, or all Federal agencies.