[Federal Register Volume 66, Number 190 (Monday, October 1, 2001)]
[Proposed Rules]
[Pages 50010-50021]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-24320]



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Part III





Department of Labor





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Office of Labor-Management Standards



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29 CFR Part 470



Obligations of Federal Contractors and Subcontractors; Notice of 
Employee Rights Concerning Payment of Union Dues or Fees; Proposed Rule

  Federal Register / Vol. 66, No. 190 / Monday, October 1, 2001 / 
Proposed Rules  

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DEPARTMENT OF LABOR

Office of Labor-Management Standards

29 CFR Part 470

RIN 1215-AB33


Obligations of Federal Contractors and Subcontractors; Notice of 
Employee Rights Concerning Payment of Union Dues or Fees

AGENCY: Office of Labor-Management Standards, Employment Standards 
Administration, Labor.

ACTION: Notice of proposed rule-making; request for comments.

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SUMMARY: This Notice of Proposed Rule-Making (NPRM) proposes a 
regulation to implement Executive Order 13201, which was signed by 
President George W. Bush on February 17, 2001. Executive Order 13201 
(``the Executive Order,'' ``the Order,'' or ``EO 13201'') requires non-
exempt Government contractors and subcontractors to post notices 
informing their employees that under Federal law, those employees have 
certain rights related to union membership and use of union dues and 
fees. The Order also provides the text of contractual provisions that 
Federal Government contracting departments and agencies must include in 
every Government contract, except for collective bargaining agreements 
and contracts for purchases under the Simplified Acquisition Threshold. 
These provisions include the language of the required notices, and 
explain the sanctions, penalties, and remedies that may be imposed if 
the contractor or subcontractor fails to comply with its obligations 
under the Order. Covered Government contractors and subcontractors must 
include these same provisions in their nonexempt subcontracts and 
purchase orders, so that the provisions will be binding upon each 
subcontractor or vendor.
    The Proposed Rule would provide the text of the required 
contractual provisions, explain exemptions, and set forth procedures 
for ensuring compliance with the Order; it also would contain other 
related requirements. This NPRM invites comments on the Proposed Rule.

DATES: Comment Period: Comments must be received on or before November 
30, 2001.

ADDRESSES: Comments should be sent to Don Todd, Deputy Assistant 
Secretary for Labor-Management Programs, Office of Labor-Management-
Standards, Employment Standards Administration, U.S. Department of 
Labor, 200 Constitution Avenue, NW, Room N-5605, Washington, DC 20210.
    As a convenience to commenters, comments transmitted by facsimile 
(FAX) machine will be accepted. The telephone number of the FAX 
receiver is (202) 693-1340. To assure access to the FAX equipment, only 
comments of five or fewer pages will be accepted via FAX transmittal. 
Receipt of submissions, whether by U.S. mail or FAX transmittal, will 
not be acknowledged.
    Comments will be available for public inspection during normal 
business hours at the above address.

FOR FURTHER INFORMATION CONTACT: Don Todd, Deputy Assistant Secretary 
for Labor-Management Programs, Office of Labor-Management Standards, 
Employment Standards Administration, U.S. Department of Labor, 200 
Constitution Avenue, NW., Room S-2321, Washington, DC 20210, (202) 693-
0200 (this is not a toll-free number). Individuals with hearing 
impairments may call 1-800-877-8339 (TTY/TDD).

SUPPLEMENTARY INFORMATION: The preamble to the Proposed Rule is 
organized as follows:

    I. Background--provides a brief description of the development 
of the Proposed Rule.
    II. Authority--cites the legal authority supporting the Proposed 
Rule, Departmental redelegation authority, and interagency 
coordination authority.
    III. Overview of the Rule--summarizes pertinent aspects of the 
regulatory text, and describes the purposes and application of that 
text.
    IV. Regulatory Procedure--sets forth the applicable regulatory 
requirements and requests comments on specific issues.

I. Background

    Executive Order 13201 (66 FR 11221, February 22, 2001) is designed 
to promote economy and efficiency in Government procurement by 
requiring Government contractors to inform their workers that Federal 
labor laws give those workers certain rights related to union 
membership and use of union dues and fees. The Order provides the text 
of a contract clause that Government contracting departments and 
agencies must include in all nonexempt Government contracts and 
subcontracts. That clause requires contractors to post a notice, the 
exact language of which is included in the clause. The clause also 
requires contractors to include the same clause in their nonexempt 
subcontracts and purchase orders, and describes generally the 
sanctions, penalties, and remedies that may be imposed if the 
contractor fails to satisfy its obligations under the Order and the 
clause.
    The text of the notice informs employees that they cannot be 
required to join, or maintain membership in, a union in order to keep 
their jobs; that under certain conditions, the law permits a union and 
an employer to enter into a union-security agreement requiring 
employees to pay dues and fees to the union; and that, even where such 
union-security agreements exist, employees who are not union members 
can only be required to pay their share of union costs relating to 
certain specific activities. The notice also provides a general 
description of the remedies to which employees may be entitled if these 
rights have been violated, and provides contact information for further 
information about those rights and remedies.
    The Order contains requirements similar, but not identical, to 
those included in Executive Order 12800, issued on April 13, 1992, by 
former President George H. W. Bush. See 57 FR 12985 (April 14, 1992); 
57 FR 13413 (April 16, 1992). That earlier Order, in turn, was intended 
to inform employees of their rights under the decisions of the United 
States Supreme Court in Communications Workers of America v. Beck, 487 
U.S. 735 (1988), and related cases. In Beck, the Court held that a 
union may not use fees and dues that it collects from bargaining unit 
employees who have not joined the union to finance activities that are 
not ``germane'' to the union's representational purposes. Examples of 
activities the Court considered ``germane'' include collective 
bargaining, contract administration, and grievance adjustment. Beck, 
487 U.S. at 745, 760.
    During 1992, the Department of Labor (``the Department'') issued a 
Notice of Proposed Rule-Making (NPRM) and Final Rule implementing 
Executive Order 12800. See 57 FR 33403 et seq. (July 24, 1992) (NPRM); 
57 FR 49588 et seq. (November 2, 1992) (Final Rule). However, Executive 
Order 12800 was revoked on February 1, 1993, by Executive Order 12836. 
58 FR 7045 (published February 3, 1993). The Final Rule was therefore 
withdrawn. See 58 FR 15402 (March 22, 1993).
    This Proposed Rule, authorized by Section 1 of Executive Order 
13201, is based largely upon the November 2, 1992, Final Rule 
implementing the earlier Order. Most substantive differences between 
the Proposed Rule and the 1992 Final Rule are necessitated by the 
differences between the two Executive Orders. The Department has made a 
few changes to the language of the earlier Final Rule in order to make

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the Proposed Rule more consistent with the regulations and procedures 
of the Office of Federal Contract Compliance Programs (OFCCP). This 
NPRM provides that OFCCP, under the supervision of the Deputy Assistant 
Secretary for Federal Contract Compliance, would conduct compliance 
evaluations and complaint investigations under the Order and the Rule. 
See Section II(B) of this preamble, ``Departmental Authorization.'' 
Each substantive difference between the earlier Final Rule and this 
Proposed Rule is discussed below in section III, ``Overview of the 
Rule.''
    In addition to such substantive changes, the Department has revised 
certain sections of the 1992 Final Rule to comply with Executive Order 
12988 (February 5, 1996). That Order requires Federal agencies to draft 
their regulations to be simple and easy to understand. Accordingly, the 
Department has drafted the Proposed Rule to make it easier to read. For 
example, the Department has reworded the headings of regulatory 
sections into the form of questions. Also, the Department has replaced 
ambiguous or confusing words with plainer language; for example, the 
word ``shall'' has been replaced in the Proposed Rule by the terms 
``must,'' ``will,'' ``is/are,'' or similar words, as appropriate. Other 
specific provisions that would differ from the 1992 Final Rule are 
discussed below in section III.
    While this NPRM was being prepared, the Department issued an 
Interim Procedural Notice (IPN) to provide guidance to contractors and 
subcontractors about how to comply with Executive Order 13201 pending 
the publication of a Final Rule implementing the Order. 66 FR 19988 
(April 18, 2001). The IPN authorizes covered contractors to fulfill 
their posting obligations under the Order by replicating the text of 
the notice set forth in the Order and posting it in conspicuous places 
in and about their plants and offices, including all places where 
notices to employees are customarily posted. As noted below in section 
470.2(e) of the Proposed Rule, the Department is printing an employee 
notice poster that will be provided by the contracting agency or may be 
obtained directly from the Department at the addresses listed in that 
section. The Rule proposes that once the Department's official employee 
notice poster is available, contractors may only fulfill their posting 
obligations by using that official poster or by making and using exact 
duplicate copies of that poster.

