[Federal Register Volume 75, Number 97 (Thursday, May 20, 2010)]
[Rules and Regulations]
[Pages 28368-28402]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-11639]



[[Page 28367]]

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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 471



Notification of Employee Rights Under Federal Labor Laws; Final Rule

  Federal Register / Vol. 75, No. 97 / Thursday, May 20, 2010 / Rules 
and Regulations  

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DEPARTMENT OF LABOR

Office of Labor-Management Standards

29 CFR Part 471

RIN 1215-AB70; RIN 1245-AA00


Notification of Employee Rights Under Federal Labor Laws

AGENCY: Office of Labor-Management Standards, Department of Labor.

ACTION: Final rule.

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SUMMARY: On August 3, 2009, the Office of Labor-Management Standards 
(``OLMS'') in the Department of Labor (``the Department'') issued a 
proposed rule implementing Executive Order 13496. This final rule sets 
forth the Department's review of and response to comments on the 
proposal and any changes made to the rule in response to those 
comments.
    President Barack Obama signed Executive Order 13496 (``Executive 
Order'' or ``E.O. 13496'') on January 30, 2009. The Executive Order 
requires nonexempt Federal departments and agencies to include within 
their Government contracts specific provisions requiring contractors 
and subcontractors with whom they do business to post notices informing 
their employees of their rights as employees under Federal labor laws. 
The Executive Order requires the Secretary of Labor (``Secretary'') to 
prescribe the size, form, and content of the notice that must be posted 
by a contractor under paragraph 1 of the contract clause described in 
section 2 of the Order. Under the Executive Order, unless a specified 
exception or exemption applies, Federal Government contracting 
departments and agencies must include the required contract provisions 
in every Government contract. As required by the Executive Order, this 
final rule establishes the content of the notice required by the 
Executive Order's contract clause, and implements other provisions of 
the Executive Order, including provisions regarding sanctions, 
penalties, and remedies that may be imposed if the contractor or 
subcontractor fails to comply with its obligations under the Order and 
the implementing regulations.

DATES: Effective Date: This rule will be effective on June 21, 2010.

FOR FURTHER INFORMATION CONTACT: Denise M. Boucher, Director, Office of 
Policy, Reports and Disclosure, Office of Labor-Management Standards, 
U.S. Department of Labor, 200 Constitution Avenue, NW., Room N-5609, 
Washington, DC 20210, (202) 693-0123 (this is not a toll-free number), 
(800) 877-8339 (TTY/TDD).

SUPPLEMENTARY INFORMATION: The Regulatory Information Number (RIN) 
identified for this rulemaking changed with publication of the Spring 
Regulatory Agenda due to an organizational restructuring. The old RIN 
was assigned to the Employment Standards Administration, which no 
longer exists; a new RIN has been assigned to the Office of Labor-
Management Standards.

I. Background on the Rulemaking

    On August 3, 2009, the Department issued a Notice of Proposed 
Rulemaking (``NPRM'' or ``proposed rule''), 74 FR 38488, to implement 
Executive Order 13496, ``Notification of Employee Rights Under Federal 
Labor Laws,'' 74 FR 6107, Feb. 4, 2009. The Department invited written 
comments on the proposed regulations 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. In addition, when proposing certain provisions of the 
rule, the Department invited public comment regarding issues addressed 
in those specific provisions. The public comment period closed on 
September 2, 2009, and the Department has considered all timely 
comments received in response to the proposed rule.\1\
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    \1\ The Department received a single request to extend the 
comment period for an additional 30 days. The commenter, a law firm, 
asserted that the 30-day comment period was too brief and that, as a 
result, many interested parties were unaware of the proposed rule. 
After due consideration, the Department has determined that the 30-
day comment period was sufficient, and additional time in which to 
respond is not warranted. The commenter requesting the extension was 
able to submit a lengthy, substantive comment within the 30-day 
period and attached additional comments from many of its clients. In 
addition, the Department received within the 30-day period a notable 
number of substantive comments representing a broad spectrum of 
interests associated with the proposed rule. Finally, no other 
commenter requested such an extension.
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    The Department received 86 unique and timely comments from a wide 
variety of sources. Commenters included individuals, labor 
organizations, and other organizations and associations representing 
the interests of employees, employers and government contractors and 
subcontractors. The Department recognizes and appreciates the value of 
comments, ideas, and suggestions from members of the public, labor 
organizations, employers, industry associations and other interested 
parties.

II. The Executive Order

    On January 30, 2009, President Barack Obama signed Executive Order 
13496, entitled ``Notification of Employee Rights Under Federal Labor 
Laws.'' 74 FR 6107, Feb. 4, 2009. The purpose of the Executive Order is 
``to promote economy and efficiency in Government procurement'' by 
ensuring that employees of certain Government contractors are informed 
of their rights under Federal labor laws. Id., Sec. 1. As the Order 
states, ``When the Federal Government contracts for goods or services, 
it has a proprietary interest in ensuring that those contracts will be 
performed by contractors whose work will not be interrupted by labor 
unrest. The attainment of industrial peace is most easily achieved and 
workers' productivity is enhanced when workers are well informed of 
their rights under Federal labor laws, including the National Labor 
Relations Act (Act), 29 U.S.C. 151 et seq.'' Id. The Order reiterates 
the declaration of national labor policy contained in the National 
Labor Relations Act (``NLRA''), 29 U.S.C. 151, that ``encouraging the 
practice and procedure of collective bargaining and * * * protecting 
the exercise by workers of full freedom of association, self-
organization, and designation of representatives of their own choosing, 
for the purpose of negotiating the terms and conditions of their 
employment or other mutual aid or protection'' will ``eliminate the 
causes of certain substantial obstructions to the free flow of 
commerce'' and ``mitigate and eliminate these obstructions when they 
have occurred.'' Id., Sec. 1, quoting 29 U.S.C. 151. As the Order 
concludes, ``[r]elying on contractors whose employees are informed of 
such rights under Federal labor laws facilitates the efficient and 
economical completion of the Federal Government's contracts.'' Id.
    The Executive Order achieves the goal of notification to employees 
of federal contractors of their legal rights through two related 
mechanisms. First, Section 2 of the Order provides the complete text of 
a contract clause that Government contracting departments and agencies 
must include in all covered Government contracts. Sec. 2, 74 FR at 
6107-08. Second, through incorporation of the specified clause in its 
contracts with the Federal government, contractors thereby agree to 
post a notice in conspicuous places in their plants and offices 
informing employees of their rights under Federal

[[Page 28369]]

labor laws. Sec. 2, para. 1, 74 FR at 6107-08.
    The Executive Order states that the Secretary ``shall be 
responsible for [its] administration and enforcement.'' Sec. 3, 74 FR 
at 6108. To that end, the Executive Order delegates to the Secretary 
the authority to ``adopt such rules and regulations and issue such 
orders as are necessary and appropriate to achieve the purposes of this 
order.'' Id., Sec. 3(a). In particular, the Executive Order requires 
the Secretary to prescribe the content, size, and form of the employee 
notice. Id., Sec. 3(b). In addition, the Executive Order permits the 
Secretary, among other things, to make modifications to the contractual 
provisions required to be included in Government contracts (Sec. 3(c)); 
to provide exemptions for contracting departments or agencies with 
respect to particular contracts or subcontracts or classes of contracts 
or subcontracts for certain specified reasons (Sec. 4); to establish 
procedures for investigations of Government contractors and 
subcontractors to determine whether the required contract provisions 
have been violated (Sec. 5); to conduct hearings regarding compliance 
(Sec. 6); and to provide for certain remedies in the event that 
violations are found (Sec. 7). 74 FR at 6108-09.

III. Statutory Authority for the Executive Order and the Department's 
Regulation

A. Legal Authority

    The President issued Executive Order 13496 pursuant to his 
authority under ``the Constitution and laws of the United States,'' 
expressly including the Federal Property and Administrative Services 
Act (``Procurement Act''), 40 U.S.C. 101 et seq. The Procurement Act 
authorizes the President to ``prescribe policies and directives that 
[he] considers necessary to carry out'' the statutory purposes of 
ensuring ``economical and efficient'' government procurement and 
supply. 40 U.S.C. 101, 121(a). Executive Order 13496 delegates to the 
Secretary of Labor the authority to ``adopt such rules and regulations 
and issue such orders as are necessary and appropriate to achieve the 
purposes of this order.'' Sec. 3, 74 FR at 6108. The Secretary has 
delegated her authority to promulgate these regulations to the Office 
of Federal Contract Compliance Programs (``OFCCP'') and the Office of 
Labor-Management Standards (``OLMS''). Secretary's Order 7-2009, 74 FR 
58834, Nov. 13, 2009; Secretary's Order 8-2009, 74 FR 58835, Nov. 13, 
2009.

B. Interagency Coordination

    Section 12 of the Executive Order requires the Federal Acquisition 
Regulatory Council (``FAR Council'') to take action to implement 
provisions of the Order in the Federal Acquisition Regulation (FAR). 74 
FR at 6110. Accordingly, the Department has coordinated with the FAR 
Council for the insertion of language into the FAR that implements the 
Executive Order.

IV. Summary of the Final Rule and Discussion of the Comments

    This final rule establishes standards and procedures for the 
implementation and enforcement of Executive Order 13496. Subpart A of 
the rule sets out definitions, the prescribed requirements for the 
size, form and content of the employee notice, exceptions for certain 
types of contracts, and exemptions that may be applicable to 
contracting departments and agencies with respect to a particular 
contract or subcontract or class of contracts or subcontracts. Subpart 
B of the rule sets out standards and procedures related to complaint 
procedures, compliance evaluations, and enforcement of the rule. 
Subpart C sets out other standards and procedures related to certain 
ancillary matters. This preamble follows the same organizational 
outline, and within each section of the preamble the Department has 
noted and responded to the comments addressed to that particular 
section of the rule.
    During the interagency review process that preceded the publication 
of the NPRM, the Department received requests to improve the 
readability and understandability of the regulatory text by employing 
``plain language,'' which includes, among other things, the use of 
common, everyday words, except for necessary technical terms, the use 
of the active rather than the passive voice, and the use of short 
sentences. The Department has made revisions to the regulatory text of 
the final rule in accordance with these guidelines.
    As part of a Departmental restructuring, effective November 8, 
2009, the Department abolished the Employment Standards Administration 
(``ESA''), which was the administrative umbrella for several agencies 
within the Department, including OLMS and OFCCP. As the administrator 
overseeing both OLMS and OFCCP, the Assistant Secretary for Employment 
Standards had designated administrative and enforcement functions under 
the proposed rule. Due to the elimination of ESA and the position of 
Assistant Secretary for Employment Standards, the final rule has been 
revised so that the roles and functions assigned to the Assistant 
Secretary in the proposed rule are reassigned. See Sec. Sec.  471.2, 
471.13, 471.14, 471.15, 471.16, 471.21, 471.22, and 471.23. Generally 
speaking, the Assistant Secretary's enforcement review functions have 
been reassigned to the Department's Administrative Review Board, and 
the administrative functions in the rule have been reassigned to the 
Directors, formerly called the Deputy Assistant Secretaries, of OFCCP 
or OLMS, or both.\2\ In addition, the definition of ``Assistant 
Secretary'' has been deleted from Sec.  471.1, and definitions have 
been added for easy reference to the ``Director of OFCCP'' and the 
``Director of OLMS'' in the body of the rule.
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    \2\ For ease of reference and to avoid confusion, the Directors 
of OLMS and of OFCCP are referred to in this preamble by their 
current title, ``Director,'' even when this preamble is discussing 
passages of the NPRM that refer to their former title, ``Deputy 
Assistant Secretary.''
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A. The Purpose of Executive Order, Statutory Authority and Preemption

    The Department received a number of comments about the Executive 
Order and its purpose, the President's authority to issue it, and the 
asserted preemption of the Order or the Department's regulation by the 
National Labor Relations Act (``NLRA''), 29 U.S.C. 151, et seq. First, 
the Department received several comments opposing the Executive Order 
generally, each of which suggests, for various reasons, that the 
Executive Order constitutes unnecessary interference with private 
enterprise. Several commenters also commented on the purpose of the 
Executive Order. Some commenters were doubtful that the Executive Order 
would fulfill its stated goals of promoting economy and efficiency in 
government procurement through notifying employees of their rights, and 
suggested instead the Executive Order would have the opposite effect 
and actually increase costs to taxpayers and amplify labor-management 
conflict, among other negative effects cited. Other commenters stated 
that the Executive Order would undoubtedly achieve its stated goals. In 
particular, these commenters indicated that informing employees of 
their rights will enhance industrial peace and worker productivity, 
promote a stable workforce and improve employee morale, reduce 
intimidation, misinformation, harassment, and fear in the workplace, 
eliminate injustice, and contribute to positive labor-management 
relations--all of which will foster labor peace and reduce costs to the 
government.

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    One commenter suggested that the Procurement Act provides an 
insufficient basis of authority for the President to issue Executive 
Order 13496. Although the comment acknowledges that the courts have 
rejected a similar challenge alleging insufficient authority under the 
Procurement Act for the issuance of an executive order requiring 
federal contractors to post notices to their employees, the commenter 
suggests that the scope of the notice required by Executive Order 13496 
is broader than the Procurement Act permits.
    The Department disagrees with the assertion that Executive Order 
13496 is not within the President's authority under the Procurement 
Act. The Procurement Act authorizes the President to ``prescribe 
policies and directives that the President considers necessary to'' 
``provide the Federal Government with an economical and efficient 
system'' of government procurement. 40 U.S.C. 101, 121. The Procurement 
Act grants the President flexibility and ``broad-ranging authority,'' 
and executive orders issued under the authority of the Procurement Act 
need only meet a ``lenient standard'' that requires that the order have 
a ``sufficiently close nexus'' to the values of providing the 
government an economical and efficient system for procurement and 
supply. UAW-Labor Employment Training Corp. v. Chao, 325 F.3d 360, 367-
68 (DC Cir. 2003). Various executive orders have passed this ``lenient 
standard,'' even in cases in which the link between the order and 
efficient procurement may seem attenuated, where an argument can be 
made that the order will have the opposite effect of its stated goal, 
or when the order increases costs to the government in the short term. 
Id. at 367-68.\3\ Executive Order 13496, which is intended to reduce 
government procurement costs through better informing employees of 
their rights so that obstructions to commerce stemming from labor 
unrest will be mitigated or eliminated, certainly meets this standard.
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    \3\ Since the passage of the Procurement Act in 1949, successive 
administrations have issued executive orders governing labor and 
employment practices of federal contractors, and such orders have 
been sustained in the federal courts of appeals against attacks 
asserting that the President exceeded his authority under the 
Procurement Act. See, e.g., Executive Order 11246, 3 CFR 339 (1964-
65 Compilation) (1965) (applying equal opportunity principles to 
federal contractors), upheld by Contractors Ass'n of Eastern 
Pennsylvania v. Secretary of Labor, 442 F.2d 159 (3d Cir.), cert. 
denied, 404 U.S. 854, (1971); Executive Order 12092, 43 FR 51,375 
(1978) (imposing wage controls on federal contractors), upheld by 
AFL-CIO v. Kahn, 618 F.2d 784 (DCCir.) (en banc), cert. denied, 443 
U.S. 915 (1979); Executive Order 13202, 66 FR 11225 (2001) (agencies 
and entities receiving federal assistance for construction projects 
may neither require nor prohibit bidders or contractors from 
entering into project labor agreements), upheld by Bldg. and 
Constr.. Trades Dept, AFL-CIO v. Allbaugh, 295 F.3d 28 (DC Cir. 
2002); E.O. 13201, 66 FR 11221 (2001) (requiring federal contractors 
to include in their contracts a provision agreeing to post notices 
informing employees of Beck rights), upheld by UAW-Labor and 
Employment Training Corp. v. Chao, 325 F.3d 360 (DCCir. 2003). See 
also City of Albuquerque v. U.S. Dept. of Interior, 379 F.3d 901 
(10th Cir. 2004) (Procurement Act provided a sufficient statutory 
foundation for executive order directing that in meeting federal 
space needs in urban areas, first consideration be given to 
centralized community business areas; order's directions were 
sufficiently related to the Act to be a valid exercise of the Act's 
delegated authority); AFL-CIO v. Carmen, 669 F.2d 815 (DC Cir. 1981) 
(executive action to phase out free parking for federal employees 
was authorized since the institution of parking charges for federal 
employees would assist government in utilizing its property 
efficiently and economically).
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    Five commenters contend that the Executive Order or the 
Department's regulations implementing it are preempted by the National 
Labor Relations Act. The comments invoke both theories of NLRA 
preemption fashioned by the Supreme Court, so-called Garmon preemption 
(San Diego Bldg. Trades Council v. Garmon, 359 U.S. 236, 244 (1959)), 
which prohibits regulation of activities that are protected by Section 
7 or prohibited by Section 8 of the NRLA, and so-called Machinists 
preemption (Int'l Ass'n of Machinists & Aerospace Workers v. Wisconsin 
Employment Relations Comm'n, 427 U.S. 132, 144 (1976)), which prohibits 
regulation of areas that Congress intended to be left ``unregulated and 
to be controlled by the free play of economic forces.'' 427 U.S. at 
144. The Court has described Machinists pre-emption as creating a 
``free zone from which all regulation, `whether federal or State,' is 
excluded.'' Golden State Transit Corp. v. Los Angeles, 493 U.S. 103, 
111 (1989), quoting Machinists, 427 U.S. at 153.
    The Department disagrees with the contention that the Executive 
Order or this implementing regulation is preempted by the NLRA. Garmon 
preemption is inapplicable because the activity regulated by the 
Executive Order--the posting of an accurate, noncoercive notice of 
employee rights--is not conduct that is either protected by Section 7 
or prohibited by Section 8 of the NLRA. Similarly, Machinists 
preemption is inapplicable because the provision of accurate, 
noncoercive information to employees about their NLRA rights is not 
within the zone of conduct intended by Congress to be reserved for 
market freedom. Further, Chamber of Commerce v. Brown, 128 S.Ct. 2408 
(2008), in which the Court held that Machinists preemption invalidated 
a State statute that prohibited employers that receive State funds from 
assisting, promoting, or deterring union organizing, is distinguishable 
because the State law in that case attempted regulation of speech about 
unionization that was within the zone of conduct intended to be left to 
market forces. In this case, federal contractors remain free to 
advocate about unionization, and there is no interference with speech 
rights protected by Section 8(c) of the NLRA. Further, the regulation 
does not interfere with the primary jurisdiction of the National Labor 
Relations Board (``NLRB'' or ``Board'') to draw the lines defining 
coercive speech that violates Section 8 of the NLRA, 29 U.S.C. 158, or 
that is prejudicial to a fair representation election under Section 9, 
29 U.S.C. 159.

