Leading wholesaler-distributors depend on NAW Institute for Distribution Excellence groundbreaking research studies because they help solve real-world business challenges.




Order copies of Facing the Forces of Change®: Navigating the Seas of Disruption for everyone on your team!


NAW News

Legal Update

Legislative Issue Update - July 2010

Federal Contractors and Subcontractors Required to Post Employee Notice of Labor Law Rights, Effective June 21, 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 http://edocket.access.gpo.gov/2010/pdf/2010-11639.pdf (“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. You can review NAW’s submitted comments at http://www.naw.org/files/Comment.pdf. 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.


FTC Delays Enforcement of the Red Flags Rule Until December 31, 2010

On May 29, 2010, the Federal Trade Commission (FTC) announced that it would push the Red Flags Rule enforcement deadline to December 31, 2010. This extension will give Congress time to consider legislation that would affect the scope of entities covered by the Rule. In a statement about the delay, the FTC urged “Congress to act quickly to pass legislation that will resolve any questions as to which entities are covered by the Rule and obviate the need for further enforcement delays.” The Rule was developed under the Fair and Accurate Credit Transactions Act, in which Congress directed the FTC and other agencies to develop regulations requiring “creditors” and “financial institutions” to address the risk of identity theft.

This is the fifth time the FTC has delayed enforcement of the rule which originally was set to go into effect on November 1, 2008. For more information on the Rule see NAW’s advisory at:



FTC Settles “Invitation to Collude” Charges Against Truck Rental Company

The Federal Trade Commission charged U-Haul International and its parent firm with a violation of the FTC Act by inviting the firm’s closest competitor, Avis Budget Group, to collude on prices for truck rentals. Collectively, the two firms had more than 70% share of the one-way truck rental market in the U.S. If the price fixing plan succeeded the two companies could have imposed higher rental rates on customers, according to the FTC in its draft complaint. (In Re U Haul International, Inc., File No. 081-0157).

In reaching a settlement, the respondent has agreed to comply with a proposed consent order, in force for 20 years, enjoining U-Haul from inviting a competitor to fix prices, divide markets or to allocate customers, or from discussing rental rates with any competitor. As is typical, the settlement and consent order do not constitute an admission that U-Haul violated the FTC Act or that the facts alleged by the FTC are true. The consent order is subject to public comment before the Commission makes it final.

According to the Commission, U-Haul’s chief executive officer urged employees to contact its competitor concerning pricing matters. In an intra-company memo, the CEO wrote:

“Budget continues in some markets to undercut us on One-Way rates. Either get below them or go up to a fair rate. Whatever you do, LET BUDGET KNOW. Contact a large Budget Dealer and tell them. Contact their company store and let the manager know.”

At the same time, the executive urged U-Haul dealers to contact competing Budget dealers and urge them to match U-Haul’s higher rental rates.

In addition, during a public 2008 earnings conference call with industry analysts, the CEO spoke of U-Haul’s showing rate leadership in the industry and suggested that U-Haul will raise rates and would allow its competition “to come up a little bit” in price. The U-Haul officials on the call clearly expected Budget management to monitor the call and receive U-Haul’s pricing signal, according to the Commission. The U-Haul executive made extensive comments about Budget’s pricing practices in response to an analyst’s question for an update on pricing in the industry.

The complaint did not allege that Budget accepted U-Haul’s invitation to collude and that the two firms reached an agreement to fix prices. If an agreement did result, the FTC would have referred the matter to the Justice Department for a criminal investigation.