II. Authority

A. Legal Authority

    The legal authority for the Notice of Proposed Rule-Making is 
Executive Order 13201, issued pursuant to the Constitution and laws of 
the United States, including the Federal Property and Administrative 
Services Act, 40 U.S.C. 471 et seq.

B. Departmental Authorization

    Section 1(b) of Executive Order 13201 delegates responsibility for 
the administration and enforcement of the Order to the Secretary of 
Labor, and directs the Secretary to adopt rules and regulations and 
issue such orders as are deemed necessary and appropriate to achieve 
the purposes of the Order. Section 9 of the Order authorizes the 
Secretary to delegate any function or duty under the Order to any 
officer in the Department of Labor or to any other officer in the 
executive branch of the Government, with the consent of the head of the 
department or agency in which that officer serves.
    Using that delegation authority, Secretary's Order 3-2001, issued 
March 26, 2001, and published in the Federal Register on April 3, 2001 
(66 FR 17762), delegates and assigns responsibility for the 
administration and enforcement of EO 13201 to the Assistant Secretary 
for Employment Standards. The Assistant Secretary, in turn, has 
delegated general responsibility for the administration and enforcement 
of the Executive Order to the Deputy Assistant Secretary for Labor-
Management Programs. Under this delegation, the Deputy Assistant 
Secretary for Labor-Management Programs has specific responsibility for 
granting and withdrawing exemptions and waivers under this part, and 
for referring for administrative enforcement cases against contractors 
that have been found to have violated the provisions of the Order or 
this part.
    The Assistant Secretary has conveyed responsibility for conducting 
compliance evaluations and complaint investigations under the Order and 
this part to the Deputy Assistant Secretary for Federal Contract 
Compliance.

C. Interagency Coordination

    The Civilian Agency Acquisition Council has been requested to 
insert language implementing the Executive Order into the Federal 
Acquisition Regulation (FAR).

III. Overview of the Rule

    This Proposed Rule would add a new subchapter C and part 470 to 
Volume 29 of the Code of Federal Regulations (CFR).

Preamble, Subpart A

    Subpart A would contain definitions, the employee notice clause, 
and exemptions.

Sec. 470.1  What definitions apply to this part?

    The proposed definitions contained in this section would be 
derived, for the most part, from the definitions of the same terms, 
either in OFCCP's regulations at 41 CFR 60-1.3 (which deals with 
certain obligations of Federal contractors regarding equal employment 
opportunity, and the procedures used to enforce those obligations), or 
in the November 2, 1992, Final Rule that implemented Executive Order 
12800 (``the earlier Final Rule''). See 57 FR 49588, 49595. With 
certain exceptions explained below, any substantive differences between 
the text of a definition in this Proposed Rule and the text of the 
definition on which it is based are necessitated by differences between 
Executive Order 13201, which authorizes this NPRM, and Executive Order 
12800, which authorized the earlier Final Rule. In addition, pursuant 
to Executive Order 12988, stylistic or phrasing changes have been made 
to particular proposed definitions to clarify their meaning or make 
their wording consistent with the wording of similar definitions in 
other regulations; such proposed changes are also explained below.
    Assistant Secretary: The substance of this definition would be 
based on the definition of the same term in the corresponding section 
of the earlier Final Rule, and would be consistent with the delegation 
in Secretary's Order 3-2001. The structure of the Department has been 
changed since 1992, when the earlier Rule was promulgated; because of 
those changes, the authority under EO 13201 is now delegated to the 
Assistant Secretary for Employment Standards, as discussed in section 
I(B) of this preamble.
    Collective bargaining agreement: Section 2(a) of EO 13201 exempts 
from the requirements of the Order those agreements that meet this 
definition. As required by section 2(a) of the Order, this definition 
would be based on the definition of the same term in the Civil Service 
Reform Act, 5 U.S.C. 7103(a)(8). Because that statutory definition, in 
turn, references the definition of the term ``collective bargaining'' 
in 5 U.S.C. 7103(a)(12), the proposed definition would incorporate the 
relevant portions of the latter statutory definition as well. The 
Department has revised and reorganized the language of these two 
statutory definitions in order to make

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the proposed definition more understandable.
    Construction: The definition of this term would be identical to the 
definition of the same term in the earlier Final Rule, except that, to 
make the definition easier to understand, the phrase ``as used in 
paragraphs (d) and (j) of this section'' would be omitted. The 
definition also would be substantively consistent with the definition 
of the term ``construction work'' in 41 CFR 60-1.3.
    Construction work site: This definition would be identical to the 
definition of the same term in the earlier Final Rule.
    Contract, contracting agency, and contractor: These definitions 
would be identical to the definitions of the same terms in the earlier 
Final Rule.
    Department: This definition would be identical to the definition of 
the same term in the earlier Final Rule, and would be consistent with 
the delegation of authority in section 1(b) of EO 13201.
    Employee notice clause: This term was used, but not defined, in the 
earlier Final Rule. The Proposed Rule would use the term as a shorthand 
method of referring to the clause that EO 13201 requires Government 
contracting departments and agencies, contractors, and subcontractors 
to include in their non-exempt contracts.
    Government: This definition would be identical to the definition of 
the same term in the earlier Final Rule.
    Government contract: This definition would be identical to the 
definition of the same term in 41 CFR 60-1.3, with one exception. 
OFCCP's definition of the term excludes ``Federally assisted 
construction contracts'; the Proposed Rule would delete the word 
``construction'' to signify that all Federally assisted contracts (not 
just construction contracts) would be exempt from the requirements of 
the Executive Order.
    Labor organization: This definition would be identical to the 
definition of the same term in the earlier Final Rule.
    Modification: This definition would be substantively similar to the 
definition of the same term in the earlier Final Rule. The proposed 
definition has been rewritten slightly to make it easier to understand. 
This revision is not intended to change the meaning of the definition; 
the Department intends that the definition would be interpreted in the 
same way as the corresponding definition in the earlier Final Rule.
    Person: This definition would be identical to the definition of the 
same term in the earlier Final Rule, except that, to make the 
definition easier to understand, the phrase ``as used in paragraphs 
(j), (o), (r), and (s) of this section'' would be omitted.
    Prime contractor: This definition would be similar to the 
definition of the same term in the earlier Final Rule. The second part 
of the definition would state that ``for purposes of subparts B and 
C,'' the term would apply to any person who has held a contract subject 
to the Order. In the earlier Final Rule, this second part of the 
definition, which would have the effect of authorizing the Department 
to take appropriate action against a prime contractor who may not hold 
a Government contract at the time the action is being taken, applied 
only for purposes of subpart B of this part. In this Proposed Rule, the 
Department would apply the second part of the definition to subpart C 
in order to ensure that the provisions of section 470.22, which 
authorize sanctions and penalties for intimidation and interference, 
would apply to former as well as current prime contractors.
    Related rules, regulations, and orders of the Secretary of Labor: 
This definition would be based on the definition of the same term in 
the earlier Final Rule. The difference between the old and new 
definitions would reflect two facts addressed above in the discussion 
of the definition of the term Assistant Secretary: first, that the 
structure of the Department has been changed since 1992, when the 
earlier Rule was promulgated; and second, that because of those 
changes, the authority under EO 13201 is now delegated to the Assistant 
Secretary for Employment Standards, who has re-delegated that authority 
to the Deputy Assistant Secretaries for Labor-Management Programs and 
for Federal Contract Compliance, as discussed in section I(B) of this 
preamble.
    Subcontract: This definition would be identical to the definition 
of the same term in 41 CFR 60-1.3.
    Subcontractor: This definition would be identical to the definition 
of the same term in the earlier Final Rule, except that the second 
clause of the definition would apply to subparts B and C of this part, 
for the same reasons explained above in the discussion of the 
definition of ``prime contractor.''
    Union: This definition would state that the term ``union'' is 
defined in the same way as the term ``labor organization.'' The earlier 
Final Rule equated these two terms as well.
    Union-security agreement: This definition would be identical to the 
definition of the same term in the earlier Final Rule.
    United States: This definition would be identical to the definition 
of the same term in 41 CFR 60-1.3, except that the phrase ``shall 
include'' would be replaced by ``includes.''

Sec. 470.2  Under the Executive Order, what employee notice clause must 
be included in Government contracts?