B. The Definitions

    Section 471.1 of the final rule contains definitions of terms used 
in the rule. The Department received six comments from the public about 
the proposed definitions and, as noted below, has made some 
modifications to the definitions after reviewing the comments.
    The Department received three related to the definitions of 
``contractor'' and ``contract.'' The NPRM defined a ``contractor'' to 
include both a prime contractor and a subcontractor, and defined 
``contract'' to include both a Government contract and a subcontract. 
The effect of these definitions, taken together with the substantive 
obligations of the Executive Order and the rule, creates no 
differentiation between the obligations of the prime contractor--the 
contractor that directly does business with the Federal government--and 
the subcontractors of the prime contractor. The three comments noted 
that the broad definitions of ``contractor'' and ``contract'' 
improperly and without limitation impose the substantive obligations of 
the rule on all subcontractors. The three comments all suggest that the 
definitions should be modified to reflect some limitation on the 
application of the rule to subcontractors, such as the application of 
the simplified acquisition threshold, 41 U.S.C. 403, to subcontractors 
or a limitation on the application of the rule to subcontractors below 
the first tier. One of the three comments notes that although the 
proposed rule stated that the simplified acquisition threshold did not 
apply to subcontracts, because the definition of ``contract'' and 
``contractors'' included ``subcontract''

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and ``subcontractor,'' the rule arguably applies the simplified 
acquisition threshold to subcontracts. 74 FR at 38491.
    The remaining comments about the definitional section of the rule 
were all submitted by one commenter. This commenter noted that the 
limited definition of ``collective bargaining agreement'' in the 
proposed rule is inconsistent with the definition of ``collective 
bargaining agreement'' in the NLRA, and may lead to confusion. The same 
commenter requests an explanation for the inclusion of 
``weatherization'' in the definition of ``construction,'' noting that 
the definition of ``construction'' in similar Departmental regulations 
does not include the term. Finally, this commenter recommends that the 
definition of ``government contract'' should expressly exclude 
contracts for the purchase of ``commercial items,'' as defined in the 
Federal Acquisition Regulation, 48 CFR 2.101, so that the terms and 
conditions of sales of commercial items to the government will be as 
similar as possible to sales in the private sector where a contract 
with the government is not involved.
    After full consideration of these comments about the definitions in 
the proposed rule, the Department has made the following decisions. The 
Department endorses the definitions of ``contract'' and ``contractor'' 
as set out in the proposal, and has made no change to these definitions 
in the final rule. As discussed in greater detail below, the 
obligations of the final rule apply to both the government contractor 
and its subcontractors at any tier. In addition, the exception in the 
Executive Order, and in this implementing rule, for government 
contracts below the simplified acquisition threshold applies only to 
the prime contract and not to subcontracts of the prime contract. 
Finally, as further explained below, the Department has decided to 
except from application of the final rule subcontracts that are de 
minimis in value, which the Department has defined as those 
subcontracts that do not exceed $10,000. This exception has been 
incorporated into the rule in Sec.  471.3(a), and no modification to 
the definitions is required in order to implement this new exception 
for de minimis value subcontracts.
    The Department declines to exclude from the definition of 
``government contract'' contracts for commercial items as defined in 
the Federal Acquisition Regulations, 48 CFR 2.101. The Department 
acknowledges, as the comment suggests, that the application of this 
rule to contracts for commercial items means that such contracts will 
differ from the purchase of the same items when the Federal government 
is not the purchaser. However, the judgment underlying the Executive 
Order, and the Department's judgment in this implementing rule, is that 
cost savings in Federal contracting can be made when employees are well 
informed of their NLRA rights, and this principle holds true whether 
the contract is for commercial items or for some other product or 
service.
    The Department agrees that the definition of ``collective 
bargaining agreement'' in the rule, which is intended only to identify 
a class of collective bargaining agreements under the Federal Service 
Labor Management Relations Statute (``FSLMRS''), 5 U.S.C. 7101 et seq., 
that are excepted from coverage under the Executive Order, may be 
confusing to readers accustomed to the usage of the same term in the 
NLRA. Therefore, the definition of this term has been removed from 
Sec.  471.1, and the exception for collective bargaining agreements 
entered into under the FSLMRS is set out more fully in Sec.  471.3 
without cross-reference to the definitional section. In order to treat 
the other coverage exception similarly, the definition of ``simplified 
acquisition threshold'' has been removed from Sec.  471.1, and the 
exception for government contracts below the simplified acquisition 
threshold has been made more explicit in Sec.  471.3 without cross-
reference to the definitional section. In addition, in response to a 
comment, the Department notes that because of the Federal government's 
increased emphasis on energy efficiency, the inclusion of 
weatherization activities within the definition of ``construction'' was 
important to ensure that Federal contracts involving weatherization are 
subject to the rule. For consistency, a similar revision has been made 
to the definition of ``construction work site.'' Finally, in response 
to a comment received during interagency review of the final rule, the 
Department has modified the definition of ``labor organization'' to 
more precisely duplicate the definition of ``labor organization'' in 
the NLRA, 29 U.S.C. 152(5).

C. The Content of the Employee Notice

1. Statutory Rights Included in the Notice
    Executive Order 13496 requires the Secretary to ``prescribe the 
size, form and content of the notice'' that contractors must post to 
notify employees of their rights. Sec. 3(b), EO 13496, 74 FR at 6108. 
Appendix A to Subpart A of the proposed regulatory text presented the 
content of the Secretary's proposed notice, which sets forth employee 
rights under the NLRA. 74 FR at 38498-99. As a threshold matter, the 
Department concluded in the NPRM that providing notice of employee 
rights under the NLRA best effectuates the purpose of the Executive 
Order. 74 FR at 38489-90. Section 1 of the Executive Order clearly 
states that the Order's policy is to attain industrial peace and 
enhance worker productivity through the notification of workers of 
``their rights under Federal labor laws, including the National Labor 
Relations Act.'' Sec. 1, 74 FR at 6107. The policy of the Executive 
Order goes on to emphasize the foundation underlying the NLRA, which is 
to encourage collective bargaining and to protect workers' rights to 
freedom of association and self-organization, and notes that efficiency 
and economy in government contracting is promoted when contractors 
inform their employees of ``such rights.'' Further, the contract clause 
prescribed by the Executive Order requires Federal contractors to post 
the notice ``in conspicuous places in and about plants and offices 
where employees covered by the National Labor Relations Act engage in 
activities related to performance of the contract. * * *'' Sec. 2, 
para. 1, 74 FR at 6107 (emphasis added). Because of these specific 
references to the NLRA, the NPRM proposed including in the notice only 
employee rights contained in the NLRA.
    The Department received one comment noting a textual ambiguity in 
the Executive Order relating to the content of the notice. The 
commenter pointed out that the Executive Order refers to the provision 
of notice about ``rights under Federal labor laws, including the 
National Labor Relations Act,'' which, the commenter submits, suggests 
that the Department should include rights under other ``Federal labor 
laws'' in the notice as well. In particular, this commenter suggested 
that the notice should include statutory rights under the Railway Labor 
Act (``RLA''), 45 U.S.C. 151-188, the Federal law governing labor-
management relations in the airline and rail industries. Two other 
commenters suggested the inclusion in the notice of rights under the 
Labor-Management Reporting and Disclosure Act (``LMRDA'') 29 U.S.C. 401 
et seq., which guarantees certain rights to union members. A final 
commenter on this subject agreed with the Department that

[[Page 28372]]

the notice should be limited to rights under the NLRA.
    The Department has considered the inclusion of other statutory 
rights in the notice, but has concluded that there is overwhelming 
textual support in the Executive Order, as noted above, for its 
original conclusion that rights under the NLRA should be the sole focal 
point of the required notice. Taken together, these provisions of the 
Executive Order offer strong evidence that its intent is to provide 
notice to employees of rights under the NLRA. Furthermore, no other 
Federal labor or employment laws are mentioned expressly in the 
Executive Order.\4\ Therefore, there is no textual support--other than 
the plural reference to ``Federal labor laws''--that would support the 
inclusion of rights under either the LMRDA or the RLA, as suggested by 
the comments. Inclusion of rights under the RLA is precluded for 
another reason as well. Because Executive Order 13496 requires that the 
notice be posted ``where employees covered by the National Labor 
Relations Act'' work, 74 FR 6107, and the NLRA expressly excludes from 
its coverage employers covered under the RLA and their employees, 29 
U.S.C. 152(2) and (3), when the Executive Order and the NLRA are read 
together, federal contractors that are covered by the RLA are excluded 
from the requirements of the Executive Order.
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    \4\ The Postal Reorganization Act, 39 U.S.C. 101 et seq., 
extended the jurisdiction of the NLRB to employees of the United 
States Postal Service. See 39 U.S.C. 1201-1209.
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2. Overview of the Comments on the Content of the Proposed Notice
    As noted in the NPRM, the Department considered the level of detail 
the notice should contain regarding NLRA rights. The Department 
considered requiring a verbatim replication of the NLRA's enumeration 
of employee rights in Section 7, 29 U.S.C. 157, or a simplified list of 
rights based upon that statutory provision.\5\ In the end, however, the 
Department concluded in the NPRM that inclusion of the statutory 
language itself or a simplified list of rights in a notice would be 
unlikely to convey the information necessary to best inform employees 
of their rights under the Act. Instead, the Department proposed a 
statement of employee rights, contained in Appendix A to Subpart A of 
Part 471 (``NPRM notice'' or ``proposed notice''), 74 FR at 38498-99, 
that provided greater detail of NLRA rights derived from Board or court 
decisions and that would more effectively convey such rights to 
employees. The proposed notice also contained examples of general 
circumstances that constitute violations of employee rights under the 
Act. Thus, the Department proposed a notice that provided employees 
with more than a rudimentary overview of their rights under the NLRA, 
in a user-friendly format, while simultaneously not overwhelming 
employees with information that is unnecessary and distracting in the 
limited format of a notice. The Department specifically invited comment 
on the statement of employee rights proposed for inclusion in the 
required notice to employees. In particular, the Department requested 
comment on whether the notice contains sufficient information of 
employee rights under the Act; whether the notice effectively conveys 
the information necessary to best inform employees of their rights 
under the Act; and whether the notice achieves the desired balance 
between providing an overview of employee rights under the Act and 
limiting unnecessary and distracting information.
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    \5\ Section 7 of the NLRA, 29 U.S.C. 157, states that: 
``[e]mployees shall have the right to self-organization, to form, 
join, or assist labor organizations, to bargain collectively through 
representatives of their own choosing, and to engage in other 
concerted activities for the purpose of collective bargaining or 
other mutual aid or protection, and shall also have the right to 
refrain from any or all such activities except to the extent that 
such right may be affected by an agreement requiring membership in a 
labor organization as a condition of employment as authorized in 
section 8(a)(3) [section 158(a)(3) of this title].''
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    The content of the proposed notice received more comments than any 
other single topic addressed in the proposed rule. Many comments from 
both individuals and organizations offered general support for the 
content of the proposed notice, stating that employee awareness of 
basic legal rights will promote a fair and just workplace, improve 
employee morale, and foster workforce stability, among other benefits. 
Several employee and civil rights organizations registered support for 
the rule, and maintained that because employers are required to post 
notices informing employees of other federal workplace rights, this 
notice represents little or no additional burden and, in fact, is long 
overdue given the other required notices.\6\ Labor organizations were 
also supportive of the proposed notice generally, noting that 
employees' awareness of their basic workplace rights in a clear and 
effective manner will promote the free exercise of those rights and 
prevent employer interference and intimidation of employees regarding 
self-organization and collective bargaining.
---------------------------------------------------------------------------

    \6\ The Department of Labor implements employee notification 
requirements pertaining to employers covered by the Fair Labor 
Standards Act, 29 U.S.C. 211 (implementing regulation 29 CFR 516.4); 
the Occupational Safety and Health Act, 29 U.S.C. 657(c) 
(implementing regulation 29 CFR 1903.2); the Family Medical Leave 
Act, 29 U.S.C. 2601 et seq., (implementing regulation 29 CFR 
825.300, .402); the Uniformed Service Employment and Reemployment 
Rights Act, 38 U.S.C. 4334 (implementing regulation 20 CFR 1002); 
Employee Polygraph Protection Act, 29 U.S.C. 2003 (implementing 
regulation 29 CFR 801.6); and the Migrant and Seasonal Agricultural 
Worker Protection Act, 29 U.S.C. 1821(b), 1831(b) (implementing 
regulation 29 CFR 500.75, .76). Federal contractors specifically 
have additional notification requirements, including equal 
employment opportunity rights under Executive Order 11246, the 
Rehabilitation Act of 1973, 29 U.S.C. 793, and the Vietnam Era 
Veterans' Readjustment Assistance Act of 1974, (implementing 
regulations at 41 CFR Chapter 60-l .42; 41 CFR 60-250.4(k); and 41 
CFR 60-74 1.5(a)(4)), and rights under the Davis-Bacon Act, 40 
U.S.C. 3142(c)(2) (implementing regulation 29 CFR 5.5(a)(l)) and the 
Service Contract Act, 29 U.S.C. 351(a)(4) (implementing regulation 
29 CFR 4.6(e), .184).
---------------------------------------------------------------------------

    Other commenters were less enthusiastic about the content of the 
proposed notice. A significant number of commenters--approximately one-
third--including many employer, industry and interest groups, argued 
that the content of the notice is not balanced, and appears to promote 
unionization instead of employee freedom of association. In particular, 
many commenters stated that among the rights contained in Section 7 of 
the NLRA is the right to refrain from union activity, but this right is 
given little attention in comparison to other rights in the proposed 
notice. In addition, many of these commenters also noted that the 
examples of employer and union unfair labor practices are unbalanced--
the list of employer misconduct in the proposed notice was seven items 
long, while the example of union misconduct contained only one item. 
Several commenters also noted that the proposed notice excludes rights 
associated with an anti-union position, including the right to seek 
decertification of a bargaining representative, the right to abstain 
from union membership in so-called right-to-work states, and rights 
associated with the Supreme Court's decision in Communication Workers 
v. Beck, 487 U.S. 735 (1988), permitting employees to seek 
reimbursement of that portion of dues or fees collected under a union 
security clause in a collective bargaining agreement that is not used 
for collective bargaining, contract administration, or grievance 
adjustments. Many of these comments noted that a neutral and even-
handed government position on unionization would be more inclusive of 
these rights.
    Many comments addressed the issue of complexity, as it pertains 
both to the

[[Page 28373]]

law and to the content of the proposed notice. Approximately ten 
comments stated that the Department's attempt to summarize NLRA 
decisional law was flawed because the law is far too complex to 
condense into a single workplace notice. Many of these comments noted 
that NLRA law has been developed over 75 years, and involves 
interpretations by both the NLRB and the federal courts, sometimes with 
conflicting results. Some commenters noted that because of Board member 
turnover, which alters the political composition of the Board, legal 
precedent changes frequently, thus requiring frequent updates to the 
content of the notice. Several commenters cited the NLRB's Basic Guide 
to the National Labor Relations Act: General Principles of Law Under 
the Statute and Procedures of the National Labor Relations Board (Basic 
Guide to the NLRA) (1997), available at http://www.nlrb.gov/nlrb/shared_files/brochures/basicguide.pdf, to make their point about legal 
complexity. In the Foreword to the Basic Guide to the NLRA, the Board's 
General Counsel states that ``[a]ny effort to state basic principles of 
law in a simple way is a challenging and unenviable task. This is 
especially true about labor law, a relatively complex field of law.'' 
The thrust of these comments about legal complexity was that NLRA 
decisional law is too complex, dynamic, and nuanced, and any attempt to 
summarize it in a workplace notice will result in an oversimplification 
of the law and lead to confusion, misunderstanding, inconsistencies, 
and some say, heightened labor-management antagonism.
    Similarly, six comments stated that the proposed notice itself was 
too complex to be helpful or informative to employees. Some said the 
notice was too long and wordy, and therefore likely to confuse or 
mislead employees, which, as one commenter noted, is contrary to the 
purpose of the Executive Order. Another said the notice is too long and 
contains examples of employer misconduct that are arbitrary and too 
specific.
    Comments asserting that the content of the proposed notice was too 
detailed dovetailed with the many comments suggesting that the required 
notice should specify only those rights contained in Section 7 of the 
NLRA or, alternatively, those rights and obligations as stated in 
employee advisories on the NLRB's Web site.\7\ Approximately sixteen 
comments suggested this simplified approach, while only three advocated 
in favor of the level of complexity in the notice, noting particularly 
that the detail in the notice comports with the Executive Order's 
requirement that employees should be ``well informed of their rights.'' 
Those comments favoring a more streamlined notice suggested that a 
simplified version of the notice based on Section 7 or the NLRB's Web 
site advisory would be clear, straightforward, and easily understood; 
would not be stated in ``legalese''; would be unlikely to confuse or 
inflame tensions; would defer to the statute's drafters or to the 
NLRB's expertise to provide a statement of rights; would be unbiased; 
and would decrease the likelihood of misleading employees; and would 
improve readability.
---------------------------------------------------------------------------

    \7\ See http://www.nlrb.gov/Workplace_Rights/employee_rights.aspx.
---------------------------------------------------------------------------

    In addition to these general comments about the proposed notice, 
many comments offered suggestions for specific revisions to individual 
provisions within the four sections of the proposed notice: the 
preamble, the statement of affirmative rights, the examples of unlawful 
conduct, and the enforcement and contact information. The following 
discussion presents in succession the comments related to individual 
provisions of the notice, followed by the Department's decisions 
regarding the content of the final notice made in response to all 
comments on the content of the notice.
 3. Comments Addressing the Preamble of the Proposed Notice
    The preamble of the proposed notice stated that ``[i]t is the 
policy of the United States to encourage collective bargaining and 
protect the exercise by workers of full freedom of association, self-
organization, and designation of representatives of their own choosing, 
for the purpose of negotiating the terms and conditions of their 
employment or other mutual aid and protection.'' 74 FR at 38498. The 
proposed preamble was based on Section 1 of the NLRA, 29 U.S.C. 151, 
and Executive Order 13496, Section 1. The Department specifically 
sought comment on this description of policy in the proposed notice.
    Five commenters support the statement in the preamble that U.S. 
policy encourages collective bargaining and the full exercise of worker 
self-determination rights. Many supportive comments noted that the 
preamble is appropriate given that Section 1 of the Executive Order 
also reiterates the policy of encouraging collective bargaining. 
Fourteen commenters opposed the preamble on various grounds. Many 
negative commenters noted that the preamble resembles text from Section 
1 of the NLRA, ``Findings and Policies,'' 29 U.S.C. 151, but 
substantially misstates it.\8\ These commenters note that U.S. policy 
as stated in Section 1 of the NLRA is ``to eliminate the causes of 
certain substantial obstructions to the free flow of commerce and to 
mitigate and eliminate these obstructions when they have occurred,'' 
and that one means to achieve that policy goal is through the 
encouragement of collective bargaining and free exercise of rights. By 
overlooking the statute's true stated purpose to eliminate obstructions 
to commerce, these commenters say, the notice's preamble improperly 
elevates the ``encouragement of collective bargaining'' to a guiding 
principle rather than simply a means to achieve the free flow of 
commerce. Other commenters noted that the policy of the U.S. is, or 
should be, to remain neutral regarding labor-management relations, and 
the preamble should reflect neutrality by emphasizing employee choice, 
which includes the right to refrain from collective bargaining or other 
union activities. One commenter noted that Section 1 of the NLRA must 
be read together with Section 9 of the NLRA, 29 U.S.C. 159, which 
establishes procedures for the election of a collective bargaining 
representative by a vote of a majority, thus underscoring that U.S. 
policy encourages collective bargaining only when a majority of 
employees have freely chosen workplace representation. Observing some 
differences between the text of the notice's preamble and the statement 
of purpose in the Executive Order, two commenters noted that the 
preamble does not accurately track the Executive Order's precatory 
language.\9\ Finally,

[[Page 28374]]

several commenters suggested that the preamble be eliminated altogether 
so that these drafting issues need not be addressed.
---------------------------------------------------------------------------

    \8\ Section 1 of the NLRA states that ``[i]t is declared to be 
the policy of the United States to eliminate the causes of certain 
substantial obstructions to the free flow of commerce and to 
mitigate and eliminate these obstructions when they have occurred by 
encouraging the practice and procedure of collective bargaining and 
by protecting the exercise by workers of full freedom of 
association, self-organization, and designation of representatives 
of their own choosing, for the purpose of negotiating the terms and 
conditions of their employment or other mutual aid or protection.'' 
29 U.S.C. 151.
    \9\ Section 1 of the Executive Order, 74 FR 6107, states:
    As the [NLRA] recognizes, ``encouraging the practice and 
procedure of collective bargaining and * * * protecting the exercise 
by workers of full freedom of association, self organization, and 
designation of representatives of their own choosing, for the 
purpose of negotiating the terms and conditions of their employment 
or other mutual aid or protection'' will ``eliminate the causes of 
certain substantial obstructions to the free flow of commerce'' and 
``mitigate and eliminate these obstructions when they have 
occurred.'' 29 U.S.C. 151.
---------------------------------------------------------------------------

4. Comments Addressing the Statement of Affirmative Rights in the 
Proposed Notice
    The proposed notice contains the following statement of affirmative 
rights:

    Under federal law, you have the right to:
    Organize a union to negotiate with your employer concerning your 
wages, hours, and other terms and conditions of employment.
    Form, join or assist a union.
    Bargain collectively through a duly selected union for a 
contract with your employer setting your wages, benefits, hours, and 
other working conditions.
    Discuss your terms and conditions of employment with your co-
workers or a union; join other workers in raising work related 
complaints with your employer, government agencies, or members of 
the public; and seek and receive help from a union subject to 
certain limitations.
    Take action with one or more co-workers to improve your working 
conditions, including attending rallies on non-work time, and 
leafleting on non-work time in non-work areas.
    Strike and picket, unless your union has agreed to a no-strike 
clause and subject to certain other limitations. In some 
circumstances, your employer may permanently replace strikers.
    Choose not to do any of these activities, including joining or 
remaining a member of a union.