    Subsection 470.2(a): This subsection would implement the 
requirements of section 2(a) of EO 13201. The text of the employee 
notice clause provided in the subsection would be identical to the text 
provided in the Executive Order, with three exceptions.
    First, paragraph 1 of the clause set forth in section 2(a) of the 
Order states that, in notices posted in the plants or offices of 
carriers subject to the Railway Labor Act (``RLA''), ``the last 
sentence'' of the notice should not be included. It appears that the 
Order adopted the quoted phrase because it was included in the 1992 
Executive Order. In that earlier Order, ``the last sentence'' of the 
notice provided contact information for the National Labor Relations 
Board (``NLRB''), which does not have jurisdiction over carriers 
subject to the RLA. However, EO 13201 added a sentence to the end of 
the notice; that sentence provides the URL for the NLRB's website. The 
reference in section 2(a) of the Order to ``the last sentence'' of the 
notice apparently fails to take into account that additional sentence. 
In the interest of clarity, and to implement the implicit intent of the 
Executive Order to exclude the posting of NLRB related information in 
Railway Labor Act related work sites, the Proposed Rule would replace 
the phrase ``the last sentence'' with the phrase ``the last two 
sentences'' in the text of the notice.
    Second, paragraph 4 of the clause in the Executive Order requires a 
contractor to pass down only the provisions of paragraphs 1 through 3 
of the clause to its subcontractors and vendors. The same requirement 
was included in the July 1992 NPRM implementing the earlier Executive 
Order. See 57 FR 33403, 33405. In response, the Associated General 
Contractors of America (AGC) observed that, since paragraphs 1 through 
3 of the clause do not themselves require pass-down, first-tier 
subcontractors and vendors would not be required to pass down the 
clause further. 57 FR 49588, 49591 (discussion of section 470.2(a)(4)). 
As the AGC noted, this result contradicted the NPRM's requirement that 
the clause be included in the contract document of each tier. Id. The 
Department noted in its response that the intent of Executive Order 
12800 was clearly that the clause ``flow down beyond the first tier 
level''; otherwise there would have been no

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reason for the provision, in section 3(b)(v) of that Order, that 
authorized the Secretary to exempt ``subcontractors below an 
appropriate tier.'' Id. As a result, the Department revised the clause 
in the earlier Final Rule to require pass-down of paragraphs 1 through 
4, rather than only paragraphs 1 through 3. Id.
    Similarly, Executive Order 13201 contains a provision at section 
3(b)(v) that authorizes the Secretary to exempt subcontractors below an 
appropriate tier. Therefore, for the same reasons discussed in the 
previous paragraph, the Proposed Rule would revise paragraph 4 of the 
employee notice clause to require contractors to pass down paragraphs 1 
through 4 of the clause to their subcontractors and vendors, rather 
than only paragraphs 1 through 3.
    Third, the words ``Provided'' and ``that'' would be deleted from 
the final sentence in section 4 of the clause, and the word ``shall'' 
would be changed to ``must'' throughout the clause, in order to make 
the clause easier to understand. This revision is not intended to 
change the meaning of the clause; the clause would be interpreted in 
the same way as the corresponding material in the Executive Order.
    Paragraph 470.2(b): This paragraph is subject to the relevant 
provisions of the Paperwork Reduction Act of 1995 (PRA) at 44 U.S.C. 
3507(d), and will be reviewed by the Office of Management and Budget 
(OMB) under those provisions. The paragraph would be identical to the 
corresponding paragraph in the earlier Final Rule, except that the 
heading of the paragraph would be revised to more accurately describe 
the contents of the paragraph.
    Paragraph 470.2 (c): This paragraph would be identical to the 
corresponding paragraph in the earlier Final Rule.
    Paragraph 470.2 (d): This paragraph would be identical to the 
corresponding paragraph in the earlier Final Rule, except that the 
title of the office to which requests for copies of the poster should 
be directed would be updated.

Sec. 470.3  What contracts are exempt from the employee notice clause 
requirement?

    The exemptions in this section are either required or authorized by 
the Executive Order.
    Paragraph 470.3(a): This paragraph would exempt, from the 
requirements of part 470, contracts for purchases below the Simplified 
Acquisition Threshold, as that threshold is defined in the Office of 
Federal Procurement Policy Act, 41 U.S.C. 403. This exemption is 
required by section 2(a) of the Executive Order. Subparagraphs (1) and 
(2) would be modeled on the parallel section in the earlier Final Rule. 
See 57 FR 49588, 49596. Consistent with plain-language guidelines, the 
relevant language from the earlier Final Rule has been slightly 
rewritten for the Proposed Rule, to improve the subparagraphs' clarity. 
This revision is not intended to change the meaning of these 
subparagraphs; they would be interpreted in the same way as the 
corresponding provisions of the earlier Final Rule.
    At the time this Rule is being proposed, Congress has set the 
Simplified Acquisition Threshold at $100,000. Therefore, except as 
provided in subparagraphs (1) and (2), contracts for purchases of less 
than that amount would not need to include the employee notice clause. 
If Congress were to amend the threshold after the Proposed Rule is 
published, this paragraph would be read to exempt contracts for 
purchases below the amended amount.
    Paragraph 470.3(b): This paragraph would exempt, from the 
requirements of part 470, Government contracts that result from 
solicitations issued before April 18, 2001, the effective date of the 
Order. This exemption would be based on section 14 of the Executive 
Order, which provides that the Order applies to contracts resulting 
from solicitations issued on or after that date.
    Paragraph 470.3(c): This paragraph would permit the Deputy 
Assistant Secretary for Labor-Management Programs, upon written 
request, to exempt contracting agencies or persons from including the 
employee notice clause in particular contracts, subcontracts, or 
purchase orders, where special circumstances in the national interest 
require such exemption. Such exemptions are authorized by section 3(a) 
of the Executive Order.
    Paragraph 470.3(d): This paragraph would permit the Deputy 
Assistant Secretary for Labor-Management Programs to withdraw the 
exemption for a specific contract or subcontract, or group of contracts 
or subcontracts, when, in his or her judgment, such a withdrawal is 
necessary or appropriate to achieve the purposes of the Executive 
Order. This subparagraph would be similar to the parallel subparagraph, 
470.3(c), in the earlier Final Rule; the title of the Departmental 
officer authorized to withdraw exemptions would be updated to reflect 
changes in the structure of the Department.

Sec. 470.4  What contractors or facilities are exempt from the posting 
requirements?

    Paragraph 470.4(a): This paragraph is authorized by section 
3(b)(iv) of EO 13201, and would be identical to the parallel paragraph 
in the earlier Final Rule.
    Paragraph 470.4(b): This paragraph is authorized by section 
3(b)(iii) of EO 13201, and would be identical to the parallel paragraph 
in the earlier Final Rule.
    Paragraph 470.4(c): This paragraph is authorized by section 
3(b)(ii) of EO 13201, and would be identical to the parallel paragraph 
in the earlier Final Rule, except that the phrase ``in jurisdictions'' 
would be inserted before the word ``where'' to conform the language of 
the regulation to that of the Executive Order.
    Paragraph 470.4(d): As with paragraph 470.2(b), discussed above, 
this paragraph is subject to the provisions of the PRA, and will be 
reviewed by OMB. The contents of the paragraph are authorized by 
section 3(c) of EO 13201, and would be modeled on 41 CFR 60-1.5(b)(2). 
The Proposed Rule revises the language of that subparagraph to conform 
to the requirements of EO 13201 and the current structure of the 
Department of Labor, and to clarify the meaning of the paragraph.
    Paragraph 470.4(e): This paragraph is authorized by section 3(b)(i) 
of EO 13201, and would be identical to the parallel paragraph in the 
earlier Final Rule.

Subpart B--Compliance Evaluations, Complaint Investigations, and 
Enforcement Procedures

Sec. 470.10  How will the Department determine whether a contractor is 
in compliance with the Executive Order and this part?

    This section would be substantively similar to the parallel section 
in the earlier Final Rule. See 57 FR 49588, 49597. The differences 
between the two sections would be necessitated by the requirements of 
EO 13201 or result from changes in OFCCP's general practice and 
procedures, including changes in the terminology used by OFCCP to refer 
to those practices and procedures. For example, the process of 
determining whether a contractor is in compliance with its obligations 
is now called a ``compliance evaluation.'' The term encompasses 
compliance reviews, as well as off-site record reviews and compliance 
checks. See 41 CFR 60-1.20(a). Therefore, the term ``compliance 
evaluation'' would replace ``compliance review'' throughout the section 
in the Proposed Rule. Additionally, references to ``the Department'' 
would be modified to clarify that the Deputy Assistant Secretary for 
Federal Contract Compliance has responsibility for

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conducting compliance evaluations, and subparagraph 470.10(b)(2) would 
be modified to include the requirements of section 14 of EO 13201.

Sec. 470.11  What are the procedures for filing and processing a 
complaint?

    Paragraph 470.11(a) and (b): As with paragraphs 470.2(b) and 
470.4(d), discussed above, these paragraphs are subject to the 
provisions of the PRA, and will be reviewed by OMB. The paragraphs 
would contain the same substantive requirements as the parallel 
sections in the earlier Final Rule. See 57 FR 49588, 49597. The 
Proposed Rule would revise the language of those previous sections to 
improve their clarity, correct punctuation errors, and make them more 
consistent with OFCCP's regulations at 41 CFR 60-1.22 and 1.23.
    Paragraphs 470.11(c)-(d): These paragraphs would be substantively 
similar to the corresponding paragraphs in the earlier Final Rule. See 
57 FR 49588, 49597. They would also be consistent with OFCCP's 
regulations at 41 CFR 60-1.24(a) and (b). The Proposed Rule would 
revise the paragraphs slightly to make them easier to understand, and 
to clarify that the Deputy Assistant Secretary for Federal Contract 
Compliance has responsibility for conducting complaint investigations. 
None of the revisions to the paragraphs is intended to change the 
meaning of the paragraphs; the paragraphs would be interpreted in the 
same way as the corresponding provisions of the earlier Final Rule.

Sec. 470.12  What are the procedures to be followed when a violation is 
found during a complaint investigation or compliance evaluation?

    Paragraph 470.12(a): This paragraph would contain the same 
substantive requirements as the corresponding paragraph in the earlier 
Final Rule, and would be consistent with OFCCP's regulation at 41 CFR 
60-1.24(c)(2). For the reasons explained in the discussion of section 
470.10 above, the Proposed Rule would replace the term ``compliance 
review'' with ``compliance evaluation.'' See 57 FR 49588, 49597. The 
Proposed Rule would also revise the paragraph slightly to make it 
easier to understand. This revision is not intended to change the 
meaning of the paragraph; the paragraph would be interpreted in the 
same way as the corresponding provision of the earlier Final Rule.
    Paragraph 470.12(b): This paragraph would contain the same 
substantive requirements as the corresponding paragraph in the earlier 
Final Rule. The Proposed Rule would add examples of ways in which a 
contractor that has violated the Order or the Rule might correct such a 
violation. The corrective action that the Deputy Assistant Secretary 
would require in a given case would depend on the type of violation. 
The addition of the examples would be made to clarify the Rule, and is 
not intended to change the meaning of the paragraph; the paragraph 
would be interpreted in the same way as the corresponding paragraph in 
the earlier Final Rule.
    Paragraphs 470.12(c) and (d): These paragraphs would be identical 
to the corresponding paragraphs in the earlier Final Rule, except that 
the title of the official responsible for processing a violation would 
be updated. These paragraphs also would be consistent with OFCCP's 
regulations at 41 CFR 60-1.24(c)(3) and (5), respectively.

Sec. 470.13  Under what circumstances, and how, will enforcement 
proceedings under the Executive Order be conducted?

    This section would be identical to the corresponding section in the 
earlier Final Rule, with two exceptions. First, for the reasons 
explained above in the discussion of section 470.10, the terms 
``compliance review'' and ``on-site review'' would be replaced with 
``compliance evaluation.'' Second, the title of the official 
responsible for referring cases for enforcement would be updated.
    The post-hearing procedures that would be set forth in this section 
for imposing sanctions or penalties would be consistent with section 6 
of the Executive Order.

Sec. 470.14  What sanctions and penalties may be imposed for 
noncompliance, and what procedures will the Department follow in 
imposing such sanctions and penalties?

    This section would be similar to the corresponding section of the 
earlier Final Rule. See 57 FR 49588, 49597-98. Substantive differences 
between the two sections are explained below.
    Paragraph 470.14(a): In this paragraph, references to the 
``affected contracting agency'' would be changed to the plural 
``affected contracting agencies,'' to indicate that a particular 
contractor may hold contracts with more than one Federal agency, and 
that all affected agencies should be notified when the Department 
intends to impose sanctions and penalties against such a contractor.
    Paragraph 470.14(b): Except for the replacement of the word 
``shall'' by ``will,'' this paragraph would contain language identical 
to that of the second sentence of paragraph 470.14(a) of the earlier 
Final Rule. The sentence would be placed in a separate paragraph in 
order to make the section easier to understand. This change is not 
intended to alter the meaning of the sentence; the sentence would be 
interpreted in the same way as the corresponding sentence in the 
earlier Final Rule.
    Paragraph 470.14(c): Except for the replacement of the word 
``shall'' by ``will,'' this paragraph would contain language identical 
to that of the corresponding paragraph in the earlier Final Rule, 
paragraph 470.14(b).
    Paragraph 470.14(d): Except for the replacement of the word 
``shall'' by ``must,'' this paragraph would contain language identical 
to that of the corresponding paragraph in the earlier Final Rule, 
paragraph 470.14(c).
    Paragraph 470.14(e): Except for the replacement of the word 
``shall'' by ``must'' and an update to a citation, this paragraph would 
contain language identical to that of the final sentence of paragraph 
470.14(e) in the earlier Final Rule. The Proposed Rule would move the 
sentence, which explains what contracting agencies must do when the 
Assistant Secretary exercises his or her authority under paragraph 
470.14(d), to make this section easier to understand.
    Paragraph 470.14(f): Except for the replacement of the word 
``shall'' by ``will,'' this paragraph would contain language identical 
to that of the first sentence of paragraph 470.14(d) in the earlier 
Final Rule. To make the Rule easier to understand, the material 
discussed in the second sentence of that earlier paragraph would be 
moved to section 470.15 of the Rule.

Sec. 470.15  Under what circumstances must a contractor be provided the 
opportunity for a hearing?

    This section is authorized by section 5(b) of the Executive Order. 
Paragraph 470.15(b) would contain material similar to that in the 
second sentence of paragraph 470.14(d) of the earlier Final Rule. The 
Proposed Rule would revise the relevant language of the Order and the 
earlier Final Rule to make it easier to understand. These changes are 
not intended to alter the meaning of this section; the section would be 
interpreted in the same way as section 5(b) of the Executive Order.

Sec. 470.16  Under what circumstances may a contractor be reinstated?

    This section would contain language similar to that found in the 
corresponding section of the earlier Final Rule. The Proposed Rule 
would revise the section to make it easier to

[[Page 50015]]

understand. These changes are not intended to alter the meaning of this 
section; the section would be interpreted in the same way as the 
corresponding section of the earlier Final Rule.

Subpart C--Ancillary Matters

    This subpart would address miscellaneous matters as discussed 
below.

Sec. 470.20  What authority under this Rule or the Executive Order may 
the Secretary delegate, and under what circumstances?

    This section would contain language similar to that found in the 
corresponding section, section 470.21, of the earlier Final Rule. The 
Proposed Rule would place this section at the beginning of subpart C so 
that the subpart would follow a more logical order. The section would 
explain what functions and duties the Secretary of Labor is authorized 
to delegate to another government officer under section 9 of the 
Executive Order. The section that was numbered 470.20 in the earlier 
Final Rule, and that would follow this section under the Proposed Rule, 
would discuss one of the functions the Secretary has chosen to delegate 
under the Order.
    The Proposed Rule would revise the section slightly to correct an 
apparent grammatical error in the corresponding section of the earlier 
Final Rule, and to make the section easier to understand. These changes 
are not intended to alter the meaning of this section; the section 
would be interpreted in the same way as section 9 of the Executive 
Order and the corresponding section of the earlier Final Rule.

Sec. 470.21  Who will make rulings and interpretations under the 
Executive Order and this part?

    This section would be identical to the corresponding section, 
section 470.20, of the earlier Final Rule.

Sec. 470.22  What actions may the Assistant Secretary take in the case 
of intimidation and interference?

    This section would contain material and language similar to that of 
the corresponding section of the earlier Final Rule. The Proposed Rule 
would revise the language of that earlier section slightly, in order to 
replace the term ``compliance review'' with ``compliance evaluation'' 
(for the reasons discussed above in section 470.10 of this preamble), 
and to make the section easier to understand. These changes are not 
intended to alter the meaning of this section; the section would be 
interpreted in the same way as the corresponding section of the earlier 
Final Rule.

Sec. 470.23  What other provisions apply to this part?

    Paragraph 470.23(a): This paragraph would be identical to the 
corresponding paragraph in the earlier Final Rule, except that the 
Executive Order number would be updated.
    Paragraph 470.23(b): This paragraph, which would require 
contracting agencies to cooperate with and assist the Assistant 
Secretary and Deputy Assistant Secretaries in carrying out their duties 
under the Executive Order and this part, would contain the same 
substantive requirements as the first sentence of paragraph 470.14(e) 
of the earlier Final Rule. Because section 470.14 of this Proposed Rule 
would deal with sanctions and penalties, the material in that sentence 
would be moved to this general section to indicate that contracting 
agencies must cooperate with and assist the Assistant Secretary and 
Deputy Assistant Secretaries in carrying out all of their duties under 
the Order and this part, not just those duties relating to sanctions 
and penalties.
    Paragraph 470.23(c): The language of this paragraph would be 
identical to the language of the corresponding paragraph, paragraph 
470.23(b), of the earlier Final Rule, with two exceptions. First, the 
reference to section 11 of the Executive Order would be updated to 
section 13, to correspond with the text of the current Order, EO 13201. 
Second, the final clause of the earlier paragraph would be deleted, 
because section 13 of the current Order does not include or authorize 
that language.