Comments on the statement of affirmative rights offered both general 
guidance on the provisions overall, as well as specific recommendations 
for revising each provision individually. Generally, two labor 
organizations suggested that the statement of affirmative rights should 
present only the basic rights without any attempt to present the 
limitations to those basic rights that have developed over the decades 
of decisional law. The first labor organization argues that such 
limitations are themselves subject to further exceptions, which cannot 
be included in the notice without overwhelming and confusing employees. 
This comment notes that the limitations to the basic rights included on 
the notice involve fact-dependent scenarios that do not assist 
employees in understanding their basic rights. None of the basic 
rights, the comment asserts, have ever been understood as absolutes 
without any exceptions or limitations, so the attempt to include those 
in the notice is unnecessary and confusing. One commenter from the 
retail industry noted generally that the statement of affirmative 
rights should contain a disclaimer that ``certain types of speech and 
expression in the workplace are not protected.'' As an example, the 
commenter indicated that some employers may permissibly prohibit third-
party solicitations or leafleting, or wearing of any insignia, in a 
retail setting. The final general comment regarding the statement of 
affirmative rights suggested that the use of the second-person pronouns 
``you'' and ``your'' is overly inclusive because not all casual readers 
of the poster are covered by the statement of rights. This comment 
suggests that the notice must make it clear that the enumerated rights 
apply only to covered employees, as the Department has done with the 
notice required by the Family and Medical Leave Act, 29 CFR part 825 
Appendix C. This comment notes that a statement regarding eligibility 
would eliminate confusion for employees who are not covered by the NLRA 
but may read the notice.
    Many comments about the notice's statement of affirmative rights 
were directed at whether each individual provision, e.g., the right to 
bargain collectively or the right to discuss union issues with 
coworkers, constitutes an informative, accurate, and/or complete 
statement of the law. Some general conclusions emerge from a review of 
the comments on each provision, which is set out in more detail below. 
First, labor organizations tended to favor statements of rights that 
were short and without qualifications or exceptions, and disfavored the 
``subject to certain exceptions'' limitations added to some of the 
provisions. Groups representing employers, on the other hand, argued in 
favor of adding exceptions and limitations to the notice, sometimes to 
the extent that the notice would lose the quality of a poster and would 
become instead a more comprehensive manual.
a. The Right To Organize and the Right To Form, Join and Assist a Union
    There were no comments, positive or negative, specifically about 
the text of the notice referencing employees' rights to organize a 
union or form, join or assist a union.
b. The Right To Bargain Collectively
    Two comments suggested that the statement that employees have the 
right to bargain collectively with their employers through a duly 
selected union over wages and other terms and conditions of employment 
is misleading and vague. The first comment argues that the statement is 
misleading because it fails to acknowledge that an employer does not 
have an obligation under the NLRA to consent to the establishment of a 
collective bargaining agreement, but instead only has the statutory 
duty to ``meet at reasonable times and confer in good faith with 
respect to wages, hours, and other terms and conditions of 
employment.'' 29 U.S.C. 158(d). Moreover, the failure to reach an 
agreement is not per se unlawful, and the finding of an unfair labor 
practice instead depends on whether the parties engaged in good faith 
bargaining. This commenter suggests that the notice should instead note 
that the NLRA requires the parties to bargain in good faith but does 
not compel agreement or the making of concessions, and that, in some 
instances, a bargaining impasse will result, permitting the parties to 
exercise their economic weapons, such as strikes or lockouts. A few 
other commenters similarly suggested that the notice should include a 
statement that both employers and unions have an obligation to bargain 
in good faith.
    The second comment submitted about this particular provision argues 
that the term ``duly selected'' union is so vague that it permits 
misunderstanding. For instance, the comment suggests, the phrase 
permits the reader to erroneously conclude that an employer is 
obligated to bargain with a union supported by the majority of 
employees signing union authorization cards but not certified by the 
NLRB following a government-supervised secret ballot election. 
Alternatively, the comment submits that the phrase permits readers to 
erroneously believe that an employer must bargain with a minority 
union. To remedy the misstatements in this and other sections of the 
notice, the comment suggests that the Department rely on the text of 
the NLRB's very brief brochure entitled, Protecting Workplace 
Democracy.\10\
---------------------------------------------------------------------------

    \10\ The brochure can be accessed at http://www.nlrb.gov/nlrb/shared_files/brochures/OutreachBrochure_Rev_10-30-07.pdf.
---------------------------------------------------------------------------

c. Discuss With Coworkers, Join With Other Coworkers
    Both labor organizations and management groups suggested changes to 
the third provision in this section of the notice. One labor 
organization suggested significant streamlining of this provision so 
that it references only employees' ``communication'' rights, and 
recommends the inclusion of the other ``action'' rights (``join other 
workers,'' etc.) in the following provision. This comment advised that 
separation of communication from action would clarify each provision. 
Thus, the comment suggests that this provision should read simply: 
``Discuss your terms and conditions of employment or union organizing 
with your coworkers or with a union.'' A second labor organization

[[Page 28375]]

agreed that communication and action rights should be separated, but 
adds that this provision should emphasize employees' rights to 
communicate with their coworkers at their place of work about union 
issues. While this comment suggests that this provision reference 
``employee's rights of workplace access/communication,'' it makes no 
specific proposal for revision of the text.
    Comments from the groups representing employer interests generally 
suggest one of two approaches--either that the provisions should be 
stricken entirely because the law in this area is too complex to 
summarize or that the general statement in the provision is inaccurate 
because it fails to include limitations and qualifications on an 
employee's right to discuss union issues with coworkers. One law firm 
representing employers suggests that the provision be stricken 
entirely, because the notice cannot possibly accurately summarize Board 
law on this point, which is constantly evolving. Four other commenters 
assert that the following complexities or subtleties are missed in the 
overly succinct statement about communication rights: The statement 
fails to notify employees that employers can lawfully prohibit certain 
communication, such as a no-talk rule about a drug investigation or 
disparagement of employer's product or service; the statement fails to 
include the Board's recently articulated rules governing employee use 
of and access to employer e-mail for union talk,\11\ omits references 
to the fact that an employee does not have an absolute right to speak 
to a union organizer on an employers' property, does not discuss the 
meaning of ``mutual aid,'' fails to discuss an employees' duty not to 
disparage employers' products or services, and does not reference the 
limitations on so-called Weingarten rights involving an employee's 
right to have a union representative present in a disciplinary meeting; 
and the provision does not clarify that concerted activity must be both 
``concerted'' and ``for the mutual aid and protection'' of employees, 
nor does it reflect that not all action taken together with coworkers 
is protected, for example, a sit down strike; and the provision does 
not explain that certain expressions or conduct, for instance, 
profanity directed at the employer, may not be protected (Jackson 
Lewis). As proposed revisions to this provision, one comment suggests 
that provisions should include the general ``subject to certain 
limitations'' language; another suggests sole reliance on the NLRB's 
brochure, Protecting Workplace Democracy, See supra n. 12; and the 
remaining comments suggest the inclusion of the level of detail that 
would effectively turn the notice into a multi-page legal reference.
---------------------------------------------------------------------------

    \11\ See The Register Guard, 351NLRB 1110 (2007).
---------------------------------------------------------------------------

d. Attending Rallies
    All four comments about the right to attend rallies suggest that 
this provision should be eliminated. One comment suggests that the term 
``rally'' has no legal history or meaning under the NLRA, and that the 
reference is misleading because it erroneously indicates that there 
might be some legal protection for a rally on company property on non-
work time. Other comments similarly suggest that the provision is 
flawed because it does not distinguish between types of protected and 
unprotected rallies and is confusing. In addition to deleting the 
reference to rallies, one labor organization's proposed revision 
suggests deleting the reference to leafleting, discussed further below, 
and establishing this provision as the ``action'' provision in 
counterpoint to the ``communication'' provision above. Thus, this 
comment suggests the following revision: ``Take action with one or more 
of your co-workers to improve your working conditions by, among other 
means, raising work-related complaints directly with your employer or 
with a government agency, and seeking help from a union.''
e. Leafleting
    Four of the five comments about the inclusion of the right to 
leaflet on non-work time in non-work areas level criticisms similar to 
criticisms of other provisions--that the provision is too general and 
does not distinguish between types of leafleting conduct that are 
protected and those that are unprotected. For instance, the comments 
indicate that the provision fails to note limitations related to the 
rights of off-duty employees to handbill, that leafleting can be 
prohibited in patient care areas, and that some types of 
communications, such as the disparagement or vilification of an 
employer's reputation, are unprotected. The fifth comment on this topic 
suggests elimination of the provision because the right to engage in 
literature distribution is adequately addressed in the examples of 
violations and need not be addressed in the statement of affirmative 
rights.
f. Striking and Picketing
    The notice's reference to the right to strike and picket received 
eight comments, and the comments are aligned generally as they have 
been with other provisions: Labor organizations suggest the removal of 
the ``subject to certain other limitations'' language and the 
suggestion that ``[i]n some circumstances, your employer may 
permanently replace strikers,'' while comments representing employer 
interests suggest the provision is flawed because of the absence of 
further limitations, exceptions, and distinctions.
    One labor organization suggests that the right to strike and picket 
be presented as are the other rights in the notice, with a plain 
affirmative statement of the right and without describing possible 
limitation on the exercise of the right in question. The reference to 
the limitation on the right in the presence of a contractual no-strike 
clause both overstates and understates the possible limitations on the 
right, this commenter submits, depending, for example, on the nature of 
the no-strike clause in question. A second labor organization echoes 
the criticism, and further suggests that the introduction of the 
complex law regarding an employer's right to permanently replace 
certain striking employees adds an unnecessary and ultimately confusing 
limitation, which will lead employees to fear exercising the right. 
Other labor organizations specifically endorse this criticism.
    Among the permutations missed in the proposed formulation, other 
commenters argue, are the distinctions that may lead to a determination 
that certain strike activity is unprotected, such as whether the strike 
is for recognition or bargaining, whether the strike has a secondary 
purpose, whether picketing involves a reserved-gate, whether the strike 
is a sit-down or minority strike, whether the conduct is a slow down 
and not a full withholding of work, whether the strike is partial or 
intermittent, whether the strike involves violence, and whether the 
strike is an unfair labor practice strike or an economic strike. One 
law firm suggests this area of law is so complex that it cannot be 
reduced to a single provision in the notice, and thus should be 
eliminated altogether.
g. Choosing To Refrain From Union Activity
    All nine comments about the right to refrain from engaging in union 
activity universally criticized its lack of prominence, two of these 
comments asserting that the provision's prominence was so diminished 
that they did not notice the statement at all. Some comments accused 
the Department of ``burying'' the provision in the text far below the 
other rights to

[[Page 28376]]

engage in union activity, further exemplifying, some say, that the 
Department favors union activity. Suggested revisions to amplify the 
prominence of the provision include stating that employees have the 
right to refrain from protected, concerted activities and/or union 
activities; stating that employees' right to refrain includes the right 
to actively oppose unionization, to not sign union authorization cards, 
to request a secret ballot election, to decertify a union 
representative, to not be a member of a union or pay dues or fees 
(addressed further below); and stating that employees have the right to 
be fairly represented even if not a member of the union. One employer 
suggested that if the notice retains its current emphasis favoring 
union activity and disfavoring the freedom to refrain from such 
activity, employers will be compelled to post their own notices, which 
the commenter states is not unlawful, that emphasize and elaborate on 
the right to refrain. Rather than subject employees to two posters, the 
commenter suggests, the Department should better balance this notice.
h. Rights Related to Union Membership
    Eight commenters want the notice to include a statement about an 
employee's rights under Communication Workers v. Beck, 487 U.S. 735 
(1988) (``Beck rights''). Typical of these comments is a submission 
suggesting that the notice should include the right to not be a member 
of a union, to not pay union dues or fees as condition of employment if 
the employee is in a so-called right-to-work state, and not to pay full 
union dues as condition of employment in non-right-to-work state. This 
commenter suggests that the failure to include these rights would make 
clear the Secretary's purpose to assist unions and union officials that 
themselves enjoy no rights under the NLRA. Another commenter made a 
somewhat different point about Beck rights, suggesting that the notice 
must include the right to refrain from being a full dues-paying member 
although an employee may have to pay representational fees; the right 
to refuse to pay any dues in a right-to-work state; and the right to 
withhold dues earmarked for political, lobbying or other non-
representational activities. A third commenter suggests that if Beck 
rights are included, the Department may find it difficult to explain 
``compulsory unionism.''
5. The Examples of Unlawful Conduct in the Notice
    The proposed Notice contained the following examples of unlawful 
conduct:

    It is illegal for your employer to:
    Prohibit you from soliciting for the union during non-work time 
or distributing union literature during non-work time, in non-work 
areas.
    Question you about your union support or activities.
    Fire, demote, or transfer you, or reduce your hours or change 
your shift, or otherwise take adverse action against you, or 
threaten to take any of these actions, because you join or support a 
union, or because you engage in other activity for mutual aid and 
protection, or because you choose not to engage in any such 
activity.
    Threaten to close your workplace if workers choose a union to 
represent them.
    Promise or grant promotions, pay raises, or other benefits to 
discourage or encourage union support.
    Prohibit you from wearing union hats, buttons, t-shirts, and 
pins in the workplace except under special circumstances, for 
example, as where doing so might interfere with patient care.
    Spy on or videotape peaceful union activities and gatherings or 
pretend to do so.
    It is illegal for a union or for the union that represents you 
in bargaining with your employer to: Discriminate or take other 
adverse action against you based on whether you have joined or 
support the union.

As a general matter and as noted earlier, there were many comments 
about the disproportionate number of examples of employer misconduct as 
compared to the single example of union misconduct. Thirteen comments 
made this point, many relying on the number of paragraphs devoted to 
illegal employer conduct (7) and the number of paragraphs devoted to 
illegal union conduct (1). Several comments indicated that when one 
compares the employer misconduct listed in Section 8(a) of the NLRA 
with union misconduct listed in Section 8(b), no such imbalance appears 
in the text of the statute. In order to comply with the Executive 
Order's directive to accurately inform workers of their rights, several 
comments indicated, additional examples of illegal union conduct must 
be included. Many suggested reliance on the statutory text of Section 8 
to achieve the proper balance. Several commenters provided additional 
examples of union misconduct that may be listed, including the refusal 
to process a grievance because the employee is not a union member, 
requiring nonmembers to pay a fee to receive contract benefits, 
videotaping non-striking employees, disciplining members for engaging 
in activity adverse to a union-represented grievant, disciplining 
members for refusing to engage in unprotected activity, engaging in 
perfunctory or careless grievance handling, failing to notify employees 
of their Beck rights, causing or attempting to cause an employer to 
discriminate against an employee regarding union security, requiring 
employees to agree to dues checkoff instead of direct payment, 
discriminatorily applying hiring hall rules, and conditioning continued 
employment on the payment of a fine.

    Four commenters offered general comments about the examples of 
unlawful employer conduct. Of those, two suggested relatively minor 
revisions--one asked for more specific examples of violations and one 
suggested the inclusion of the concept that low-level supervisors must 
not engage in misconduct. A third suggested the inclusion of examples 
of employer misconduct that interferes with or restrains an employee's 
right to oppose unionization. The fourth, from a labor organization, 
suggests that the Department should delete the specific references to 
solicitation, distribution and insignia, and instead categorically 
state that ``it is unlawful for employers to interfere with any and all 
employee rights, including all examples of rights listed above.'' This 
comment contends that this would be clearer and more accurate than the 
current provision, which lists only some but not all violations.
    As with the notice's statement of affirmative rights, the 
individual provisions in this section of the notice each received 
numerous comments and suggestions for improvement. The vast majority of 
the comments about the specific provisions are from representatives of 
employers, and most suggest that the examples are too broad and fail to 
reflect the various permutations that would convert some conduct from 
prohibited to permitted.
a. No Solicitation and No Distribution Rules
    Seven commenters were critical of the provision stating that an 
employer cannot lawfully prohibit employees from ``soliciting for the 
union during non-work time or distributing union literature during non-
work time, in non-work areas.'' Of those, two labor organizations 
suggest that the references to ``non-work time'' and ``non-work areas'' 
are too abstract, ambiguous and confusing, and suggest additions to the 
text to explain the references. Thus, one labor organization proposes 
that the notice state that employers may not ``prohibit you from 
soliciting for a union during non-work time, such as before or

[[Page 28377]]

after work or during break times; or from distributing union literature 
during such non-work time, in non-work areas, such as parking lots or 
break rooms.'' \12\ The second labor organization offered the same 
clarification of the reference to non-work time, but goes further. This 
comment suggested that ``solicitation'' has a narrow meaning and 
involves asking someone to join the union by signing an authorization 
card, which is subject to the restrictions suggested in the notice. The 
comment submits, however, that this should be distinguished from more 
general ``union talk''--discussing the advantages and disadvantages of 
unionization--which, the comment asserts, cannot be lawfully restricted 
by employers.
---------------------------------------------------------------------------

    \12\ This comment also suggested changing the reference in the 
proposed provision from ``the union'' to ``a union'' to avoid the 
suggestion that there is a preferred union, such as an incumbent 
union. This suggestion has been adopted.
---------------------------------------------------------------------------