IV. Regulatory Procedures

Executive Order 12866

    This Notice of Proposed Rule-Making constitutes an ``other 
significant regulatory action'' within the meaning of Executive Order 
12866, and therefore the Department has provided a cost-benefit 
analysis below. However, the implementation of the Proposed Rule would 
not have an annual effect of $100 million or more on the economy, nor 
would it adversely affect in a material way the economy, a sector of 
the economy, productivity, jobs, the environment, public health or 
safety, or State, local, or tribal governments or communities. 
Therefore, the Department has concluded that this NPRM is not 
``economically significant'' as defined in section 3(f)(1) of EO 12866.
    With regard to the benefits that would result from the Proposed 
Rule: Section 1(a) of Executive Order 13201 states that ``[w]hen 
workers are better informed of their rights, including their rights 
under the Federal labor laws, their productivity is enhanced.'' On that 
basis, the Order and the Proposed Rule, which are intended to ensure 
that employees of Government contractors are informed of certain rights 
regarding union dues and fees, are designed to promote economy and 
efficiency in Government procurement.
    In the Department's view, the only costs that contractors would 
incur under the Proposed Rule would result from the notice posting 
requirement in section 470.2(a) of the Rule, and the requirement in 
section 470.4(d) of the Rule that contractors apply in writing for 
waivers from the posting requirement for facilities that do not perform 
work on Government contracts. For the posting requirement, the 
Department has concluded, based on both OFCCP's historical experience 
and the fact that the Department will supply the required employee 
notice poster at no cost, that the annualized costs would be 
negligible.
    OFCCP receives few requests from contractors for waivers of 
regulatory requirements for facilities not connected with Government 
contracts (see 41 CFR 60-741(b)(3)). For those few contractors that do 
request waivers, the cost consists of drafting a letter and sending the 
letter to DOL to request the waiver. Based on that experience, the 
Department estimates that under the Proposed Rule, one-tenth of one 
percent (.1%) of Federal contractors annually would be likely to submit 
requests for waivers. Given a total of 200,000 supply, services, and 
construction contractors who would be subject to the Proposed Rule, the 
Department estimates that 200 contractors per year (.1% of 200,000) 
would be likely to request a waiver under the Rule.
    The Department estimates that it would take an average of one hour 
to prepare and mail each waiver request under the Proposed Rule. Of 
that hour, 20 percent of the burden would be assumed by executive, 
administrative, or managerial staff, and 80 percent would be assumed by 
administrative support staff. In the publication ``Employer Costs for 
Employee Compensation'' (USDL 99-173), the Bureau of Labor Statistics 
(BLS) lists average compensation for executive, administrative, and 
managerial positions as $35.18 per hour, and for administrative support 
as $16.63 per hour. Based on this information and on current postage 
rates, the Department has calculated the total estimated annualized 
cost to contractors that

[[Page 50016]]

would request waivers under the Proposed Rule as follows:

Executive, Administrative, and Managerial--200  x  .20  x  $35.18 = 
$1,407.20
Administrative Support--200  x  .80  x  $16.63 = $2,660.80
Postage--200  x  .34 = $68.00
Total annualized cost estimate--$4,136.00

    Dividing the total annualized cost estimate of $4,136.00 by the 
estimated total number of Government supply, service, and construction 
contractors (200,000), the Department calculates that the estimated 
average cost per Federal contractor establishment under the Proposed 
Rule would be $.02.
    The Office of Management and Budget (OMB) has reviewed the NPRM for 
consistency with the President's priorities and the principles set 
forth in EO 12866.

Regulatory Flexibility Act

    The Proposed Rule presented in this NPRM would not substantially 
change existing obligations for Federal contractors; it would merely 
require certain contractors to post notices informing their employees 
of certain rights those employees already hold under Federal law, and 
to include clauses in contracts with subcontractors and vendors, 
requiring those subcontractors and vendors to post the same notices. 
Accordingly, the Proposed Rule would not have a significant economic 
impact on a substantial number of small business entities. The 
Secretary has certified to the Chief Counsel for Advocacy of the Small 
Business Administration to that effect. Therefore, under the Regulatory 
Flexibility Act, 5 U.S.C. 605(b), a regulatory flexibility analysis is 
not required.

Unfunded Mandates Reform

    For purposes of the Unfunded Mandates Reform Act of 1995, as well 
as EO 12875, Enhancing the Intergovernmental Partnership, the Rule 
proposed in this NPRM would not include any Federal mandate that might 
result in increased expenditures by State, local, and tribal 
governments, or increased expenditures by the private sector of more 
than $100 million in any one year.

Paperwork Reduction Act

    Certain sections of this Proposed Rule, including sections 
470.2(b), 470.4(d), and 470.11(a) and (b), contain information 
collection requirements. As required by the Paperwork Reduction Act 
(PRA), the Department has submitted a copy of these sections to OMB for 
its review.
    The Proposed Rule would also require contractors to post notices, 
investigate complaints, and, where appropriate, file requests for 
waivers. The application of the PRA to those requirements is discussed 
below.
    The Proposed Rule would impose certain minimal burdens associated 
with the posting of the employee notice poster required by the 
Executive Order and section 470.2(a) of the Rule. As noted in section 
470.2(d), the Department will supply the poster, and contractors will 
be permitted to make and post exact duplicate copies thereof. Under the 
regulations implementing the PRA, ``[t]he public disclosure of 
information originally supplied by the Federal government to [a] 
recipient for the purpose of disclosure to the public'' is not 
considered a ``collection of information'' under the Act. 5 CFR 
1320.3(c)(2). Therefore, the posting requirement is not subject to the 
PRA.
    The Proposed Rule would also impose certain burdens associated with 
the filing and processing of a complaint on both the complainant and 
the contractor. The burdens for the complainant are described in the 
PRA package the Department will submit to OMB. With regard to the 
burdens for the contractor, the regulations implementing the PRA exempt 
from the requirements of the Act any information collection 
requirements imposed by an administrative agency during the conduct of 
an administrative action against specific individuals or entities. See 
5 CFR 1320.4. Once the agency opens a case file or equivalent about a 
particular party, this exception applies during the entire course of 
the investigation, before or after formal charges or complaints are 
filed or formal administrative action is initiated. Id. Therefore, this 
exemption would apply to the Department's investigation of complaints 
alleging violations of the Order or this Rule.
    Finally, section 470.4(d) of this Rule would permit a contractor to 
apply in writing for a waiver from the requirement to post the employee 
notice contained in section 470.2(a). For the Department's analysis of 
the burdens that would be imposed on contractors as a result of this 
requirement, see the discussion of Executive Order 12866 above.
    The Department invites the public to comment on whether each of the 
proposed collections of information: (1) Ensures that the collection of 
information is necessary to the proper performance of the agency, 
including whether the information will have practical utility; (2) 
estimates the projected burden, including the validity of the 
methodology and assumptions used, accurately; (3) enhances the quality, 
utility, and clarity of the information to be collected; and (4) 
minimizes the burden of the collection of information on those who are 
to respond, including through the use of appropriate automated, 
electronic, mechanical, or other technological collection techniques or 
other forms of information technology (e.g., permitting electronic 
submission of responses). Comments must be submitted by November 30, 
2001 to: Desk Officer for the Department of Labor, Office of Management 
and Budget, 725 17th Street, NW., Washington, DC 20503.

Executive Order 13132 (Federalism)

    The Department has reviewed this Proposed Rule in accordance with 
Executive Order 13132 regarding federalism, and has determined that the 
Rule does not have ``federalism implications.'' Some States do hold 
Federal contracts that do not involve the provision of Federal 
assistance to those States. However, as described above in the 
discussion of other regulatory procedures, the Department has concluded 
that the impact of requirements of posting notices, and requesting 
waivers that would be imposed by the Rule on those States would be 
negligible. Therefore, the Rule does not ``have substantial direct 
effects on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government.''

Executive Order 13084 (Consultation and Coordination With Indian 
Tribal Governments)

    The Department certifies that this Proposed Rule does not impose 
substantial direct compliance costs on Indian tribal governments.

Request for Comments

    This Proposed Rule would implement Executive Order 13201. The 
Department invites comments about the NPRM from interested parties, 
including current and potential Government contractors, subcontractors, 
and vendors, and current and potential employees of such entities; 
labor organizations; public interest groups; Federal contracting 
agencies; and the public.

Clarity of This Regulation

    Executive Order 12988 and the President's Memorandum of June 1, 
1998, require each Federal agency to write all rules in plain language. 
The

[[Page 50017]]

Department invites comments on how to make this Proposed Rule easier to 
understand. For example:
--Have we organized the material to suit your needs?
--Are the requirements in the Rule clearly stated?
--Does the Rule contain technical language or jargon that is not clear?
--Would a different format (grouping and order of sections, use of 
headings, paragraphing) make the Rule easier to understand?
--Would more (but shorter) sections be better?
--Could we improve clarity by adding tables, lists, or diagrams?
--What else could we do to make the Rule easier to understand?

List of Subjects in 29 CFR Part 470

    Administrative practice and procedure, Government contracts, 
Unions.
    Accordingly, OLMS proposes to amend 29 CFR chapter IV by adding a 
new subchapter C, consisting of part 470, as set forth below.

    Signed at Washington, DC, this 6 day of September, 2001.
Joe N. Kennedy,
Acting Assistant Secretary for Employment Standards.
Don Todd,
Deputy Assistant Secretary for Labor-Management Programs.

    A new subchapter C, consisting of part 470, is added to 29 CFR 
chapter IV to read as follows:

Subchapter C--Employee Rights Concerning Payment of Union Dues or Fees

PART 470--OBLIGATIONS OF FEDERAL CONTRACTORS AND SUBCONTRACTORS; 
NOTICE OF EMPLOYEE RIGHTS CONCERNING PAYMENT OF UNION DUES OR FEES

Subpart A--Preliminary Matters
Sec.
470.1   What definitions apply to this part?
470.2   Under the Executive Order, what employee notice clause must 
be included in Government contracts?
470.3   What contracts are exempt from the employee notice clause 
requirement?
470.4   What contractors or facilities are exempt from the posting 
requirements?
Subpart B--Compliance Evaluations, Complaint Investigations, and 
Enforcement Procedures
470.10   How will the Department determine whether a contractor is 
in compliance with the Executive Order and this part?
470.11   What are the procedures for filing and processing a 
complaint?
470.12   What are the procedures to be followed when a violation is 
found during a complaint investigation or compliance evaluation?
470.13   Under what circumstances, and how, will enforcement 
proceedings under the Executive Order be conducted?
470.14   What sanctions and penalties may be imposed for 
noncompliance, and what procedures will the Department follow in 
imposing such sanctions and penalties?
470.15   Under what circumstances must a contractor be provided the 
opportunity for a hearing?
470.16   Under what circumstances may a contractor be reinstated?
Subpart C--Ancillary Matters
470.20   What authority under this part or the Executive Order may 
the Secretary delegate, and under what circumstances?
470.21   Who will make rulings and interpretations under the 
Executive Order and this part?
470.22   What actions may the Assistant Secretary take in the case 
of intimidation and interference?
470.23   What other provisions apply to this part?

    Authority: 40 U.S.C. 471 et seq.; E.O. 13201 (66 FR 11221, 
February 22, 2001).

Subpart A--Preliminary Matters


Sec. 470.1  What definitions apply to this part?

    Assistant Secretary means the Assistant Secretary for Employment 
Standards, United States Department of Labor, or his or her designee.
    Collective bargaining agreement, for purposes of Sec. 470.2, means 
an agreement entered into by the representative of a Federal agency and 
the exclusive representative of employees in an appropriate unit in the 
agency, as a result of those representatives performing their mutual 
obligation to:
    (1) Meet at reasonable times; and
    (2) Consult and bargain in a good-faith effort to reach agreement, 
with respect to the conditions of employment affecting the employees in 
the unit; and
    (3) Execute, if requested by either party, a written document 
incorporating any collective bargaining agreement reached through such 
meetings, consultation, and bargaining.
    Construction means the construction, rehabilitation, alteration, 
conversion, extension, demolition, or repair of buildings, highways, or 
other changes or improvements to real property, including facilities 
providing utility services. The term construction also includes the 
supervision, inspection, and other on-site functions incidental to the 
actual construction.
    Construction work site means the general physical location of any 
building, highway, or other change or improvement to real property 
which is undergoing construction, rehabilitation, alteration, 
conversion, extension, demolition, or repair, and any temporary 
location or facility at which a contractor or subcontractor meets a 
demand or performs a function relating to the contract or subcontract.
    Contract means, unless otherwise indicated, any Government contract 
or subcontract.
    Contracting agency means any department, agency, establishment, or 
instrumentality in the executive branch of the Government, including 
any wholly owned Government corporation, which enters into contracts.
    Contractor means, unless otherwise indicated, a prime contractor or 
subcontractor, at any tier.
    Department means the U.S. Department of Labor.
    Employee notice clause means the contract clause that Government 
contracting departments and agencies must include in all nonexempt 
Government contracts and subcontracts pursuant to Executive Order 
13201.
    Government means the Government of the United States of America.
    Government contract means any agreement or modification thereof 
between any contracting agency and any person for the purchase, sale, 
or use of personal property or nonpersonal services. The term 
``personal property,'' as used in this part, includes supplies, and 
contracts for the use of real property (such as lease arrangements), 
unless the contract for the use of real property itself constitutes 
real property (such as easements). The term ``nonpersonal services'' as 
used in this part includes, but is not limited to, the following 
services: utilities, construction, transportation, research, insurance, 
and fund depository. The term Government contract does not include: (1) 
Agreements in which the parties stand in the relationship of employer 
and employee; and (2) Federally assisted contracts.
    Labor organization means any organization of any kind in which 
employees participate and which exists for the purpose, in whole or in 
part, of dealing with employers concerning grievances, labor disputes, 
wages, rates of pay, hours, or other terms or conditions of employment.
    Modification of a contract means any alteration in the terms and 
conditions of that contract, including amendments, renegotiations, and 
renewals.
    Order or Executive Order means Executive Order 13201 (66 FR 11221, 
February 22, 2001).
    Person means any natural person, corporation, partnership, 
unincorporated association, State or local government, and any agency,

[[Page 50018]]

instrumentality, or subdivision of such a government.
    Prime contractor means any person holding a contract with a 
contracting agency, and, for the purposes of subparts B and C of this 
part, includes any person who has held a contract subject to the 
Executive Order.
    Related rules, regulations, and orders of the Secretary of Labor, 
as used in Sec. 470.2, means rules, regulations, and relevant orders of 
the Assistant Secretary for Employment Standards, or his or her 
designee, issued pursuant to the Executive Order or this part.
    Secretary means the Secretary of Labor, U.S. Department of Labor, 
or his or her designee.
    Subcontract means any agreement or arrangement between a contractor 
and any person (in which the parties do not stand in the relationship 
of an employer and an employee):
    (1) For the purchase, sale or use of personal property or 
nonpersonal services which, in whole or in part, is necessary to the 
performance of any one or more contracts; or
    (2) Under which any portion of the contractor's obligation under 
any one or more contracts is performed, undertaken or assumed.
    Subcontractor means any person holding a subcontract and, for the 
purposes of subparts B and C of this part, any person who has held a 
subcontract subject to the Executive Order.
    Union means a labor organization as defined in section.
    Union-security agreement means an agreement entered into between a 
contractor and a labor organization which requires certain employees of 
the contractor to pay uniform periodic dues, initiation fees, or other 
payments to that labor organization as a condition of employment.
    United States as used in this part includes the several States, the 
District of Columbia, the Virgin Islands, the Commonwealth of Puerto 
Rico, Guam, American Samoa, the Commonwealth of the Northern Mariana 
Islands, and Wake Island.


Sec. 470.2  Under the Executive Order, what employee notice clause must 
be included in Government contracts?

    (a) Government contracts. Except in contracts exempted in 
accordance with Sec. 470.3 and collective bargaining agreements as 
defined in Sec. 470.1, all Government contracting agencies must, to the 
extent consistent with law, include the following provisions in 
Government contracts, including contracts resulting from solicitations 
issued on or after April 18, 2001:

    ``1. During the term of this contract, the contractor agrees to 
post a notice, of such size and in such form as the Secretary of 
Labor will prescribe, in conspicuous places in and about its plants 
and offices, including all places where notices to employees are 
customarily posted. The notice must include the following 
information (except that the last two sentences must not be included 
in notices posted in the plants or offices of carriers subject to 
the Railway Labor Act, as amended (45 U.S.C. 151-188)).