    The remaining comments criticize the provision for failing to note 
any limitations on employees' rights to solicit and distribute, such as 
the limited rights of off-duty employees, and limitations in the retail 
and health care establishments. One comment, in particular, wants the 
notice to advise hospital employees that they do not enjoy a protected 
right to solicit in immediate patient care areas or where their 
activity might disturb patients, and proposes including the 
qualification, ``except that a hospital or other health care employer 
may prohibit all solicitation in immediate patient care areas or 
outside those areas when necessary to avoid disrupting health care 
operations or disturbing patients.'' Another comment suggested that the 
law in this area is so complex that no meaningful but succinct 
provision can be constructed, and therefore recommends deleting it 
entirely.
b. Interrogating Employees About Union Activity
    Four commenters, all representing employer interests, suggested 
that the notice's provision indicating that it is unlawful for an 
employer to question an employee about his or her union support or 
activities is too broadly stated. Three of the four suggested that the 
provision should include the Board's standard for analysis of 
interrogation charges, i.e., whether the questioning interferes with an 
employee's rights given the totality of the circumstances. Two of those 
three suggested the inclusion of the circumstances that might be 
considered to determine whether questioning is unlawful, including the 
presence of employer hostility to unions, the identity of the 
questioner, the place and method used, and the employee's response. The 
fourth comment asserted that the provision should be stricken because 
the law in this area is too complex to summarize.
c. Taking Adverse Action Against Employees for Engaging in Union-
Related Activity
    Four comments, all from employer groups, disapprove of the 
provision describing unlawful employer discrimination against employees 
for engaging in union activity. Two of the four suggest that the 
provision is inadequate because it does not recognize the application 
of the Board's burden-shifting analysis in Wright Line, Inc., 251 NLRB 
1083 (1980) to determine whether unlawful discrimination has occurred. 
Another comment suggests that the provision is inaccurate because it 
does not reflect that in states without right-to-work laws and where a 
collective bargaining agreement contains a union security clause, some 
employers may be required to terminate employees who choose not to join 
the union or pay union dues or fees. The final comment complains that 
this provision is inaccurate because it does not include or explain 
protection for ``concerted activity.''
d. Threats To Close
    Five comments, all from employer groups, criticize the 
overgeneralization of the provision stating that it is unlawful to 
threaten to close if a union is chosen to represent employees. Most 
comments note that, as with unlawful interrogation, a threat to close 
is evaluated under a totality of circumstances, and that an employer is 
permitted to state the effects of unionization on the company so long 
as the statement is based on demonstrably probable consequences of 
unionization. Also, as with other provisions, one commenter suggested 
that the provision should be eliminated because the law in this area is 
too complex to capture. A final comment suggests that the provision 
implies that a union can guarantee job security.
e. Promising Benefits
    One comment from a group representing employer interests states 
that this provision is ``the only substantive statement that the 
Department has proposed in the notice that we do not find fault with.'' 
The only two other comments state that the provision fails to recognize 
that an employer may promise or grant benefits that are not coercive in 
nature.
f. Prohibitions on Union Insignia
    Two labor organizations and six employer groups are critical of 
this provision. One labor organization criticizes both the inclusion of 
the ``special circumstances'' exception as well as the reference to 
``patient care areas'' as an example of a special circumstance. In 
addition to asserting that it inaccurately states the law because it 
fails to include ``immediate'' as a characterization of ``patient care 
areas,'' this comment suggests that the provision would be better 
stated as an affirmative right rather than an employer unfair labor 
practice. The second labor organization suggests the elimination of 
``patient care area'' as an example of the ``special circumstances'' 
exception.
    The six remaining comments suggest that the provision fails to 
illuminate the conditions under which ``special circumstances'' may 
exist, including in hotels or retail establishments where the insignia 
may interfere with the employer's public image, or when the insignia is 
profane or vulgar. Another comment indicates that the provision is 
overly broad because it does not reflect that a violation depends on 
the work environment and the content of the insignia. All either 
suggest that more detail should be added to the provision to narrow its 
meaning, or it should be stricken.
g. Spying or Videotaping
    Five commenters challenged the accuracy of this provision, 
asserting primarily that observation of union activity that occurs out 
in the open and videotaping for security purposes is lawful. Aside from 
the common suggestion that the provision be stricken, no specific 
revisions were suggested in the comments.
h. Union Discrimination or Adverse Action
    There were no comments specifically addressing the one example of 
unlawful union conduct.
6. The Enforcement and Contact Information in the Notice
    The proposed notice included NLRB contact information and basic 
enforcement procedures to enable employees to find out more about their 
rights under the Act and to proceed with enforcement if necessary. 
Accordingly, the required notice stated that illegal conduct will not 
be permitted, provided information regarding the NLRB and filing a 
charge with that agency, and indicated that the Board will prosecute 
violators of the Act. Furthermore, the notice indicated

[[Page 28378]]

that there is a 6-month statute of limitations applicable to making 
allegations of violations and provides NLRB contact information for use 
by employees. The Department invited suggested additions or deletions 
to these procedural provisions that would improve the content of the 
notice.

    Three commenters offered suggestions for this section of the 
notice. One commenter provided the following text to substitute for the 
paragraph in the proposed notice that begins, ``If you believe your 
rights * * *'':

    If you believe your rights or the rights of others have been 
violated, you should contact the NLRB immediately. You may inquire 
concerning possible violations without your employer or anyone else 
being informed of the inquiry. If the NLRB representative with whom 
you speak believes that a violation might have occurred he or she 
will inform you how you may file a charge seeking redress of the 
violation. Charges may be filed by any person and need not be filed 
by the employee directly affected by the violation.

    The same commenter also suggested that the NLRB's telephone number 
appear before its Web site information because, the comment asserts, 
more people are likely to use the telephone to make the contact. A 
second commenter suggested that the contact information provide the 
important assurance that employees may raise employment questions or 
concerns with the NLRB in confidence, which is a revision that the 
first commenter's proposed paragraph incorporates. Finally, a third 
commenter suggested that the admonition in the notice that an employee 
``must contact the NLRB within six months of the unlawful treatment'' 
if the employee believes a violation has occurred suggests that 
contacting the NLRB is mandatory and ignores those employees who may 
not want to contact the NLRB. The commenter suggests that the provision 
include the phrase, ``if you desire relief from the NLRB.''
7. Suggestions To Incorporate Three Additional Provisions
    One comment suggested that the use in the proposed notice of the 
second-person pronouns ``you'' and ``your'' is overly inclusive because 
not all casual readers of the poster will be covered by the NLRA. This 
comment suggested that the notice should clarify that the specified 
rights apply only to covered employees in order to eliminate confusion 
for employees who are not covered by the NLRA but may read the Notice.
    Four commenters suggested that the Notice include a provision 
referencing the NLRA's obligation on employers and labor organizations 
to bargain in good faith. One of these comments requested the inclusion 
as an express limitation on the provision that employees have the right 
to bargain collectively, in order to clarify that the employer's 
obligation was only to bargain in good faith and not necessarily to 
reach an agreement.
    One commenter from the retail industry noted generally that the 
statement of affirmative rights should contain a qualification that 
``certain types of speech and expression in the workplace are not 
protected.'' As an example, the commenter indicated that some employers 
may permissibly prohibit third-party solicitations or leafleting, or 
wearing of any insignia, in a retail setting. Although this comment 
suggests a statement indicating limitations on certain employee speech 
rights, the Department has considered whether such a statement may be 
appropriate more broadly for application to all the rights and 
obligations listed in the notice, particularly in light of the many 
comments criticizing the proposed notice because its provisions do not 
indicate that the rights and obligations are subject to exceptions and 
limitations.
8. Revisions to the Notice Based on the Comments
    After fully considering these comments, the Department has decided 
to revise the employee notice that will be included in the final rule 
(``final notice'') as follows.
a. The Introduction to the Final Notice
    The Department has substantially revised the preamble, or 
introduction, to the final notice to achieve several goals. First, the 
Department agrees with those comments suggesting that the preamble 
included in the NPRM notice contained content that did not promote 
employees' awareness of their specific rights under the NLRA, and that 
such a prominent place on the notice merited text that better served 
that goal. Second, the Department has included in this premier 
paragraph the concept that the NLRA prohibits both employer and union 
misconduct. Third, the Department agrees with comments suggesting that 
the final notice should contain a provision indicating which employers 
and employees are covered by the NLRA, and that coverage provision has 
been added with an asterisk in the new introduction. Fourth, in 
response to the many comments indicating that the NPRM notice included 
only broad generalities and did not include exceptions or limitations 
to the general rights listed in the notice based on particular facts or 
circumstances, which, if heeded, would convert a simple employee notice 
into a lengthy legal guide, the Department has included a cautionary 
note at the outset that the stated rights are general in nature, and 
the notice is not intended to provide specific advice about their 
application in all circumstances. Finally, the Department has made 
prominent the NLRB investigation and enforcement role, and has 
suggested that that agency can assist employees with specific questions 
or concerns should they arise. As a result, the final notice contains a 
new introduction that better serves these goals, as follows

    The NLRA guarantees the right of employees to organize and 
bargain collectively with their employers, and to engage in other 
protected concerted activity. Employees covered by the NLRA* are 
protected from certain types of employer and union misconduct. This 
Notice gives you general information about your rights, and about 
the obligations of employers and unions under the NLRA. Contact the 
National Labor Relations Board, the federal agency that investigates 
and resolves complaints under the NLRA, using the contact 
information supplied below if you have any questions about specific 
rights that may apply in your particular workplace.

    The coverage provision, associated with the asterisk in the 
introduction, states:

    The National Labor Relations Act covers most private-sector 
employers. Excluded from coverage under the NLRA are public-sector 
employees, agricultural and domestic workers, independent 
contractors, workers employed by a parent or spouse, employees of 
air and rail carriers covered by the Railway Labor Act, and 
supervisors (although supervisors that have been discriminated 
against for refusing to violate the NLRA may be covered).

b. The Statement of Affirmative Rights in the Final Notice
    The Department concluded that no change was necessary to three of 
the seven affirmative rights listed in the proposed notice. As 
previously noted, the first two rights listed--the right to organize a 
union to bargain collectively and the right to form, join and assist a 
union--attracted no specific comments, either positive or negative, and 
therefore these provisions are unmodified in the final notice. The 
third right that the Department has left unchanged--the right to 
refrain from union activity, including joining or remaining a member of 
a union--received several comments suggesting that this right was given 
diminished prominence in favor of rights that promote activity in 
support of unions. This contention is misguided. The list of rights 
included in

[[Page 28379]]

the notice is patterned after the list of rights in the NLRA, 29 U.S.C. 
157, which includes the right to refrain last, after stating several 
other rights before it. See, supra, n. 5. Similarly, the NLRB's Web 
site page follows the same pattern, listing the right to refrain fifth 
on a list of five specified rights. See http://www.nlrb.gov/Workplace_Rights/employee_rights.aspx
    In addition, the notice's examples of unlawful employer conduct 
include the concept that it is illegal for an employer taking adverse 
action against an employee `` because [the employee] choose[s] not to 
engage in any such [union-related] activity[,]'' further underscoring 
an employee's right to refrain. Accordingly, the Department concludes 
that the notice sufficiently addresses this right among the list of 
statutory rights.
    The Department has amended the statement in the notice regarding 
the right to bargain collectively. Based on comments discussed above, 
this provision was modified to substitute the statutory phrase 
``representatives of [employees'] own choosing'' for the phrase ``duly 
selected union'' to eliminate the ambiguity of the latter. The 
substituted phrase retains the intent of the original phrase, which was 
to reflect that bargaining representatives can be elected or can be 
voluntarily recognized by an employer based on a verifiable showing 
that the labor organization enjoys majority support among employees in 
the bargaining unit, but employs the words of the statute instead. 
Thus, the final notice states that employees have the right to 
``bargain collectively through representatives of employees' own 
choosing for a contract with your employer setting your wages, 
benefits, hours, and other working conditions.''
    Based on comments, the next two provisions--discuss terms and 
conditions of employment and take action--have been substantially 
modified to achieve several goals. First, the Department agrees that 
these two provisions as presented in the proposed notice could be 
simplified and clarified by separating employees' communication rights 
from their conduct rights. In addition, the Department agrees that 
inclusion of the right to leaflet was duplicative of the provision 
regarding employer interference with distribution of union literature, 
and so this reference has been deleted from the final notice. Next, the 
Department decided to delete the reference to the right to attend 
rallies on non-work time so as not to complicate a list of essential 
and fundamental rights under the NLRA. Finally, because the reference 
in the proposed notice to ``seeking and receiving help from a union'' 
was moved to the following provision and in an effort to retain the 
concept that employees can discuss union-related activity among 
themselves, the Department added to the employee discussion provision 
the right to talk about unions and union organizing. As a result, the 
two provisions in the final notice state that employees have the right 
to, ``discuss your terms and conditions of employment or union 
organizing with your co-workers or a union'' and ``take action with one 
or more co-workers to improve your working conditions by, among other 
means, raising work-related complaints directly with your employer or 
with a government agency, and seeking help from a union.''
    As noted earlier, the provision in the proposed notice related to 
the rights to strike and picket received several comments. Labor 
organizations suggested the removal of the references to a contractual 
no-strike provision, permanent replacements, and the phrase ``subject 
to certain other limitations.'' By contrast, comments from employers 
suggested the provision is flawed because of the absence of the many 
limitations, exceptions, and distinctions related to these rights. By 
necessity, the notice cannot contain an exhaustive list of limitations 
on and exceptions to the rights to strike and picket, as suggested by 
employers. Indeed, the various permutations of these rights 
comprehensively documented by such comments reflect that in 
highlighting just a few limitations, or referring to them ambiguously 
as ``other limitations,'' the proposed notice fell short of the goal to 
clearly inform employees about their rights. However, because 
exercising the right to strike, in particular, can significantly affect 
the livelihood of employees, the Department considers it vital to 
reflect in one general phrase that there are caveats associated with 
it. The Department is satisfied that the addition of a general caveat, 
coupled with the admonition in the new introduction to contact the NLRB 
with specific questions about the application of rights in certain 
situations, provides sufficient guidance to employees about the 
exercise of these rights while still staying within the constraints set 
by a necessarily brief employee notice. Thus, this provision in the 
final notice states that employees have the right to ``Strike and 
picket, depending on the purpose or means of the strike or the 
picketing.''
    As noted, the Department received several comments suggesting that 
the notice contain provisions related to Beck rights. The final notice 
will retain, as part of the right to refrain, the provision stating 
that an employee has the right to not join or remain a member of a 
union that represents the employee's bargaining unit. However, further 
explication of Beck rights will not be included because of space 
limitations and because of the policy choice, as expressed in Executive 
Order 13496, to revoke a more explicit notice to employees of Beck 
rights. See Sec. 13, E.O. 13496, 74 FR at 6110.
c. The Examples of Unlawful Conduct in the Final Notice
    The Department has decided that three examples of unlawful employer 
conduct--regarding unlawful threats to close, promises or grants of 
benefits, and spying or videotaping--need no revision for the final 
notice. The comments related to these three provisions all shared a 
common theme, as discussed above, that the provisions are 
overgeneralizations that neither capture the legal standard associated 
with evaluating allegations of unlawful conduct nor indicate factual 
scenarios in which the highlighted conduct may be lawful. After review 
of these comments and the case law cited therein, the Department 
concludes that the provisions as proposed are accurate and informative, 
and, as with the notice as a whole, strike an appropriate balance 
between being simultaneously instructive and succinct.
    The Department has decided to modify the remaining four examples of 
illegal employer conduct in order to clarify them. First, the 
Department has modified the provision related to employers' no-
solicitation and no-distribution rules for the final notice. The 
Department agrees with those comments suggesting that the terms ``non-
work time'' and ``non-work areas,'' while used commonly in Board law, 
are not readily ascertainable, and the addition of common examples of 
each would assist employees in understanding their rights. Therefore, 
the provision was modified to clarify the meaning of ``non-work time'' 
and ``non-work areas.'' The remaining comments suggesting the inclusion 
of the various circumstances in which no-solicitation and no-
distribution rules may be lawful were rejected due to limitations 
imposed by a notice format. More specifically, the Department 
recognizes that under the NLRB's precedent, a hospital's prohibition of 
solicitation or distribution of literature in immediate patient care 
areas, even during employees' nonworking time, is presumptively lawful. 
Brockton Hospital, 333 NLRB 1367, 1368 (2001).

[[Page 28380]]

Once again, however, the limitations on the format preclude the 
inclusion of factual permutations in which a general right may not 
apply or may only apply with qualifications, and hospital employees, as 
well as other employees, can contact the NLRB with specific questions 
about the lawfulness of their employers' rules governing solicitation 
and literature distribution. Finally, the Department acknowledges, as 
one comment noted, that the NLRB distinguishes between ``solicitation'' 
for a union, which generally means encouraging a coworker to 
participate in supporting a union, and so-called ``union talk,'' which 
generally refers to discussions about the advantages and disadvantages 
of unionization. W.W. Grainger, 229 NLRB 161, 166 (1977), enforced, 582 
F.2d 1118, (7th Cir.1978); Jensen Enterprises, Inc., 339 NLRB 877, 878 
(2003). However, this provision is intended to expressly address the 
former; the right to engage in ``union talk'' is now encompassed more 
specifically by the revision, as noted above, to the ``discussion'' 
provision in the affirmative rights section of the final notice. 
Accordingly, this provision in the final notice indicates that it is 
illegal for employers to ``prohibit you from soliciting for a union 
during non-work time, such as before or after work or during break 
times; or from distributing union literature during non-work time, in 
non-work areas, such as parking lots or break rooms.''
    The comments about the next provision regarding employers' 
questions about union support or activity correctly note that the 
Board's test for determining the legality of such questions is whether 
under all the circumstances the interrogation reasonably tends to 
restrain, coerce, or interfere with rights guaranteed employees by the 
Act. Rossmore House, 269 NLRB 1176, 1177 (1984), enforced, 760 F.2d 
1006 (9th Cir. 1985). Under this totality of circumstances approach, 
consideration is given to whether the interrogated employee is an open 
or active supporter of the union, the background surrounding the 
interrogation, the nature and purpose of the information sought, the 
identity of the questioner, the place and/or method of the 
interrogation, and the truthfulness of any reply by the questioned 
employee. Id. The Board has said that these factors are not to be 
mechanically applied but rather are useful indicia that serve as a 
starting point for assessing the totality of the circumstances. Id. The 
comments suggesting revisions of this provision, as with many of the 
prior suggestions, request inclusion of substantial detail, much of 
which is beyond the purview of this notice. However, the Department has 
concluded that the provision would be clarified by reference to the 
concepts that unlawful questioning interferes with employees' Section 7 
rights and that the interference is judged under the circumstances of 
the questioning. Thus, this provision in the final notice states that 
it is unlawful for employers to ``question you about your union support 
or activities in a manner that discourages you from engaging in that 
activity.''
    Comments about employers' taking, or threatening to take, adverse 
action against employees because of their union-related or other 
protected activity request the inclusion of complicated references to 
legal complexities, such as the application of a burden-shifting 
analysis to determine whether unlawful discrimination has occurred, 
Wright Line, Inc., 251 NLRB 1083 (1980), or the consideration of the 
impact of right-to-work laws. This provision is intended to supply 
employees with notice of their fundamental right to be free from 
discrimination based on union activity, and its accuracy and 
instructiveness will be diminished by such complicated references. 
However, the Department agrees with one comment suggesting that the 
provision can be improved with the substitution of one word to 
underscore that the protections of the NLRA attach to activity that is 
concerted in nature. Thus, this provision in the final notice instructs 
employees that it is unlawful for employers to ``fire, demote, or 
transfer you, or reduce your hours or change your shift, or otherwise 
take adverse action against you, or threaten to take any of these 
actions, because you join or support a union, or because you engage in 
concerted activity for mutual aid and protection, or because you choose 
not to engage in any such activity.''
    The final provision regarding unlawful employer conduct that the 
Department decided to revise is related to union insignia in the 
workplace. Generally, an employer may not prohibit the wearing of union 
insignia, absent special circumstances. Airport 2000 Concessions, LLC, 
346 NLRB 958, 960 (2006). For reasons of format, the notice cannot 
accommodate those comments suggesting that this provision specify those 
cases in which the Board has found ``special circumstances'' to exist, 
such as where insignia might interfere with production or safety; where 
it conveys a message that is obscene or disparages a company's product 
or service; where it interferes with an employer's attempts to have its 
employees project a specific image to customers; where it hinders 
production; where it causes disciplinary problems in the plant; or 
where it would have any other consequences that would constitute 
special circumstances under settled precedent. Escanaba Paper Co., 314 
NLRB 732 (1994), enforced, 73 F.3d 74 (6th Cir. 1996). In addition, as 
noted earlier, an employer's prohibition on wearing union insignia in 
immediate patient care areas is presumptively valid. London Memorial 
Hospital, 238 NLRB 704, 708 (1978). This lengthy list supplied by some 
comments highlights that the addition of only one example of ``special 
circumstances''--the patient care example--may mislead or confuse 
employees. Thus, the general caveat that special circumstances may 
defeat the application of the general rule, coupled with the advice to 
employees to contact the NLRB with specific questions about particular 
issues, achieves the balance required for an employee notice of rights 
about union insignia in the workplace.
    The proposed notice had only one very broad description of union 
conduct that is unlawful under the NLRA. Although this provision 
generally encompassed a wide range of illegal union activity, it was 
criticized in comments for lacking specificity, and thus resulting in 
imbalance as compared to the examples of unlawful employer 
activity.\13\ After reviewing the comments, the Department has revised 
the notice in order to more thoroughly reflect the range of unlawful 
union conduct.
---------------------------------------------------------------------------

    \13\ The Department notes that the NLRB reported that in fiscal 
year 2008, 22,497 unfair labor practice charges were filed. Seventy-
Third Annual Report of the National Labor Relations Board for the 
Fiscal Year Ended September 30, 2008, at 5, available at http://www.nlrb.gov/nlrb/shared_files/brochures/annual%20reports/NLRB2008.pdf. Of these, 16,179 charges were against employers, and 
6,210 charges were filed against unions. Id. Thirty-nine percent of 
all charges were found to have merit, and 1108 complaints were 
issued. Id. at 7. Of complaints issued, 86 percent were against 
employers and 14 percent were against unions. Id. at 8.
---------------------------------------------------------------------------

    Thus, the final notice contains the following five examples of 
unlawful union conduct:
     Threaten you that you will lose your job unless you 
support the union.
     Refuse to process a grievance because you have criticized 
union officials or because you are not a member of the union.
     Use or maintain discriminatory standards or procedures in 
making job referrals from a hiring hall.
     Cause or attempt to cause an employer to discriminate 
against you because of your union-related activity.