``Notice to Employees

    ``Under Federal law, employees cannot be required to join a 
union or maintain membership in a union in order to retain their 
jobs. Under certain conditions, the law permits a union and an 
employer to enter into a union-security agreement requiring 
employees to pay uniform periodic dues and initiation fees. However, 
employees who are not union members can object to the use of their 
payments for certain purposes and can only be required to pay their 
share of union costs relating to collective bargaining, contract 
administration, and grievance adjustment.
    ``If you do not want to pay that portion of dues or fees used to 
support activities not related to collective bargaining, contract 
administration, or grievance adjustment, you are entitled to an 
appropriate reduction in your payment. If you believe that you have 
been required to pay dues or fees used in part to support activities 
not related to collective bargaining, contract administration, or 
grievance adjustment, you may be entitled to a refund and to an 
appropriate reduction in future payments.
    ``For further information concerning your rights, you may wish 
to contact the National Labor Relations Board (NLRB) either at one 
of its Regional offices or at the following address: National Labor 
Relations Board, Division of Information, 1099 14th Street, NW, 
Washington, D.C. 20570.
    ``To locate the nearest NLRB office, see NLRB's website at 
www.nlrb.gov.''
    ``2. The contractor will comply with all provisions of Executive 
Order 13201 of February 17, 2001, and related rules, regulations, 
and orders of the Secretary of Labor.
    ``3. In the event that the contractor does not comply with any 
of the requirements set forth in paragraphs (1) or (2) above, this 
contract may be cancelled, terminated, or suspended in whole or in 
part, and the contractor may be declared ineligible for further 
Government contracts in accordance with procedures authorized in or 
adopted pursuant to Executive Order 13201 of February 17, 2001. Such 
other sanctions or remedies may be imposed as are provided in 
Executive Order 13201 of February 17, 2001, or by rule, regulation, 
or order of the Secretary of Labor, or as are otherwise provided by 
law.
    ``4. The contractor will include the provisions of paragraphs 
(1) through (4) herein in every subcontract or purchase order 
entered into in connection with this contract unless exempted by 
rules, regulations, or orders of the Secretary of Labor issued 
pursuant to section 3 of Executive Order 13201 of February 17, 2001, 
so that such provisions will be binding upon each subcontractor or 
vendor. The contractor will take such action with respect to any 
such subcontract or purchase order as may be directed by the 
Secretary of Labor as a means of enforcing such provisions, 
including the imposition of sanctions for noncompliance: However, if 
the contractor becomes involved in litigation with a subcontractor 
or vendor, or is threatened with such involvement, as a result of 
such direction, the contractor may request the United States to 
enter into such litigation to protect the interests of the United 
States.''

    (b) Inclusion by reference. The employee notice clause need not be 
quoted verbatim in a contract, subcontract, or purchase order. The 
clause may be made part of the contract, subcontract, or purchase order 
by citation to 29 CFR part 470.
    (c) Adaptation of language. The Assistant Secretary may make such 
changes in the contractual provisions of the Executive Order as may be 
necessary to reflect Acts of Congress, clarifications in the law by the 
courts, or otherwise to fully and accurately inform employees of their 
rights under the Executive Order.
    (d) Obtaining employee notice poster. The required employee notice 
poster, printed by the Department, will be provided by the Federal 
contracting agency or may be obtained from the Division of 
Interpretations and Standards, Office of Labor-Management Standards, 
U.S. Department of Labor, 200 Constitution Avenue, NW, Room N-5605, 
Washington, DC 20210, or from any field office of the Department's 
Office of Labor-Management Standards or Office of Federal Contract 
Compliance Programs. Additionally, contractors may reproduce and use 
exact duplicate copies of the Department's official poster.


Sec. 470.3  What contracts are exempt from the employee notice clause 
requirement?

    (a) Transactions below the Simplified Acquisition Threshold. The 
requirements of this part do not apply to Government contracts for 
purchases that fall below the Simplified Acquisition Threshold, as that 
threshold is defined in the Office of Federal Procurement Policy Act, 
41 U.S.C. 403. Therefore, the employee notice clause need not be 
included in contracts for purchases below that threshold, provided 
that--
    (1) No agency, contractor, or subcontractor is permitted to procure 
supplies or services in a way designed to avoid the applicability of 
the Order and this part; and
    (2) The employee notice clause must be included in contracts and

[[Page 50019]]

subcontracts for indefinite quantities, unless the contracting agency 
or contractor has reason to believe that the amount to be ordered in 
any year under such a contract or subcontract will be less than the 
Simplified Acquisition Threshold.
    (b) Government contracts resulting from solicitations issued before 
April 18, 2001. Pursuant to section 14 of the Order, the requirements 
of this part do not apply to Government contracts that result from 
solicitations issued before April 18, 2001, the effective date of the 
Order.
    (c) Specific contracts. The Deputy Assistant Secretary for Labor-
Management Programs may exempt a contracting agency or any person from 
requiring the inclusion of any or all of the employee notice clause in 
any specific contract, subcontract, or purchase order when the Deputy 
Assistant Secretary deems that special circumstances in the national 
interest so require. Requests for such exemptions must be in writing, 
and must be directed to the Deputy Assistant Secretary for Labor-
Management Programs, U.S. Department of Labor, 200 Constitution Avenue, 
NW, Room S-2321, Washington, D.C. 20210.
    (d) Withdrawal of exemption. When any contract or subcontract is of 
a class exempted under this section, the Deputy Assistant Secretary for 
Labor-Management Programs may withdraw the exemption for a specific 
contract or subcontract or group of contracts or subcontracts when, in 
the Deputy Assistant Secretary's judgment, such action is necessary or 
appropriate to achieve the purposes of the Order.


Sec. 470.4  What contractors or facilities are exempt from the posting 
requirements?

    (a) Number of employees. The requirement to post the employee 
notice given in Sec. 470.2(a) (hereafter in this part referred to as 
the posting requirement) does not apply to contractors and 
subcontractors that employ fewer than 15 persons.
    (b) Union representation. The posting requirement does not apply to 
contractor establishments or construction work sites where no union has 
been formally recognized by the contractor or certified as the 
exclusive bargaining representative.
    (c) State law. The posting requirement does not apply to contractor 
establishments or construction work sites in jurisdictions where state 
law forbids enforcement of union-security agreements.
    (d) Work not performed under Government contracts. Upon the written 
request of the contractor, the Deputy Assistant Secretary for Labor-
Management Programs may waive the posting requirements with respect to 
any of a contractor's facilities if the Deputy Assistant Secretary 
finds that the contractor has demonstrated that:
    (1) The facility is in all respects separate and distinct from 
activities of the contractor related to the performance of a contract; 
and
    (2) Such a waiver will not interfere with or impede the 
effectuation of the Executive Order.
    (e) Work outside the United States. The posting requirement does 
not apply to work performed outside the United States that does not 
involve the recruitment or employment of workers within the United 
States.

Subpart B--Compliance Evaluations, Complaint Investigations and 
Enforcement Procedures


Sec. 470.10  How will the Department determine whether a contractor is 
in compliance with the Executive Order and this part?

    (a) The Deputy Assistant Secretary for Federal Contract Compliance 
may conduct a compliance evaluation to determine whether a contractor 
holding a nonexempt contract is in compliance with the requirements of 
this part. Such an evaluation may be limited to compliance with this 
part or may be included in a compliance evaluation conducted under 
other laws, Executive Orders, and/or regulations enforced by the 
Department.
    (b) During such an evaluation, a determination will be made 
whether:
    (1) The employee notice is posted in conspicuous places in and 
about each of the contractor's establishments and/or construction work 
sites not exempted under Sec. 470.4, including all places where notices 
to employees are customarily posted; and
    (2) The provisions of the employee notice clause are included in 
nonexempt Government contracts, including contracts resulting from 
solicitations issued on or after April 18, 2001.
    (c) The results of the evaluation will be documented in the 
evaluation record, which will include findings regarding the 
contractor's compliance with the requirements of the Executive Order 
and this part and, as applicable, conciliation efforts made, corrective 
action taken and/or enforcement recommended.


Sec. 470.11  What are the procedures for filing and processing a 
complaint?

    (a) Filing complaints. An employee of a covered contractor may file 
a complaint alleging that the contractor has failed to post the 
employee notice as required by the Executive Order and this part; and/
or has failed to include the employee notice clause in nonexempt 
subcontracts or purchase orders. Complaints may be filed with the 
Office of Labor-Management Standards (OLMS) or the Office of Federal 
Contract Compliance Programs (OFCCP) at 200 Constitution Avenue, NW, 
Washington, DC 20210, or with any OLMS or OFCCP field office.
    (b) Contents of complaints. The complaint must be in writing and 
must include the name, address, and telephone number of the 
complainant, the name and address of the contractor alleged to have 
violated the Executive Order, an identification of the alleged 
violation and the establishment or construction work site where it is 
alleged to have occurred, and any other pertinent information that will 
assist in the investigation and resolution of the complaint. The 
complainant must sign the complaint.
    (c) Referrals. The Department will refer complaints alleging use of 
union dues or fees for purposes unrelated to a collective bargaining 
agreement, and/or seeking a refund or future adjustment of such dues or 
fees, to the National Labor Relations Board or other appropriate 
agency.
    (d) Complaint investigations. In investigating complaints filed 
with the Department under paragraph (a) of this section, the Deputy 
Assistant Secretary for Federal Contract Compliance will evaluate the 
allegations of the complaint and develop a case record. The record will 
include findings regarding the contractor's compliance with the 
requirements of the Executive Order and this part, and, as applicable, 
a description of conciliation efforts made, corrective action taken, 
and/or enforcement recommended.