[[Page 28381]]

     Take other adverse action against you based on whether you 
have joined or support the union.
d. The Inclusion of the Duty to Bargain in Good Faith
    The Department agrees with those comments that suggested that 
employees should be aware that their employer and their bargaining 
representative have a statutory duty to bargain in good faith. Thus, 
the final notice states that ``if you and your coworkers select a union 
to act as your collective bargaining representative, your employer and 
the union are required to bargain in good faith in a genuine effort to 
reach a written, binding agreement setting your terms and conditions of 
employment. The union is required to fairly represent you in bargaining 
and enforcing the agreement.'' The latter sentence regarding the 
union's duty of fair representation is somewhat duplicative of 
provisions above exemplifying union misconduct, but the Department 
concluded that it was important to note a union's duty to fairly 
represent all bargaining unit members specifically in connection with 
its obligation to bargain in good faith.
e. The Contact Information
    The proposed notice contained two paragraphs about the NLRB, its 
enforcement procedures, and its contact information, which have been 
streamlined into one paragraph for the final notice. In doing so, and 
after reviewing the comments, the Department has substituted the word 
``should'' for the word ``must'' to indicate that it is not mandatory 
that the NLRB be notified of unlawful conduct; retained the admonition 
to employees to act promptly and within the six month statute of 
limitations; added a sentence that underscores the confidentiality 
associated with contacting the NLRB; added a sentence that indicates 
that anyone can file a charge with the NLRB; and retained the sentence 
relating to possible reinstatement, back pay and cease-and-desist 
remedies. The final notice, as modified on the basis of comments 
discussed above, is set forth in Appendix A to Subpart A of this rule.

D. Incorporation of the Contract Clause in Government Contracts and 
Subcontracts

    As proposed in Sec.  471.2(a), all nonexempt prime contractors and 
subcontractors are required to include the employee notice contract 
clause in each of their nonexempt contracts and subcontracts. In order 
to ensure that contractors are made aware of their contractual 
obligation to post the required notice, proposed Sec.  471.2(b) 
provided that the employee notice contract clause must be set out 
verbatim in a contract, subcontract or purchase order, rather than 
being incorporated by reference in those documents. In the NPRM, the 
Department requested comment regarding the utility of setting out the 
employee notice clause verbatim, as opposed to incorporation of the 
clause by reference.
    The Department received ten comments about this requirement, only 
one of which agreed with the Department that full inclusion of the 
employee notice clause in every contract and subcontract will ensure 
that contractors and subcontractors fully understand their obligations 
under the rule. The other nine comments suggested that the rule should 
permit the inclusion of the employee notice clause by reference for 
various reasons, including that full inclusion provides little utility, 
and is burdensome and unreasonable because many contractors would have 
to substantially revise their procurement and contract documents, many 
of which are purposefully brief, standard-form documents, in order to 
comply. One commenter noted that because the content of the notice 
itself may be subject to updating, the contract clause will also 
require modification, and contractors who are unaware of the necessary 
update may inadvertently rely on outdated contract documents or 
provisions. Another commenter suggested that the notice in the contract 
clause is very long and contains language that will confuse readers of 
contracts and purchase orders. Finally, several commenters also noted 
that the prohibition on incorporation by reference is inconsistent with 
various laws--some of which are implemented by the Department--that 
permit contract clause incorporation by reference, including Executive 
Order 11246, Vietnam Era Veterans Readjustment Assistance Act, and 
Section 503 of the Rehabilitation Act of 1973, among others.
    Following full consideration of these comments, and in order to 
ease contractor compliance with the requirements of this rule, the 
Department has decided to permit inclusion of the employee notice 
clause by reference. Therefore, in place of proposed Sec.  471.2(b) 
that disallowed incorporation by reference, the final rule contains a 
new Sec.  471.2(b), that permits incorporation by reference. The 
Department has coordinated with the FAR Council to implement this 
provision.

E. Application of the Rule to Contractors and Subcontractors; 
Exceptions and Exemptions; Other Limitations

    As proposed in Sec.  471.2(a), all nonexempt prime contractors and 
subcontractors are required to include the employee notice contract 
clause in each of their nonexempt subcontracts so that the obligation 
to notify employees of their rights flows to subcontractors of a 
government contract as well. The Executive Order expressly excepts from 
its application two types of Government contracts: Collective 
bargaining agreements as defined in 5 U.S.C. 7103(a)(8) and contracts 
involving purchases below the simplified acquisition threshold as 
defined in the Office of Federal Procurement Policy Act, 41 U.S.C. 403. 
Sec. 2, 74 FR at 6107. The simplified acquisition threshold is 
currently set at $100,000. 41 U.S.C. 403. Section 471.3(a)(1) and (2) 
of the proposed rule implemented these exceptions. 74 FR at 38498. In 
addition, the Executive Order's provision regarding its effective date 
excepts contracts resulting from solicitations issued prior to the 
effective date of the final rule promulgated pursuant to this 
rulemaking. Sec. 16, 74 FR 6111. Proposed Sec.  471.3(a)(3) implemented 
this provision of the Executive Order. 74 FR at 38498.
    The NPRM concluded that the obligations of the rule apply to 
government contractors and all subcontractors of the government 
contract, regardless of whether the subcontractor is a first-tier 
subcontractor or a more remote subcontractor. This conclusion was based 
on the Department's construction of the interrelated terms of the 
Executive Order. The NPRM noted that paragraph 4 of the contract clause 
in the Executive Order requires the contractor to incorporate only 
paragraphs 1 through 3 of the clause in its subcontracts. 74 FR at 
38490. A narrow reading of the operation of this provision outside the 
full context of the Executive Order, the NPRM noted, might suggest that 
the obligation to include the contract clause is limited to contracts 
between the government agency and the prime contractor. Id. Under this 
reading, subcontractors would be required only to post the notice of 
employee rights, and their subcontractors (sometimes called second-tier 
contractors) would have no responsibilities under the Executive Order. 
However, the NPRM reasoned that provisions of the Executive Order 
establishing exemptions and exceptions for the application of the 
Executive Order's obligations do not expressly specify that

[[Page 28382]]

its obligations do not flow past the first-tier subcontractor, a 
significant limitation that would normally be made explicit in the text 
of the Executive Order rather than by operation of the contract 
clause's incorporation provision. In addition, the NPRM noted that in 
the Department's past regulatory treatment of a similar issue, it had 
adapted through regulation the application of an executive order's 
contract inclusion provisions so that the obligation to abide by the 
mandates of the orders flows to subcontractors below the first tier. 
See, e.g., 69 FR 16378, Mar. 29, 2004 (final rule implementing E.O. 
13201) (based on identical contract incorporation provision, ``the 
intent of the Order was clearly that the clause be passed to 
subcontractors below the first tier''); 57 FR 49591, Nov. 2, 1992 
(final rule implementing E.O. 12800) (``It is clear, however, that the 
intent of Executive Order 12800 was that the clause flow down below the 
first-tier level''). The NPRM concluded that the Department's 
experience with regulatory implementation of prior executive orders 
establishing that the obligations of those orders flow past the first-
tier subcontractor supported the application of this rule to 
subcontractors below the first tier, and best achieves the purposes of 
this Executive Order. 74 FR at 38491. Accordingly, the Department 
concluded that in order to fully implement the intent of Executive 
Order 13496, proposed Sec.  471.2(a) was adapted to require the 
inclusion of paragraphs 1 through 4, rather than 1 through 3, of the 
contract clause. The Department specifically sought comments on this 
proposal.
    The NPRM also concluded that although the Executive Order clearly 
did not apply to government contracts for purchases below the 
simplified acquisition threshold, the Executive Order did not provide 
for the same exception for subcontracts involving purchases below the 
simplified acquisition threshold. However, the Department noted that 
inclusion of the express limitation in the definition of 
``subcontract'' that ``subcontracts'' consist only of those instruments 
that are ``necessary to the performance of the government contract,'' 
NPRM Sec.  471.1(r), was intended as a control on the otherwise 
universal application of the rule to subcontracts. 74 FR at 38491, 
citing OFCCP v. Monongahela R.R., 85-OFC-2, 1986 WL 802025 (Recommended 
Decision and Order, April 2, 1986), aff'd, (Deputy Under Secretary's 
Final Decision and Order, Mar. 11, 1987) (railroad transporting coal to 
power generation plant of energy company contracting with GSA was 
subcontractor because delivery of coal is necessary for the power 
company to perform under its contract with GSA). Thus, the NPRM noted 
that although the rule may result in coverage of subcontracts with 
relatively de minimis value in the overall scheme of government 
contracts, covered subcontractors include only those who are performing 
subcontracts that are necessary to the performance of the prime 
contract. The Department invited comment on whether a further 
limitation on the application of the rule to subcontracts is necessary, 
and if it is, whether such a limitation is best accomplished through 
the application of this or another standard, for instance, a threshold 
related to the monetary value of the subcontract.
    The Department received numerous comments about the application of 
the rule to subcontractors below the first tier, the non-application of 
the simplified acquisition threshold to subcontractors, and the 
proposed ``necessary to the performance'' limitation on the application 
of the rule to subcontractors. Four comments supported the application 
of the rule to subcontractors below the first tier. These commenters 
noted various reasons for their support, including that application of 
the rule to more remote subcontractors would prevent circumvention of 
the rule through subcontracting, would further the Executive Order's 
goal of preventing labor unrest, and was similar to the Department's 
implementation of prior executive orders. One commenter noted that it 
is not unusual for a vast majority of laborers on a jobsite to be 
employed by subcontractors of the prime contractor or its 
subcontractors, and that the rule should apply equally to such jobsites 
regardless of the remoteness of the subcontract to the prime contract. 
Three commenters argued that the Department should not apply the rule 
to subcontractors below the first tier, and one commenter requested 
clarification on the application of the rule below the first tier. 
Those comments opposing lower-tier application suggested that the rule 
has gone too far in its application, and that coverage of the rule 
should be limited to first-tier subcontractors. One commenter in 
particular disagreed with the Department's modification of the contract 
inclusion provision discussed above, contending that the Department's 
reliance on its prior regulatory implementation of Executive Orders 
13201 and 12800 was inapt. The commenter noted that each of those 
executive orders contained a provision, not present in Executive Order 
13496, stating that the Secretary may exempt ``subcontracts below an 
appropriate tier set by the Secretary,'' thus indicating that the 
application of the rule to any tier of subcontractors was contemplated 
by the executive order but subject to administrative limitation. See 
Sec. 3(b)(v), E.O. 13201, 66 FR 11221, Feb. 22, 2001 (revoked by 
Executive Order 13496); Sec. 3(b)(v), E.O. 12800, 57 FR 12985, April 
13, 1992 (revoked by Executive Order 12836). By contrast, the commenter 
notes, Executive Order 13496 contains no such language permitting the 
Secretary to limit the application of the rule, thus indicating that 
flow-down below the first tier is not contemplated by the plain 
language of the Executive Order.
    The Department received eleven comments regarding the proposal in 
the NPRM to apply the simplified acquisition threshold only to 
government contracts and not to subcontracts, and all universally 
stated that the simplified acquisition threshold should apply to 
subcontracts as well. Most comments noted the incongruity associated 
with the application of the threshold to prime contracts but not to 
subcontracts, asserting that it makes little sense to except prime 
contracts below a set monetary limit but then apply the rule to reach 
subcontracts below that same limit. Most negative comments similarly 
noted that the failure to apply the simplified acquisition threshold to 
subcontracts will result in coverage of very small contracts and 
contractors, which, they argue, the Executive Order clearly intended to 
avoid by requiring the application of the dollar limit to prime 
contracts. Coverage of small subcontractors is burdensome to those 
contractors, many commenters asserted, and will result in the 
application of the rule to very small procurement contracts and will 
discourage some contractors from bidding for work associated with a 
government contract. Some commenters said they failed to see the policy 
reason supporting the non-application of the threshold to subcontracts. 
One commenter contended that the application of the rule to small 
subcontractors violates a Congressional mandate in the Small Business 
Act, 15 U.S.C. 637(d), that requires Federal agencies to give 
preference to small and disadvantaged businesses. Another comment noted 
the apparent inconsistency in proposed Sec.  471.3(a)(2)(ii), which 
applies the simplified acquisition threshold to ``contracts and 
subcontracts'' for an indefinite quantity, but not to contracts

[[Page 28383]]

for a defined quantity. As noted above in the discussion of comments 
about the rule's definition section, because the definitions of 
``contract'' and ``contractor'' include ``subcontract'' and 
``subcontractor,'' commenters argued that the rule by its terms does in 
fact apply the simplified acquisition threshold to limit its 
application to subcontracts. Finally, one commenter suggested that if 
the Department is concerned that application of the simplified 
acquisition threshold to subcontractors will unnecessarily limit the 
reach of the rule to small contractors, it should nevertheless include 
some other limitation on the application of the rule to prevent its 
application to very small contractors.
    The Department's proposed limitation on the application of the rule 
to only those subcontracts that are ``necessary to the performance of 
the prime contract'' received little support from commenters. By 
contrast, five commenters submitted that the term was so general and 
vague as to be completely ineffective as a significant limitation on 
the rule's application. Two commenters suggested that all subcontracts 
in some manner, no matter how attenuated, are necessary to the 
performance of the prime contract, or the subcontract would not have 
been executed in the first place. In this vein, one commenter noted 
that the Department's use of the phrase suggests pejoratively that some 
subcontracts are unnecessary to the performance of the government 
contract. Other commenters queried how a subcontractor at the time of 
the execution of the subcontract is to know whether the subcontract is 
necessary to the performance of the government contract, particularly 
when such a determination by the Department will only be made during 
subsequent enforcement proceedings that may have adverse consequences 
for the subcontractor. One commenter noted that when a subcontractor or 
vendor receives a purchase order from a firm, the subcontractor or 
vendor may have no way of knowing of the purchase order's connection to 
a government contract without conducting an investigation into the 
purchaser's connections, which may be considered intrusive. One 
commenter stated that the Department's reliance on OFCCP v. Monongahela 
R.R., 85-OFC-2, 1986 WL 802025 (Recommended Decision and Order, April 
2, 1986), aff'd, (Deputy Under Secretary's Final Decision and Order, 
Mar. 11, 1987) to support explication of the phrase raised concerns 
because the rule should not apply to subcontractors that only supply 
material to a job site but do not install it.
    Four commenters suggested alternative standards that would serve to 
limit the application of the rule to subcontractors. Suggested 
limitations included establishing a value for de minimis subcontracts 
to which the rule would not apply, which was phrased by another 
commenter as establishing an exemption for small contractors based on 
the monetary value of the subcontract; creating an exception for 
application of the rule to firms with a small, defined number of 
employees; and application of the rule to only those contractors and 
subcontractors that provide services, as opposed to supplies, to the 
government. One commenter noted that the rule should include a 
``minimum size threshold [below] which a contractor is exempt,'' but 
the commenter did not indicate whether the limit should be connected to 
the size of the subcontract's value, the size of the subcontractor's 
workforce, or the size of the subcontractor's revenue. This same 
commenter submitted that the rule must also provide some means by which 
a subcontractor will be notified that the subcontract is covered by the 
rule and some clarification on compliance in those situations in which 
a subcontractor does not have control over the site where the prime 
contract is being performed.
    After carefully considering all the comments related to the 
application of the rule to subcontractors, the Department has made the 
following decisions. The Department will retain the provision, as 
proposed in enumerated paragraph 4 of the contract clause set out in 
Appendix A (``paragraph 4''), requiring government contractors to 
incorporate paragraphs (1) through (4) in every subcontract. As noted 
in the proposal, the contract inclusion provision in paragraph 4 cannot 
be read in isolation, but rather it must be read in conjunction with 
other operative words and phrases of paragraph 4 and in the Executive 
Order as a whole in order to fully implement its purpose. Many aspects 
of the Executive Order demonstrate the President's intent to apply the 
obligations of the Order not just to government contracts, but also to 
subcontracts of the government contract at all levels. As the proposal 
noted, no other provision in the Executive Order, save for the 
mechanical operation of paragraph 4, suggests that the intent of the 
Executive Order was to except subcontracts below the first tier. The 
Department concludes that silence in failing to include lower tier 
subcontractors in the Executive Order's exemptions and exceptions 
provisions indicates that they were meant to be covered. In addition, 
the Department broadly interprets paragraph 4's directive that the 
contractor ``will include the provisions of paragraphs 1 through 3 
above in every subcontract entered into in connection with this 
contract * * * so that such provisions will be binding upon each 
subcontractor[.]'' The Department reads the terms ``will include'' in 
``every subcontract'' to mean that the initial contractor will ensure, 
to the extent possible, that the posting obligation will be included in 
all subcontracts in connection with the prime contract, whether at the 
first tier level or below. Read in this fashion, this directive can be 
implemented only by requiring, as does the final rule, that every 
subcontract pass through such an obligation to any lower tier 
subcontractors. In addition, the Department interprets broadly the 
reference to ``contractor'' in paragraph 4 (``The contractor will 
include paragraphs (1) through (3) above * * *'') to encompass a 
``subcontractor,'' so that the provision is read to require each 
subcontractor on a government contract, regardless of tier, to include 
posting requirements in any of its subcontracts.
    Other provisions in the Executive Order outside paragraph 4 evince 
an intent to apply the rule to subcontracts below the first tier. 
References to ``contractors'' (Sec. 1), ``any Government contractor, 
subcontractor, or vendor'' (Sec. 5), and ``a Government contractor or 
subcontractor'' (Sec. 5) are unqualified or modified, and the 
Department interprets the references to mean subcontractors at all 
tiers. This broad interpretation is most fitting in application to the 
statement of policy in Section 1 of the Executive Order, which provides 
that ``[w]hen the Federal government contracts for goods or services, 
it has a proprietary interest in ensuring that those contracts will be 
performed by contractors whose work will not be interrupted by labor 
unrest'' and ``relying on contractors whose employees are informed of 
such rights under Federal labor laws facilitates the efficient and 
economical completion of the Federal Government's contracts.'' 74 FR 
6107. Given the frequency with which the performance of government 
contracts are subcontracted, the policy of the Executive Order is best 
understood as reaching contracts below the first tier. This is 
particularly true when the government contract is, for instance, a 
large, multi-million dollar transaction, and its performance is 
subcontracted in multiple tiers. The

[[Page 28384]]

economy and efficiency that is sought to be promoted by the Executive 
Order would not be realized if subcontractors below the first tier of a 
large government contract were not subject to this rule, and a labor 
dispute at a lower tier subcontractor interfered with the delivery of 
the large prime contract. In such a case, ``the efficient and 
economical completion of the Federal Government's contracts'' would not 
be realized. 74 FR 6107. As a result, the Department interprets the 
Executive Order as a whole as seeking to avoid just such a scenario.
    In addition, as noted in the proposal, the interpretation of 
Executive Order 13496 has been informed by the interpretation of 
Executive Orders 12800 and 13201. In both those cases, the Department 
similarly interpreted the text of the orders, which had contract 
incorporation provisions that were virtually identical to paragraph 4 
of Executive Order 13496, to provide for application of the obligations 
to subcontractors below the first tier. See 69 FR 16378, Mar. 29, 2004; 
57 FR 49591, Nov. 2, 1992. The Department has concluded that Executive 
Order 13496 was drafted with awareness of these earlier Executive 
Orders, and that it was intended to be implemented in the same manner 
as its predecessors.
    One commenter emphasized that the regulatory implementation of 
Executive Orders 12800 and 13201 was supportable because those orders 
granted authority to the Secretary to exempt subcontracts below an 
appropriate tier, suggesting application of the obligations of those 
orders to lower contract tiers. See Section 3(b)(v) of Executive Orders 
12800 and 13201, 57 FR 12986, Apr. 13, 1991; 66 FR 11222, Jan. 17, 2001 
(``subcontracts below an appropriate tier set by the Secretary'' may be 
exempted). In this case, the comment notes, Executive Order 13496 does 
not grant the Secretary similar regulatory authority to exempt 
contracts below an appropriate tier, thus suggesting that the Executive 
Order does not contemplate reaching contracts other than first tier 
subcontracts. However, the Department views the absence of such 
regulatory authority to exempt contracts below a certain tier as 
supporting its interpretation that the Executive Order intends that its 
obligations are to apply to all subcontracts of the prime contract 
regardless of tier. The President omitted from Executive Order 13496 
any administrative authority to exempt lower tier subcontractors 
because he did not intend to permit any tier-based exemption, and not 
because it was contemplated that lower tier subcontractors would, at 
some point, be outside the reach of the purposes of the Executive 
Order. Thus, the Department interprets silence as to tier coverage 
within the text of the Executive Order as reflecting an intent for all 
tiers to be covered.
    The Department's grant of authority to promulgate regulations under 
the Executive Order is broad, and permits the Department to implement 
the Order in a manner that is ``necessary and appropriate to achieve 
the purposes'' of the Order. Sec. 3(a), 74 FR at 6108. In addition, the 
Secretary has the express authority under the Executive Order to ``make 
modification of the contractual provisions * * * necessary to achieve 
purposes of this order[.]'' Sec. 3(c), 74 FR at 6108. Accordingly, in 
order to implement the purpose, intent, and express provisions of the 
Executive Order, which the Department concludes applies to nonexempt 
government contracts and all subcontracts of the government contract, 
the Department will retain paragraph 4 of the contract clause as 
proposed.
    The Department will also retain the interpretation set out in the 
proposal that the exception for contracts below the simplified 
acquisition threshold applies only to the prime contract. The 
Department views as plain and unambiguous the text of the Executive 
Order on this point. Section 2 of the Order states that ``all 
Government contracting departments and agencies shall, to the extent 
consistent with law, include the [contract clause] in every Government 
contract, other than * * * purchases under the simplified acquisition 
threshold. * * *'' 74 FR 6107 (emphasis added). Based on this 
provision, the exception for contracts below the simplified acquisition 
threshold applies only to the original government contract, and has no 
application to subsequent subcontracts. In response to comments, the 
Department does not consider the result--excepting prime contracts 
below the simplified acquisition threshold and covering subcontracts 
below that threshold--to be incongruous. The Department concludes that 
the Executive Order embodies a sound policy choice that when the 
Federal government enters into a large prime contract (defined as 
exceeding the simplified acquisition threshold), all employees working 
under the umbrella of that prime contract will be notified of their 
rights under federal labor law, including employees of lower tier 
subcontractors. Indeed, it would be incongruous to seek economical and 
efficiency improvements in government procurement through a well-
informed contractor workforce and yet not apply those standards to all 
subcontracts flowing from the covered prime contract regardless of 
their size. The Department notes that the application of the rule to 
subcontracts below the simplified acquisition threshold presents no 
greater notice-posting obligation than many of those employers already 
have with other notice-posting obligations under various labor and 
employment laws. For instance, the notice-posting obligation of USERRA, 
the Uniformed Services Employment and Reemployment Rights Act, requires 
all employers regardless of size to post notices to their employees 
about their USERRA rights. 38 U.S.C. 4334; 20 CFR 1002 (implementing 
regulations). The reach of this rule is not incompatible or 
inconsistent with the reach of other labor and employment notice-
posting obligations.
    After full consideration of comments about the application of the 
rule to de minimis value subcontracts, the Department has concluded 
that it is ``necessary and appropriate,'' Sec. 3 of the Executive 
Order, to establish a de minimis value standard for subcontracts below 
which the rule will not apply. Such a standard expressly employs the 
principle that certain activity is of such modest concern to the 
application of the legal standard that it can be set apart from its 
application. Wisconsin Dept. of Revenue v. William Wrigley, Jr., Co., 
505 U.S. 214 (1992) (the maxim--``the law cares not for trifles''--is 
part of the established background of legal principles against which 
all enactments are adopted, and which all enactments (absent contrary 
indication) are deemed to accept). A de minimis standard based on the 
dollar value of the subcontract also has the advantage of permitting 
subcontractors to ascertain at the time of entry into the subcontract 
that this rule will or will not apply to them. In implementing the 
equal opportunity contract clause requirements of Executive Order 
11246, the Department has established a $10,000 threshold for contracts 
and subcontracts below which that rule will not apply. See 41 CFR 60-
1.5(a). The Department considers suitable the application of a similar 
$10,000 threshold for subcontracts below which this rule will not 
apply, and this de minimis standard has been added to Sec.  
471.3(a)(4). In addition, as with the admonition in Sec.  
471.3(a)(2)(i) that agencies and contractors may not enter into 
contracts so as to avoid the application of the rule, contractors and 
subcontractors similarly may not enter into contracts so as to avoid 
application of the rule, and that constraint has also

[[Page 28385]]

been added to Sec.  471.3(a)(4). In addition to the exception for de 
minimis contracts, the definition of subcontract, as proposed in the 
NPRM, will continue to be limited to those that are ``necessary to the 
performance of'' the government contract.
    In addition to the exceptions for certain contracts, the Executive 
Order establishes two exemptions that the Secretary, in her discretion, 
may provide to contracting department or agencies that the Secretary 
finds appropriate for exemption. Sec. 4, 74 FR 6108. These provisions 
permit the Secretary to exempt a contracting department or agency or 
group of departments or agencies from the requirements of any or all of 
the provisions of the Order with respect to a particular contract or 
subcontract or any class of contracts or subcontracts if she finds 
either that the application of any of the requirements of the Order 
would not serve its purposes or would impair the ability of the 
government to procure goods or services on an economical and efficient 
basis, or that special circumstances require an exemption in order to 
serve the national interest. Id. Proposed Sec.  471.3(b) implemented 
these exemptions, and provided for the submission of written requests 
for exemptions to the Director of OLMS. It also provided that the 
Director may withdraw an exemption if a determination is made that such 
action is necessary or appropriate to achieve the purposes of the rule. 
The Department invited comments on the standards and procedures for 
requesting an exemption and the Department's withdrawal of a granted 
exemption, but received no comments applicable to these proposed 
revisions. Therefore, the proposed provisions implementing the 
exemptions stated in the Executive Order have been carried over to the 
final rule unchanged. See Sec. Sec.  471.3(b) and (c).

F. Physical and Electronic Posting Requirements

1. Physical Posting Requirements
    The contract clause in the Executive Order requires a contractor to 
post the employee notice ``in conspicuous places in and about its 
plants and offices where employees covered by the National Labor 
Relations Act engage in activities relating to the performance of the 
contract, including in all places where notices to employees are 
customarily posted both physically and electronically.'' Sec. 2, 74 FR 
6107. This provision from the Executive Order establishes a number of 
criteria for posting, including ``conspicuous'' posting, posting in 
locations where NRLA-covered employees work, posting in locations where 
contract-related activity is performed, and posting where employee 
notices are customarily placed. The NPRM summarized the physical 
posting criteria by stating that the provision establishes that a 
contractor is required to post the notice physically at its place of 
operation where employees are likely to see it. 74 FR at 38491. In 
addition, proposed Sec.  471.2(d) provided that the Department will 
print the required employee notice poster and supply it to Federal 
contractors through the Federal contracting agency. The NPRM also noted 
the poster may be obtained from OLMS, whose contact information was 
provided in this subsection of the proposed rule, or can be downloaded 
from OLMS's Web site, http://www.olms.dol.gov. The NPRM observed that 
the Department's printing of the poster and provision of it to Federal 
contractors will reduce the burden on those contractors to comply with 
the Executive Order and this regulation, and will ensure conformity and 
consistency with the Secretary's specifications for the notice. 
Proposed Sec.  471.2(d) also permitted contractors to reproduce in 
exact duplicate the poster supplied by the Department to satisfy their 
obligations under the Executive Order and this rule. The Department 
invited comment on its proposal to make available print and electronic 
format posters containing the employee notice.
    The Department received nine comments on issues related to the 
physical posting requirements. As a general matter, a few comments 
stated support for the requirements for physical posting, and a few 
complained that the posting would create workplace clutter. However, 
most comments requested clarification of the criteria for posting and 
the meaning of specific terms, including ``customary'' placement and 
``activities related to the performance of the contract.''
    The contract clause in the Executive Order requires covered 
contractors to post notices in ``places where notices to employees are 
customarily posted.'' 74 FR 6107. One comment sought guidance on this 
provision, asking whether ``customary'' postings means placement where 
the employer posts routine notices to employees such as general 
personnel information, or whether it instead means placement where the 
employer posts other legally mandated notices, which may be different.
    One comment suggests that the contract clause establishes two 
independent requirements for posting: First, a contractor must post the 
notice where NLRA-covered employees perform work related to the 
contract, and second, they must post it in all places where notices to 
employees are customarily posted. This comment suggests that the first 
requirement is separate from the second, so the notice must be posted 
where contract work is being performed, even if not where customary 
employee notices are posted, and a notice must also be posted where 
employee notices are customarily posted. Under this interpretation, a 
contractor must post, for example, on the work floor and where other 
notices are posted. In a similar vein, a second commenter suggests that 
DOL ``mandate effective physical posting'' because ``employees working 
at diverse or remote locations may not always pay attention to 
electronic notices but do take note of physical postings in their work 
areas'' (emphasis added).
    Several commenters raised concerns about the application of the 
phrase ``activities relating to the performance of the contract.'' One 
commenter submitted that the meaning of where employees ``engage in 
activities relating to the performance of the contract'' is vague and 
unclear. Must a contractor post the notice, the commenter asks, in a 
location in which employees indirectly engage in contract activities, 
such as where employees provide some but not all products and/or 
services related to the contract; where employees spent only 20% of 
their work time on products and/or services that would ``eventually'' 
be used at a second facility in performance of the contract; where the 
product or service was altered prior to fulfillment of the contract; or 
where human resources personnel work at a separate location by 
providing support to employees working on the contract? In short, the 
commenter posits, what ``nexus'' must exist between an employee and 
work related to the performance of the contract?
    A second commenter suggests that posting should be required only 
where employees work directly on the contract. The comment argues that 
requiring employers to post where employees are not working directly on 
the government contract may cause compliance challenges and would give 
contractors ``significant pause'' before entering into future 
government contracts. This commenter requests guidance from the 
Department regarding employees that do not directly perform contract 
work but perform supportive work, such human resources and accounting 
employees. Similarly, a third comment requests clarification on posting 
where the contractor's employees perform ``remote tasks,'' such as 
payroll employees at a separate

[[Page 28386]]

facility, or employees at a distribution center that sends parts to the 
assembly facility where the contract work is performed. This comment 
also proposes that the Department interpret the provision to mean work 
performed directly on the contract, thus eliminating ``upstream'' and 
``downstream'' employees. To the extent the rule covers administrative 
functions, the comment requests more specific guidance on how such work 
is ``related to the performance of the contract.''
    Finally, two commenters contended that the rule's posting 
requirements conflict with the Executive Order. Specifically, they 
observe that Sec.  471.10(b)(1) requires that the notice be posted at 
``each of the contractor's establishments and/or construction work 
sites* * *[,]'' which appears to be broader than the contract clause 
requirement to post where employees engage in activities related to 
contract performance. The comment recommends revision to regulatory 
text to state that posting is only required where employees engage in 
contract's performance.
    The Department received several comments about the physical poster 
itself. Two comments suggested that the poster be printed in other 
languages, particularly Spanish. Two agree with the Department that in 
order to ensure that the notice is not reduced or otherwise modified, 
the poster as supplied by the Department cannot be altered in size or 
substance and that only exact duplicates of the Department-supplied 
poster can be utilized. By contrast, two commenters noted that this no-
alteration requirement prevents contractors from purchasing the poster 
through a commercial source that consolidates Federally mandated 
posters into a single poster, provides updates to posters when the 
content is revised by the implementing agency, or both.
    After carefully reviewing the comments related to the physical 
posting requirements, the Department has concluded the following. The 
Executive Order requires a contractor to post the employee notice ``in 
conspicuous places in and about its plants and offices[,] including all 
places where notices to employees are customarily posted * * * 
physically.'' Sec. 2, para. 1, 74 FR 6107. Because the Department 
received no comments raising issues regarding the meaning of posting 
``in conspicuous places[,]'' the Department concludes that contractors 
are accustomed to such a requirement and it has a well-accepted 
meaning. A notice is conspicuously posted if it is placed in a central 
location where employees are likely to see it. Dunham v. McLaughlin 
Body Co., 812 F. Supp 867, 872 (DC Ill. 1992) (notice required under 
Age Discrimination in Employment Act). See also 29 CFR 825.300, which 
requires covered employers to ``post and keep posted'' the notice 
required by the Family and Medical Leave Act (``FMLA''), 29 U.S.C. 2601 
et seq., ``on its premises, in conspicuous places where employees are 
employed,'' which means ``prominently where it can be readily seen by 
employees and applicants for employment.'' Accordingly, for the 
purposes of this rule, a contractor meets the requirement to post the 
employee notice conspicuously if the notice is prominent and can be 
readily seen by employees. This standard has been incorporated into a 
new subsection of Sec.  471.2(d), which establishes the regulatory 
standards for a contractor's physical posting of the employee 
notice.\14\
---------------------------------------------------------------------------

    \14\ Subsequent subsections of Sec.  471.2 have been re-lettered 
following the insertion of new subsection (d).
---------------------------------------------------------------------------

    The requirement to post ``in and about [a contractor's] plants and 
offices * * *, including in all places where notices to employees are 
customarily posted[,]'' when read together with the ``conspicuous'' 
requirement, requires widespread posting that is prominent and readily 
observable throughout the contractor's plants and offices, and 
emphasizes that among these locations is placement where other employee 
notices are posted. ``Other notices to employees'' is not limited to 
Federally mandated legal notices, but includes notices to employees 
regarding the terms and conditions of their employment. See Sec.  
471.2(d)(1).
    In response to comments, the Department has determined that it is 
necessary and appropriate to require a contractor that employs a 
significant number of employees who are not proficient in English to 
post the employee notice in languages other than English to achieve the 
purposes of the Order, and this requirement has been incorporated into 
Sec.  471.2(d). In implementing a similar requirement under the FMLA, 
29 CFR 825.300(a)(4), the Department stated that ``when the employer 
employs a significant portion of employees who are not literate in 
English, the employer [must] provide the poster and general notice to 
employees in a language in which they are literate.'' 73 FR 67991, Nov. 
17, 2008. The Department similarly adopts this standard for application 
in this rule, and will require a contractor to post the employee notice 
in a language or languages spoken by a significant portion of the 
contractor's workforce. See Sec.  471.2(d). Employers with multiple 
locations may post notices in different languages at different 
locations, if the posted notices are provided in languages in which the 
employees are literate at each location. The Department will provide 
necessary translations of the poster. See Sec.  471.2(e). With regard 
to the requirement in Sec.  471.2(e) that the poster not be altered by 
the contractor, the Department clarifies that this prohibition is not 
intended to, and should not, impair the ability of contractors to 
utilize a commercial poster service that might provide the instant 
employee notice consolidated onto one poster with other Federally 
mandated labor and employment notices, so long as such consolidation 
does not alter the size, color, or content of the poster provided by 
the Department.
    Finally, the Department agrees with the comments that additional 
guidance is needed to advise contractors and employees regarding the 
meaning of the requirement to post where employees ``engage in 
activities relating to the performance of the contract.'' 74 FR 6107. 
The starting point for interpretation and implementation of this phrase 
is two prior executive orders that similarly obligated notice-posting 
through contract clause incorporation. Although neither Executive Order 
11246 nor 13201 included the operative phrase as a provision setting 
the outside bounds of the posting requirement, they each employed the 
operative phrase inversely to establish the basis of a coverage 
exemption.\15\ As a result, both Executive Orders 11246 and 13201 
provided that the Department may grant exemptions to facilities of a 
contractor that are ``in all respects separate and distinct from 
activities of the contractor related to the performance of the 
contract.'' See E.O. 11246, Sec. 204(d), as amended (available at 
http://www.dol.gov/ofccp/regs/statutes/eo11246.htm); E.O. 13201, Sec. 
3(c), 66 FR 11222-23 (emphasis added).
---------------------------------------------------------------------------

    \15\ The contract clause prescribed by Executive Order 13201 
specified that ``[d]uring the term of this contract, the contractor 
agrees to post a notice, of such size and in such form as the 
Secretary of Labor shall prescribe, in conspicuous places in and 
about its plants and offices, including all places where notices to 
employees are customarily posted.'' Sec. 2(a)(1), 66 FR 11221. 
Section 202 of Executive Order 11246 requires that ``[t]he 
contractor agrees to post in conspicuous places, available to 
employees and applicants for employment, notices to be provided by 
the contracting officer setting forth the provisions of this 
nondiscrimination clause.'' Sec. 202(1), E.O. 11246 (available at 
http://www.dol.gov/ofccp/regs/statutes/eo11246.htm).
---------------------------------------------------------------------------

    In implementing the ``separate and distinct facilities'' exemption 
for

[[Page 28387]]

Executive Order 11246, the Department has adopted a multi-factor 
analysis to determine whether activity at a certain facility is 
separate and distinct from activity related to the performance of the 
contract.\16\ Although these exemption factors are facility-based, and 
are inherently intended to analyze whether entire facilities are 
contract-related, they are nevertheless instructive because they 
suggest that indirect support of or benefit from the government 
contract may cause the denial of an exemption or waiver request.
---------------------------------------------------------------------------

    \16\ These factors are found in Office of Federal Contractor 
Compliance Programs Directive, Separate Facility Waivers/Exemptions 
(Sept. 13, 2002) (available at http://www.dol.gov/ofccp/regs/compliance/directives/dir260.pdf). Other factors that may be 
considered include the number of facilities connected to the 
contractor's Government contracts and the nature of the contractor's 
contractual relationship with the Government. Id. at 4. The 
Department's implementation of now revoked Executive Order 13201 
concluded that the identical factors would be used to consider 
requests for waivers for separate and distinct facilities under that 
rule. See 69 FR 16384.
---------------------------------------------------------------------------

    In addition to analyzing the implementation of the phrase as it 
operated in the two predecessor executive orders, the Department has 
also looked to the implementation of a similar phrase that 
affirmatively established the bounds of a contractor's obligations 
without regard to the possibility of waivers or exemptions. The 
Department's previous experience implementing Section 503 of the 
Rehabilitation Act, 29 U.S.C. 793, provides such an analog. Prior to a 
statutory amendment in 1992, the affirmative action requirements of 
Section 503 required government contracts in excess of $10,000 to 
``contain a provision requiring that, in employing persons to carry out 
such contract, the party contracting with the United States shall take 
affirmative action to employ and advance in employment qualified 
individuals with disabilities.'' 29 U.S.C. 793 (1991 compilation) 
(emphasis added). Accordingly, the affirmative action provision of 
Section 503 applied only insofar as the contractor was employing 
persons to ``carry out'' or, as with Executive Order 13496, ``engage in 
activities related to the performance of,'' the government contract. 
The similar focus of these provisions is thus directed to the specific 
nature of the employees' work, and is not based on the conduct of the 
work at a facility.
    To determine whether contractors were ``employing persons to carry 
out'' a government contract for the purposes of Section 503, the 
Department established a disjunctive test. 29 CFR 60-741.4(a)(2). Under 
that test, the Department considered a position to have been engaged in 
carrying out a contract if:

    (A) The duties of the position included work that fulfilled a 
contractual obligation, or work that was necessary to, or that 
facilitated, performance of the contract or a provision of the 
contract; or
    (B) The cost or a portion of the cost of the position was 
allowable as a cost of the contract under the principles set forth 
in the Federal Acquisition Regulation at 48 CFR Ch. 1, part 31: 
Provided, That a position shall not be considered to have been 
covered by this part by virtue of this provision if the cost of the 
position was not allocable in whole or in part as a direct cost to 
any Government contract, and only a de minimis (less than 2%) 
portion of the cost of the position was allocable as an indirect 
cost to Government contracts, considered as a group.