Sec. 470.12  What are the procedures to be followed when a violation is 
found during a complaint investigation or compliance evaluation?

    (a) If any complaint investigation or compliance evaluation 
indicates a violation of the Executive Order or this part, the 
Department will make reasonable efforts to secure compliance through 
conciliation.
    (b) The contractor must correct the violation found by the 
Department (for example, by posting the required employee notice, and/
or by amending its subcontracts or purchase orders with nonexempt 
subcontractors and vendors to include the employee notice clause), and 
must commit, in writing, not to repeat the violation, before the 
contractor may be found to be in

[[Page 50020]]

compliance with the Executive Order or this part.
    (c) If a violation cannot be resolved through conciliation efforts, 
the Deputy Assistant Secretary for Labor-Management Programs may 
proceed in accordance with Sec. 470.13.
    (d) For reasonable cause shown, the Deputy Assistant Secretary may 
reconsider, or cause to be reconsidered, any matter on his or her own 
motion or pursuant to a request.


Sec. 470.13  Under what circumstances, and how, will enforcement 
proceedings under the Executive Order be conducted?

    (a) General. (1) Violations of the Executive Order may result in 
administrative proceedings to enforce the Order. The bases for a 
finding of a violation may include, but are not limited to:
    (i) The results of a compliance evaluation;
    (ii) The results of a complaint investigation;
    (iii) A contractor's refusal to allow a compliance evaluation or 
complaint investigation to be conducted; or
    (iv) A contractor's refusal to provide information as required by 
the Executive Order and the regulations in this part.
    (2) If a determination is made that the Executive Order or the 
regulations in this part have been violated, and the violation has not 
been corrected through conciliation, the Deputy Assistant Secretary for 
Labor-Management Programs may refer the matter to the Solicitor of 
Labor for institution of administrative enforcement proceedings.
    (b) Administrative enforcement proceedings. (1) Administrative 
enforcement proceedings will be conducted under the control and 
supervision of the Solicitor of Labor, under the hearing procedures set 
forth in 29 CFR part 18, Rules of Practice and Procedure for 
Administrative Hearings Before the Office of Administrative Law Judges.
    (2) Unless otherwise provided by the Office of the Solicitor in its 
complaint, all hearings will be conducted in accordance with the rules 
for expedited proceedings at 29 CFR 18.42.
    (3) The administrative law judge will certify his or her 
recommended decision issued pursuant to 29 CFR 18.57 to the Assistant 
Secretary. The decision will be served on all parties and amici.
    (4) Within 10 days (25 days in the event that the proceeding is not 
expedited) after receipt of the administrative law judge's recommended 
decision, either party may file exceptions to the decision. Exceptions 
may be responded to by the other parties within 7 days (25 days if the 
proceeding is not expedited) after receipt. All exceptions and 
responses must be filed with the Assistant Secretary.
    (5) After the expiration of time for filing exceptions, the 
Assistant Secretary will issue a final administrative order. In an 
expedited proceeding, unless the Assistant Secretary issues a final 
administrative order within 30 days after the expiration of time for 
filing exceptions, the administrative law judge's recommended decision 
will become the final administrative order. If the Assistant Secretary 
determines that the contractor has violated the Executive Order or the 
regulations in this part, the final administrative order may enjoin the 
violations, require the contractor to provide appropriate remedies and, 
subject to the procedures in Sec. 470.14, impose appropriate sanctions 
and penalties.


Sec. 470.14  What sanctions and penalties may be imposed for 
noncompliance, and what procedures will the Department follow in 
imposing such sanctions and penalties?

    (a) Before imposing the sanctions and penalties described in 
paragraph (d) of this section, the Assistant Secretary will consult 
with the affected contracting agencies, and provide the heads of those 
agencies the opportunity to respond and provide written objections.
    (b) If the contracting agency provides written objections, those 
objections must include a complete statement of reasons for the 
objections, among which reasons must be a finding that, as applicable, 
the completion of the contract, or further contracts or extensions or 
modifications of existing contracts, is essential to the agency's 
mission.
    (c) The sanctions and penalties described in this section, however, 
will not be imposed if:
    (1) The head of the contracting agency continues personally to 
object to the imposition of such sanctions and penalties, or
    (2) The contractor has not been afforded an opportunity for a 
hearing.
    (d) In enforcing the Order and this part, the Assistant Secretary 
may:
    (1) Direct a contracting agency to cancel, terminate, suspend, or 
cause to be canceled, terminated or suspended, any contract or any 
portions thereof, for failure of the contractor to comply with its 
contractual provisions as required by section 2 of the Executive Order 
and the regulations in this part. Contracts may be canceled, 
terminated, or suspended absolutely, or continuance of contracts may be 
conditioned upon compliance.
    (2) Issue an order of debarment under section 6(b) of the Order 
providing that one or more contracting agencies must refrain from 
entering into further contracts, or extensions or other modification of 
existing contracts, with any noncomplying contractor.
    (e) Whenever the Assistant Secretary has exercised his or her 
authority pursuant to paragraph (d) of this section, the contracting 
agency must report the actions it has taken to the Assistant Secretary 
within such time as the Assistant Secretary will specify.
    (f) Periodically, the Assistant Secretary will publish and 
distribute, or cause to be published and distributed, to all executive 
agencies a list of the names of contractors that have, in the judgment 
of the Assistant Secretary under Sec. 470.13(b)(5), failed to comply 
with the provisions of the Executive Order and this part, or of related 
rules, regulations, and orders of the Secretary of Labor, and as a 
result have been declared ineligible for future contracts or 
subcontracts under the Executive Order and the regulations in this 
part.


Sec. 470.15  Under what circumstances must a contractor be provided the 
opportunity for a hearing?

    A contractor must be given the opportunity for a hearing before the 
Assistant Secretary:
    (a) Issues an order debarring the contractor from further 
Government contracts under section 6(b) of the Executive Order and 
Sec. 470.14(d)(2); or
    (b) Includes the contractor on a published list of noncomplying 
contractors under section 6(c) of the Executive Order and 
Sec. 470.14(f).


Sec. 470.16  Under what circumstances may a contractor be reinstated?

    Any contractor or subcontractor debarred from or declared 
ineligible for further contracts or subcontracts under the Executive 
Order may request reinstatement in a letter to the Assistant Secretary. 
If the Assistant Secretary finds that the contractor or subcontractor 
has come into compliance with the Order and this part and has shown 
that it will carry out the Order and this part, the contractor or 
subcontractor may be reinstated.

Subpart C--Ancillary Matters


Sec. 470.20  What authority under this Part or the Executive Order may 
the Secretary delegate, and under what circumstances?

    Consistent with section 9 of the Executive Order, the Secretary may 
delegate any function or duty of the Secretary under the Order to any 
officer

[[Page 50021]]

in the Department of Labor or to any other officer in the executive 
branch of the Government, with the consent of the head of the 
department or agency in which that officer serves.


Sec. 470.21  Who will make rulings and interpretations under the 
Executive Order and this part?

    Rulings under or interpretations of the Executive Order or the 
regulations contained in this part will be made by the Assistant 
Secretary or his or her designee.


Sec. 470.22  What actions may the Assistant Secretary take in the case 
of intimidation and interference?

    The sanctions and penalties contained in Sec. 470.14 may be 
exercised by the Assistant Secretary against any contractor or 
subcontractor who fails to take all necessary steps to ensure that no 
person intimidates, threatens, or coerces any individual for the 
purpose of interfering with the filing of a complaint, furnishing 
information, or assisting or participating in any manner in a 
compliance evaluation, complaint investigation, hearing, or any other 
activity related to the administration of the Executive Order or the 
regulations in this part.


Sec. 470.23  What other provisions apply to this part?

    (a) The regulations in this part implement Executive Order 13201 
only, and do not modify or affect the interpretation of any other 
Department of Labor regulations or policy.
    (b) Consistent with section 8 of the Executive Order, each 
contracting department and agency must cooperate with the Assistant 
Secretary, the Deputy Assistant Secretary for Labor-Management 
Programs, and/or the Deputy Assistant Secretary for Federal Contract 
Compliance, and must provide such information and assistance as the 
Assistant Secretary or Deputy Assistant Secretary may require, in the 
performance of his or her functions under the Executive Order and the 
regulations in this part.
    (c) Consistent with section 13 of the Executive Order, nothing 
contained in the Executive Order or this part, or promulgated pursuant 
to the Executive Order or this part, is intended to confer any 
substantive or procedural right, benefit, or privilege enforceable at 
law by any party against the United States, its agencies or 
instrumentalities, its officers or employees, or any other person.

[FR Doc. 01-24320 Filed 9-28-01; 8:45 am]
BILLING CODE 4510-CP-P