29 CFR 60-741.4(a)(2)(A)-(B). In proposing this regulatory test, the 
Department explained that subsection A includes ``work that is 
necessary to or that facilitates contract performance, even if not 
directly required by an express contract term, [which] is intended to 
reflect the practical reality that performance of a contract generally 
requires the cooperation of a variety of individuals engaged in 
auxiliary and related functions beyond direct production of the goods 
or provision of the services that are the object of the contract.'' 57 
FR 48092, Oct. 21, 1992.
    The Department has uniformly concluded in each of these 
prototypes--Executive Orders 11246 and 13201, and Section 503--that 
contract-related work includes more than direct work that effectuates 
that product or service that is the subject of the contract. Under the 
Department's interpretations, included in contract-related activity is 
indirect or auxiliary work without which the contract could not be 
effectuated, such as maintenance, repair, personnel and payroll work.
    Accordingly, the Department will adopt the disjunctive test 
previously used for implementing the affirmative action requirements of 
Section 503 of the Rehabilitation Act to determine whether, under 
Executive Order 13496, particular employees are ``engage[d] in 
activities relating to the performance of the contract.'' See Sec.  
471.2(d)(2).\17\ In determining whether employees are engaging in 
activities relating to the performance of the contract under Sec.  
471.2(d)(2)(i), the Department notes that a contract for production and 
sale of goods to the Government commonly requires the work not only of 
the production employees assembling the goods, but also of those 
engaged in functions such as repairing the machinery used in producing 
the goods; maintaining the plant; assuring quality control and 
security; storing the goods after production; delivering them to the 
Government; hiring, paying, and providing personnel services for the 
employees engaged in contract-related work; keeping financial and 
accounting records; performing related office and clerical tasks; and 
supervising or managing the employees engaged in such tasks. This list 
is not intended to be exhaustive, but only to illustrate that a variety 
of functions may commonly be involved in activities related to the 
performance of the contract. Whether a particular employee is engaged 
in activities related to the performance of the contract depends on the 
facts. In each case, the question is whether the duties of the 
employee's position include work that contributes to or furthers the 
performance of the contract, or work whose omission would impede the 
contract's performance.
---------------------------------------------------------------------------

    \17\ In addition, Proposed Sec.  471.10(b)(1), which stated that 
compliance evaluations will determine whether the notice is posted 
``in an about each of the contractor's establishments and/or 
construction worksites,'' has been modified to reflect that 
compliance evaluations will assess conformity with the applicable 
physical and electronic posting standards contained in Sec.  
471.2(d) and (f).
---------------------------------------------------------------------------

2. Electronic Posting Requirements
    The NPRM stated that those contractors that customarily post 
notices to employees electronically must also post the required notice 
electronically. In proposed Sec.  471.2(e), the Department indicated 
that such contractors may satisfy the electronic posting requirement on 
any Web site that is maintained by the contractor or subcontractor and 
customarily used for employee notices, whether external or internal. 
The NPRM noted that a contractor must display prominently on its Web 
page or electronic site where other employee notices are customarily 
placed a link to the DOL's Web page that contains the full text of the 
employee notice. The contractor must also place the link in the 
prescribed text contained in Sec.  471.2(e). The prescribed text is the 
introductory language of the notice. The Department sought comments on 
this proposal for electronic compliance, and particularly requested 
feedback regarding whether it should prescribe standards regarding the 
size, clarity, location, and brightness with regard to the link, 
including how to prescribe electronic postings that are at least as 
large, clear and conspicuous as the contractor's other posters.
    The Department received numerous comments about the electronic 
posting requirements of the rule. About half of those comments sought 
additional

[[Page 28388]]

guidance on the meaning of particular terms used in the rule that 
establish the electronic posting requirement, and the other half 
commented on the text prescribed to accompany the electronic link to 
the notice. In addition, the Department received one comment responding 
particularly to whether the Department should adopt standards regarding 
display of the link. Finally, one comment challenged the requirement to 
post electronically as unnecessary, redundant and ultimately burdensome 
because, the commenter submitted, most employees are accustomed to 
finding notices on employee bulletin boards. This comment also 
suggested that posting this notice electronically, when other Federally 
mandated notices are required to be posted only physically, heightens 
the impact of this notice and suggests that it may have priority over 
other required notices. The comment suggests that this outcome is not 
supported by the requirements of the Executive Order.
    Two comments suggested additional limitations on the meaning of 
``customarily post[ing] notices to employees electronically,'' which is 
the threshold standard that triggers the obligation to post this notice 
electronically as well. The first comment applauds the use of 
electronic notification to employees, but suggests that the requirement 
to post electronically be limited to those cases in which the employer 
posts only other Federally mandated notices electronically. The comment 
suggests that employers may post a variety of notices to employees 
electronically, and the mere use of electronic communications would 
trigger the e-posting requirement for this notice. The second comment 
suggests that in those cases in which an employer posts notices to 
employees both physically and electronically, the rule should be 
modified to give employers the option to post only physically. The 
comment supports the optional requirement with the example of firms 
that engage in manufacturing that may post some notices electronically. 
The most effective way to reach the employees engaged in the 
manufacturing process, the comment contends, is to physically post 
notices on the shop floor. This comment suggests the electronic posting 
in such instances would be needless and burdensome, and defeat the 
intent of the Executive Order. The comment suggests that the 
requirement to post electronically be limited to those cases in which 
employees engaged in activities related to the contract have regular 
access to electronic postings and access to electronic postings may be 
limited to employees engaged in activities related to the contract.
    Three comments sought clarification of the requirement to ``display 
prominently'' the link to the Department's Web site containing the full 
text of the notice. The first comment suggests that many employers have 
intranet sites that are devoted entirely to communication with 
employees, and absent further guidance on prominent display, such 
employers will be uncertain where on those sites to include the link to 
the required notice. One labor organization suggested that placement of 
the link be required ``immediately'' on any page referencing employee 
notices so that successive clicks are avoided. A second labor 
organization suggested that the rule require the link to be no less 
prominent than the employer's display of other comparable notices. 
Finally, in response to the Department's specific query regarding 
whether it should prescribe standards regarding the size, clarity, 
location and brightness of the link, one commenter responded 
negatively, arguing that such regulation would be ``intrusive, 
overreaching and over-regulating.'' Instead of assuming that 
contractors may try to minimize the link, the comment suggested that 
the Department simply require that the link be displayed in the same 
size and clarity as other information on the employer's Web site.
    The Department received six comments on the text required to be 
included with the link to the notice, and because the prescribed text 
is identical to the preamble of the notice, the comments were analogous 
to comments discussed earlier about the text of the preamble--some 
favored the statement regarding encouraging collective bargaining and 
some opposed it. In addition to comments about the content of the text, 
two commenters objected to the length of the prescribed text, one 
suggesting that it is cumbersome and impractical and the other 
suggesting that the prescribed text simply state, ``Your Rights Under 
the National Labor Relations Act.'' Two labor organizations favored the 
inclusion of the prescribed text, and suggested that it include the 
heading, ``Important notice of Your Federal Rights with Regard to 
Collective Bargaining.''
    After full consideration of the comments about the rule's 
electronic posting requirements, the Department has made the following 
decisions. The Executive Order requires posting in ``all places where 
notices to employees are customarily posted both physically and 
electronically.'' Sec. 2, para. 1, 74 FR 6107 (emphasis added). Thus, 
the Order indicates that the physical and electronic posting 
requirements are simultaneous, and one cannot be used in lieu of, or as 
a substitute for, the other. Accordingly, if an employer customarily 
posts employee notices both physically and electronically, it must post 
this notice both physically and electronically. As with the physical 
posting requirements, the Department concludes that a contractor 
``customarily posts employee notices electronically'' within the 
meaning of the rule when the contractor posts messages to employees 
electronically about the terms and conditions of their employment, and 
such messages are not limited to Federally mandated communications and 
employee rights. Thus, a contractor must post this notice 
electronically in those places that it customarily posts electronically 
other messages to employees about the terms and conditions of their 
employment. Further, inherent in the concept of a contractor's 
``customary'' electronic posting is employee access to those 
communications. Presumably, a contractor would not electronically post 
notices to employees about the terms and conditions of their employment 
if its employees did not have regular access to those notices. 
Therefore, the Department need not at this time provide guidance or set 
standards regarding employee access to electronic postings.
    The Executive Order's requirement to post ``conspicuously'' was 
interpreted in proposed Sec.  471.2(e) of the NPRM as requiring the 
``prominent display'' of the link to the Department's Web site, and 
comments reflected uncertainty regarding the meaning of this provision. 
In particular, as noted in the comments, large contractors may have 
entire intranets that are available for communication to employees. 
Other contractors may maintain a Web site on which notices to employees 
are not consolidated into one location. Until compliance experience is 
further developed, the Department will not adopt a standard for 
``prominent display'' that precisely regulates the location of 
electronic notice by a set number of successive ``clicks'' away from a 
starting page, as suggested in some comments. Instead, the Department 
will consider that the electronic notice is displayed prominently if 
the link to the Department's Web site containing the notice is no less 
prominent than the contractor's other notices to employees. In 
addition, at this time the Department will not set regulatory standards

[[Page 28389]]

regarding the clarity or brightness of the link to the Department's Web 
site. Further, in response to comments and for a variety of reasons, 
including limitations on space available for electronic notices, the 
Department has eliminated the requirement to include text specified in 
proposed Appendix B with the link to the Department's Web site 
containing the employee notice. Instead, the link to the Department's 
Web site must read, ``Important Notice about Employee Rights to 
Organize and Bargain Collectively with Their Employers,'' and this 
requirement has been included with the other requirements for 
electronic posting in Sec.  471.2(f).
    Finally, as with the requirement to post translations of the 
physical employee notice, where a significant portion of a contractor's 
workforce is not proficient in English, the contractor must provide the 
required electronic notice in the language the employees speak. This 
requirement will be satisfied by prominent display, as required in 
Sec.  471.2(f), of a link to the Department of Labor's Web site that 
contains the full text of the poster in the language or languages the 
employees speak. In such cases, the Office of Labor-Management 
Standards will provide translations of the link to the Department's Web 
site that must be displayed on the contractor's or subcontractor's Web 
site.

G. Application of the Rule to Employers of ``Employees Covered by the 
NLRA''

    Proposed Sec.  471.4 implemented the policy noted above that the 
Executive Order requires notice-posting in those workplaces in which 
employees covered by the NLRA perform work related to the Federal 
contract. Thus, Sec.  471.4 of the proposed regulatory text established 
coverage of the rule that is coterminous with NLRA coverage, and stated 
that the rule did not apply to employers excluded from the definition 
of ``employer'' in the NLRA, 29 U.S.C. 152(2), and employers of 
employees excluded from the definition of ``employee'' under the NLRA, 
29 U.S.C. 152(3).\18\
---------------------------------------------------------------------------

    \18\ Under the NLRA, the term ``employer'' excludes the United 
States, any wholly owned Government corporation, any Federal Reserve 
Bank, any State or political subdivision thereof, any person subject 
to the Railway Labor Act [45 U.S.C. 151 et seq.], any labor 
organization (other than when acting as an employer), or anyone 
acting in the capacity of officer or agent of such labor 
organization. 29 U.S.C. 152(2). Section 471.4(a)(3) of the NPRM 
contained an inadvertent drafting error, which combined two employer 
exclusions into one subparagraph. The two exclusions--any State or 
political subdivision of a State and any person subject to the 
Railway Labor Act--have been listed in separate subparagraphs in the 
final rule, thus increasing by one the number of employer exclusions 
listed in Sec.  471.4(a).
    The NLRA's definition of ``employee'' also excludes those 
employed as agricultural laborers, in the domestic service of any 
person or family in a home, by a parent or spouse, as an independent 
contractor, as a supervisor, or by an employer subject to the 
Railway Labor Act, such as railroads and airlines. 29 U.S.C. 152(3). 
Section 471.4(b) has been modified to include the NLRA's catchall 
definition of excluded employees, i.e., someone who is employed ``by 
any other person who is not an employer as defined'' in the NLRA. 29 
USC 152(3).
---------------------------------------------------------------------------

    One commenter agreed with proposed Sec.  471.4 as a starting point, 
but suggested that the rule must clarify several points with respect to 
NLRA coverage. First, the comment suggests that the rule should state 
that it does not apply to contractors without employees. Second, the 
comment suggests that the rule should exempt employers that do not fall 
within the NLRB's discretionary jurisdictional standards related to the 
volume and character of the business done by the employer. Third, the 
comment states that the rule should indicate that the Board's 
jurisdiction does not extend to some employers, such as religious 
school and tribal enterprises. A second comment agrees that the 
Department should state that employers who are not covered by the 
Board's discretionary jurisdictional standards, or are exempted from 
coverage for other reasons, such as certain religious educational 
institutions or the horse-racing industry, should be expressly excluded 
from the rule's application. Two comments raised the issue of 
application of the rule to foreign operations. The first comment urges 
the exemption of posting requirements for [presumably U.S. firms with] 
``employees performing work outside of the United States'' because 
``the nations in which our companies operate overseas have labor 
management requirements of their own.'' The second comment raises the 
concern that requiring notice-posting ``in foreign contracts and 
subcontracts would be confusing to employees working abroad who would 
not be subject to the statute.'' This comment notes that OFCCP has 
incorporated a similar exclusion in its regulations at 41 CFR 60-
1.5(a)(3), and suggests a similar exemption for work performed on 
contracts and subcontracts outside the U.S.
    As noted, Section 2 of the Executive Order requires contractors to 
post the required notice ``where employees covered by the National 
Labor Relations Act'' perform contract-related activities. The NLRA 
applies to employers and employees that are not excluded from coverage 
under the definitions of those terms in the Act. 29 U.S.C. 152(2)-(3). 
Section 10(a) of the Act empowers the Board ``to prevent any person 
from engaging in any unfair labor practice affecting commerce,'' and 
Sec.  9 of the Act extends the jurisdiction to representation cases 
where commerce would be affected. 29 U.S.C. 160(a), 159. Sections 2(6) 
and 2(7) provide statutory definitions of ``commerce'' and ``affecting 
commerce.'' 29 U.S.C. 152(6), (7).
    The Supreme Court has determined that Congress granted the Board 
with ``the fullest jurisdictional breadth constitutionally permissible 
under the Commerce Clause.'' NLRB v. Reliance Fuel Corp., 371 U.S. 224, 
226 (1963). Although the NLRA's statutory jurisdiction is coextensive 
with congressional power to legislate under the Commerce Clause, the 
Board has established discretionary standards that limit the assertion 
of its broad statutory authority to those cases which, in its opinion, 
have a substantial effect on commerce. These discretionary standards 
are based on the volume and character of the business done by the 
employer. See ``An Outline of Law and Procedure in Representation 
Cases,'' Chapter 1, Jurisdiction (August 2008) (available at http://www.nlrb.gov/nlrb/legal/manuals/outline_chap1.html). However, even 
where an employer fails to meet the appropriate discretionary monetary 
standard, the Board will assert its jurisdiction to the extent 
necessary to address alleged violations of Section 8(a)(4), which 
prohibits retaliation against employees who give testimony or file 
charges under the Act, if it can be established that the Board has 
statutory jurisdiction, i.e., a greater than de minimis flow of goods 
or services across State lines. Pickle Bill's, Inc., 224 NLRB 413 
(1976).
    After due consideration, the Department declines to limit the 
application of the notice-posting requirements based on the Board's 
discretionary jurisdictional standards for the following reasons. 
First, had the President wanted the application of the rule to be 
limited in such a fashion, the words of the Executive Order would 
create such a limitation, but no such text appears in the Order. 
Second, the Board's discretionary jurisdictional standards were 
established to better effectuate the purposes of the Act to ``promote 
the prompt handling of major cases'' by limiting the exercise of its 
jurisdiction ``to enterprises whose operations have, or at which labor 
disputes would have, a pronounced impact upon the flow of interstate 
commerce.'' Hollow Tree Lumber Company, 91 NLRB 635, 636 (1950). The 
application of the notice-posting

[[Page 28390]]

rule to employers outside the Board's discretionary jurisdictional 
limits raise no similar concerns related to the prompt handling of 
major unfair labor practice or representation cases, and thus no 
similar rationale demands the inclusion of such a limitation. Third, 
the Board's discretionary jurisdictional standards are numerous and 
unwieldy for the purposes of this rule. The jurisdictional standards 
that have the broadest application are those for retail and non-retail 
operations, but the Board has established numerous separate individual 
standards to address certain industries and types of enterprises, 
including health care organizations, newspapers, and educational 
institutions, among others. See ``An Outline of Law and Procedure in 
Representation Cases,'' supra, Chapter 1, Jurisdiction (discussing 
jurisdictional standards applicable by industry). Finally, as 
illustrated in Pickle Bill's, Inc., supra, 224 NLRB at 413, certain 
public policies, such as remedying an employer's unlawful interference 
with the statutory right of all employees freely to resort to and 
participate in the Board's processes, demand that the Board's 
discretionary jurisdictional standards not apply. The Department 
likewise concludes that the public policy underlying this rule favoring 
notification to employees of their rights similarly demands that the 
Board's discretionary jurisdictional standards not apply. Therefore, 
the Department has determined that the rule applies to employers of 
``employees covered by the National Labor Relations Act,'' Sec. 2, 74 
FR at 6107, without regard to the Board's discretionary jurisdictional 
limitations.\19\
---------------------------------------------------------------------------

    \19\ As one comment notes, the Board has declined completely to 
exercise jurisdiction over the horseracing and dogracing industries 
because they are peculiarly related to, and regulated by, local 
governments, and because further regulation of them would not 
contribute to stability in labor relations in those industries. See 
29 CFR 103.3. Because the Board has expressly found that its 
jurisdiction would not enhance labor-management stability in those 
industries, and because the purpose of this rule is to promote labor 
peace and reduce labor unrest, the Department will follow this 
jurisdictional standard and not apply the rule to the horseracing or 
dogracing industries.
---------------------------------------------------------------------------

    These comments also raise the issue of the application of the rule 
to certain contractors that might implicate the First Amendment, such 
as religiously affiliated employers. See NLRB v. Catholic Bishop of 
Chicago, 440 U.S. 490 (1979) (reading the NLRA in light of the Religion 
Clauses of the First Amendment, NLRB lacks jurisdiction over church-
operated schools). Because such limits to the NLRA's jurisdiction are 
constitutional in nature and similarly implicate the Department's 
action under the Executive Order with respect to such contractors, the 
rule will not apply to contractors that hold themselves out to the 
public as a religious institution, that are nonprofit, and are 
religiously affiliated. See University of Great Falls v. NLRB, 278 F.3d 
1335 (DC Cir. 2002) (employing three-part test for implementing 
Catholic Bishop); Universidad Central de Bayamon v. NLRB, 793 F.2d 383 
(1st Cir. 1985) (en banc) (Breyer, Circuit Judge) (same).
    As noted, the comments also raise the issue of the application of 
the rule to U.S. firms doing business abroad. The Supreme Court has 
stated that the statutory jurisdiction of the NLRA extends only to 
employees ``of our own country and its possessions.'' Benz v. Compania 
Naviera Hidalgo, S.A., 353 U.S. 138, 144 (1957). More precisely, the 
Act only applies to employees in the territorial United States, and not 
to American employees located abroad. See, e.g., RCA Oms, 202 NLRB 228 
(1973); Range Sys's. Eng'g Support, 326 NLRB 1047 (1998); Computer 
Sci.'s Raytheon, 318 NLRB 966 (1995); GTE Automatic Elec. Inc., 226 
NLRB 1222 (1976). Similarly, the regulations implementing Executive 
Order 11246 exempt from coverage ``work performed outside the United 
States by employees who were not recruited within the United States.'' 
41 CFR. 60-1.5(a)(3). For these reasons, the Department has determined 
that this rule will not apply to government contracts for work 
performed exclusively by employees of U.S. firms operating outside the 
territorial United States, and Sec.  471.3(a)(5) has been added to 
reflect this determination.
    Finally, the comments raise the issue regarding the application of 
the rule to tribal governments. The NLRA is a statute of general 
applicability, and therefore may be applicable to the activities of 
Indian tribes. NLRB v. Chapa-De Indian Health Program Inc., 316 F.3d 
995 (9th Cir. 2003). The Board's standard for determining the 
circumstances under which it will exercise jurisdiction over Indian-
owned and -operated enterprises is based on the nature of the 
enterprise and not its location. San Manuel Indian Bingo & Casino, 341 
NLRB 1055 (2004). In San Manuel, the Board overruled prior precedent 
and applied the statute to the conduct of Indian tribes, unless the law 
touches the exclusive rights of self-government in purely intramural 
matters, the application of the law would abrogate treaty rights, or 
there is evidence in the statute or legislative history that Congress 
did not intend the law to apply to Indian tribes. Id. The Department 
will utilize the same standard, and apply this rule to Federal 
contractors that are Indian-owned or -operated enterprises, unless one 
of the exceptions articulated by the Board in San Manuel applies.

Subpart B--General Enforcement; Compliance Review and Complaint 
Procedures

    Subpart B of the proposed rule established standards and procedures 
the Department will use to determine compliance with obligations of the 
rule, take complaints regarding noncompliance, address findings of 
violations, provide hearings for certain matters, impose sanctions, 
including debarment, and provide for reinstatement in the case of 
debarment. The standards and procedures proposed in the NPRM were taken 
largely from the Department's prior rule administering and enforcing 
Executive Order 13201, 66 FR 11221. See 29 CFR Part 470 (2008), 
rescinded under authority of E.O. 13496, 74 FR 14045, March 30, 2009. 
The Department invited comment on the administrative and enforcement 
procedures proposed in Subpart B.
    The NPRM noted that OFCCP administers and enforces several laws 
that ban discrimination and require Federal contractors and 
subcontractors to take affirmative action to ensure that all 
individuals have an equal opportunity for employment. Therefore, OFCCP 
already has responsibility for monitoring, evaluating and ensuring that 
contractors doing business with the Federal government conduct 
themselves in a manner that complies with certain Federal laws. 
Proposed Sec.  471.10 built on this practice and expertise, and 
established authority in the Director of OFCCP to conduct evaluations 
to determine whether a contractor is in compliance with the 
requirements of this rule. Under proposed Sec.  471.10(a), such 
evaluations may be done solely for the purpose of assessing compliance 
with this rule, or may be undertaken in conjunction with an assessment 
of a Federal contractors' compliance with other laws under OFCCP's 
jurisdiction. This proposed section also established standards 
regarding location of the posted notice that will be used by OFCCP to 
assess compliance and indicates that an evaluation record will reflect 
efforts made toward conciliation, corrective action and/or 
recommendations regarding enforcement actions.
    The Department received three comments that each raised concerns 
about OFCCP evaluations to determine

[[Page 28391]]

whether a contractor is in compliance with the contract clause-
inclusion and notice-posting requirements of the rule. The thrust of 
these comments is that OFFCP compliance evaluators do not have 
substantive expertise about the rights and obligations contained in the 
NLRA, and therefore should not be permitted to dispense advice to 
employees regarding those rights and obligations during compliance 
reviews. One comment noted that employees are likely to be confused by 
OFCCP's role in implementing the rule, because the NLRB has enforcement 
authority regarding the rights stated in the notice. A second commenter 
noted that the Department should delegate authority for compliance to 
the NLRB, since it has the proper enforcement authority. Two commenters 
noted that the Department must ensure that OFCCP compliance evaluators 
refer any questions regarding substantive rights and obligations under 
the NLRA to the NLRB. In response to these concerns, the Department 
notes that the purpose of an OFCCP compliance evaluation is to 
determine whether a contractor is in compliance with the requirements 
of this rule, in particular, whether the contractor has satisfied the 
notice-posting and contract clause-inclusion requirements applicable to 
that contractor. To the extent that questions are raised regarding the 
substantive provisions of the notice during a compliance evaluation, 
the OFCCP reviewer will refer such questions to the NLRB. Therefore, no 
change to the proposed Sec.  471.10 is required.
    Proposed Sec.  471.11 provided for the Department's acceptance of 
written complaints alleging that a contractor doing business with the 
Federal government has failed to post the notice required by this rule. 
The proposed section established that no special complaint form is 
required, but that complaints must be in writing. In addition, as 
proposed in Sec.  471.11, written complaints must contain certain 
information, including the name, address and telephone number of the 
person submitting the complaint, and the name and address of the 
Federal contractor alleged to have violated this rule. This proposed 
section established that written complaints may be submitted either to 
OFCCP or OLMS, and the contact information for each agency was 
contained in this subsection. Finally, proposed Sec.  471.11 
established that OFCCP will conduct investigations of complaints 
submitted under this section, make compliance findings based on such 
investigations, and include in the investigation record any efforts 
made toward conciliation, corrective action, and recommended 
enforcement action.
    The Department received one comment regarding the ``informality'' 
of the complaint submission process. The comment suggests that because 
the complaint is not required to be submitted under penalty of perjury 
or similar standard, the process permits the filing of false complaints 
for harassment or other wrongful purposes. Unlike most other complaints 
alleging an employer's violation of a legal obligation, however, a 
complaint filed under Sec.  471.11 requires only a straightforward 
allegation that an employer has not posted the required notice 
physically and/or electronically, or has not included the contract 
clause in its covered contracts or subcontracts. Once notified that 
such a complaint has been received, the alleged violation is either 
easily remedied or easily disproved, providing virtually no opportunity 
for harassment or other misuse of the complaint process. In addition, 
because the factual basis underlying a complaint is easily corrected, 
an employee who files a true complaint may be vulnerable to retaliation 
by an employer who quickly corrects the violation and then subjects the 
complaining employee to repercussions that may result from a penalty-
of-perjury standard. Finally, the complaint process for the 
Department's former and now-revoked employee notice rule, 29 CFR 470.11 
(2008) was identical to this process. For these reasons, the Department 
has decided to retain the complaint process as proposed in the NPRM. 
See Sec.  471.11.
    Proposed Sec.  471.12 set out the initial steps that the Department 
will take in the event that a contractor is found to be in violation of 
this rule, including making reasonable efforts to secure compliance 
through conciliation. Under this proposed section, a noncompliant 
contractor must take action to correct the violation and commit in 
writing to maintain compliance in the future. If the contractor fails 
to come into compliance, OLMS may proceed with enforcement efforts 
proposed in Sec.  471.13.
    One comment regarding the conciliation process requested that the 
Department clarify the extent of a contractor's liability for penalties 
if the contractor has fully cooperated with reasonable conciliation 
effort and complies with the requirements of the rule. The same comment 
suggests that a contractor be given notice of the conciliation process 
and an opportunity to appear at that stage before the Director for 
Federal Contract Compliance, and that if compliance results, a written 
decision be issued to that effect.
    The comment misconstrues the conciliation and enforcement processes 
of the rule. Enforcement proceedings against a contractor, discussed 
further below, will result when a violation has not been corrected 
through conciliation. Sec.  471.13(a)(2). If, during the conciliation 
process, a contractor comes into full compliance with the requirements 
of the rule and commits in writing not to repeat the violation, Sec.  
471.12(b), there is no need to refer the matter for enforcement, and no 
attendant penalties can result. Similarly, because of the informality 
of the conciliation process and the absence of any penalties associated 
with it, there is no basis to provide a contractor with formal notice, 
an opportunity to be heard, or a decision on the record at that stage 
of the process.
    Proposed Sec.  471.13 implemented Section 6 of the Executive Order, 
74 FR 6108-09, and established steps that the Department will take in 
the event that conciliation efforts fail to bring a contractor into 
compliance with this rule. Under this proposed section, enforcement 
proceedings may be initiated if violations are found as a result of 
either a compliance evaluation or a complaint investigation, or in 
those cases in which a contractor refuses to allow a compliance 
evaluation or complaint investigation or refuses to cooperate with the 
compliance evaluation or complaint investigation, including failing to 
provide information sought during those procedures. The enforcement 
procedures proposed in Sec.  471.13 relied primarily on the 
Department's regulations at 29 CFR part 18, which govern administrative 
hearings before an Administrative Law Judge (``ALJ''), and on the 
provisions for expedited hearings at 29 CFR 18.42. The procedures in 
this proposed section established that an ALJ will make recommended 
findings and conclusions regarding any alleged violation to the 
Assistant Secretary for Employment Standards (``Assistant Secretary''), 
who would issue a final administrative order. The final administrative 
order may include a cease-and-desist order or other appropriate 
remedies in the event that a violation is found. The procedures in this 
proposed section also established timetables for submitting exceptions 
to the ALJ's recommended order to the Assistant Secretary, and also 
provided for the use of expedited proceedings. Other than the 
substitution of the Administrative Review Board for the Assistant 
Secretary, as noted earlier, no changes were made to proposed

[[Page 28392]]

Sec.  471.13, and it is unchanged in the final rule.
    Proposed Sec.  471.14 addressed the imposition of sanctions and 
penalties in cases in which violations are found, and established post-
hearing procedures related to such sanctions or penalties. Section 7 of 
the Executive Order provides the framework for the scope and nature of 
remedies the Department may order in the event of a violation. 74 FR 
6109.
    Section 7(a) of the Executive Order provides that the Secretary may 
issue a directive that the contracting department or agency cancel, 
terminate, suspend, or cause to be cancelled, terminated or suspended 
any contract or portion of a contract for noncompliance. Id. In 
addition, the Executive Order indicates that contracts may be 
cancelled, terminated or suspended absolutely, or their continuance may 
be conditioned on a requirement for future compliance. Id. Prior to 
issuing such a directive, the Secretary must offer the head of the 
contracting department or agency an opportunity to object in writing to 
the remedy contemplated, and the objections must contain reasons why 
the contract is essential to the agency's mission. Id. Finally, Section 
7 of the Executive Order prevents the imposition of such a remedy if 
the head of the contracting department or agency, or his or her 
designee, continues to object to the issuance of the directive. Id. 
Proposed Sec.  471.14(a), (b), (c), and (d)(1) fully implemented the 
standards and procedures established in Section 7(a) of the Executive 
Order.
    Section 7(b) of the Executive Order provides that the Secretary may 
issue an order debarring noncompliant contractors ``until such 
contractor has satisfied the Secretary that such contractor has 
complied with and will carry out the provisions of the order.'' 74 FR 
6109. As with the remedies discussed above, prior to the imposition of 
debarment, the Secretary must offer the head of the contracting 
department or agency an opportunity to object in writing to debarment, 
and the objections must contain reasons why the contract is essential 
to the agency's mission. Id. Finally, Section 7(b) of the Executive 
Order prevents the imposition of debarment if the head of the 
contracting department or agency, or his or her designee, continues to 
object to it. Id. Proposed Sec.  471.14(d)(3) of the rule established 
the availability of the debarment remedy. Section 471.14(f) of the 
proposed rule indicated that the Assistant Secretary will periodically 
publish and distribute the names of contractors or subcontractors that 
have been debarred for noncompliance. Other than the substitution of 
the Director of OLMS for the Assistant Secretary, as noted earlier, no 
changes were made to proposed Sec.  471.14, and it is unchanged in the 
final rule.
    Proposed Sec.  471.15 permitted a contractor or subcontractor to 
seek a hearing before the Assistant Secretary before the imposition of 
any of the remedies outlined above. Other than the substitution of the 
Director of OLMS for the Assistant Secretary, as noted earlier, no 
changes were made to proposed Sec.  471.15, and it is unchanged in the 
final rule. Proposed Sec.  471.16 provides contractors or 
subcontractors that have been debarred under this rule an opportunity 
to seek reinstatement by requesting such in a letter to the Assistant 
Secretary. Under this proposed provision, the Assistant Secretary may 
reinstate the debarred contractor or subcontractor if he or she finds 
that the contractor or subcontractor has come into compliance with this 
rule and has shown that it will fully comply in the future.
    As noted above, Sec.  471.2(a) required all nonexempt prime 
contractors and subcontractors to include the employee notice contract 
clause in each of its nonexempt subcontracts so that the obligation to 
notify employees of their rights is binding upon each successive 
subcontractor. Regarding enforcement of the requirements of the rule as 
to subcontractors, the Executive Order requires the contractor to 
``take such action with respect to any such subcontract as may be 
directed by the Secretary of Labor as a means of enforcing such 
provisions, including sanctions for noncompliance.'' Sec. 2, para. 4, 
74 FR 6108. Accordingly, in the event that the Department determines 
that a subcontractor is out of compliance with the requirements of this 
rule regarding employee notice or inclusion of the contract clause in 
the subcontractor's own subcontracts, the Secretary may direct the 
contractor to require the noncompliant subcontractor to come into 
compliance. As indicated in the Executive Order, if such a directive 
causes the contractor to become involved in litigation with the 
subcontractor, the contractor may request the United States to enter 
the litigation in order to protect the interests of the United States. 
Sec. 2, para. 4, 74 FR 6108. If the contractor is unable to compel 
subcontractor compliance on its own accord, the compliance review, 
complaint, investigation, conciliation, hearing and decision procedures 
established in Sec. Sec.  471.10 through 471.16 to assess and resolve 
contractor compliance with the requirements of this rule are also 
applicable to subcontractors. In those instances in which a contractor 
fails to take the action directed by the Secretary regarding a 
subcontractor's noncompliance, the contractor may be subject to the 
same enforcement and remedial procedures that apply to noncompliance 
with requirements to provide employee notice or include the contract 
clause in its contracts. See Sec.  471.13(a)(1).
    The Department received a number of comments regarding the 
enforcement procedures of the rule, the vast majority of which raised 
concerns regarding the Department's purported enforcement of the 
substantive provisions of the notice. Eight comments raised the issue 
with respect to the second paragraph of the contract clause, which 
states that the ``contractor will comply with all provisions of the 
Secretary's notice, and related rules, regulations, and orders of the 
Secretary of Labor.'' 74 FR 6107. These comments note that this 
provision, when taken together with the rule's enforcement procedures, 
suggest that the Department will be adjudicating violations of the 
substantive provisions of the notice, which they correctly indicate is 
solely within the purview of the National Labor Relations Board. Other 
commenters raise the same issue more generically, and suggest that the 
Department's enforcement against contractors that violate the 
Department's rule interferes with the NLRB's exclusive jurisdiction. 
Overall, the comments indicate that the Department's interference with 
the NLRB's adjudicatory role would violate principles of preemption and 
primary jurisdiction, and incorrectly impose sanctions precluded by the 
NLRA.
    In response to these comments, the Department assures the 
contractor community that it cannot, nor will it, attempt to enforce 
the substantive provisions of the notice against contractors or 
subcontractors. As the comments correctly note, such enforcement 
authority is within the exclusive jurisdiction of the National Labor 
Relations Board. The primary purpose of the Executive Order is to 
reduce the government's contracting costs by ensuring that employees 
are well-informed of their rights under the NLRA. 74 FR 6107. The 
mechanism by which the Executive Order achieves this goal is through 
requiring that a contractor agree in the government contract to post a 
notice, developed by the Department, to its employees about those 
rights. The grant of enforcement authority to the Department in 
Sections 6 and 7 of the Executive Order is limited, and the Order 
sanctions the Department's enforcement activity only

[[Page 28393]]

as to a contractor's compliance with the contract clause-inclusion 
requirements and the notice-posting requirements of this final rule. 
The Department does not construe the second paragraph of the contract 
clause as establishing an independent basis of authority for the 
enforcement of the substantive provisions of the notice. Of course, the 
substantive provisions of the notice are an accurate reflection of NLRA 
law. As a result, if a contractor is failing or refusing to comply with 
those provisions, the contractor may be in violation of the NLRA, and 
in that case charges may be lodged solely with and adjudicated solely 
by the NLRB.
    Beyond questions related to alleged overlapping jurisdiction, 
comments regarding enforcement of the rule made general observations 
and consisted of some requests for clarification. Two commenters 
submitted general support for the administrative and enforcement 
procedures of the rule. One comment indicated that these same 
enforcement procedures worked well in implementing the now-revoked 
Executive Order 13201, and urged the Department to similarly emphasize 
compliance assistance rather than ``heavy-handed enforcement.'' One 
commenter described the available sanctions, particularly debarment, as 
``unduly extreme,'' and is concerned that a contractor might face such 
sanctions in the event of an unintentional or inadvertent violation, 
such as when a notice has fallen off the wall. Another comment 
requested more guidance on reinstatement from debarment under Sec.  
471.16, including the steps a contractor must take to seek 
reinstatement and the requirement of a written decision on the request. 
This comment offers as an example the reinstatement procedures 
established in 41 CFR 60-1.31. Another comment requests that the 
Department clarify that a contractor has no affirmative obligation to 
compel a subcontractor's compliance with the rule, and that a 
contractor can only be compelled to itself comply. This comment 
suggests that it is unrealistic of the Department to require that 
contractors police their subcontractors for compliance, and that the 
Department should take enforcement action directly against a 
subcontractor in the event of the subcontractor's noncompliance. The 
final comment regarding enforcement suggests that the rule must be 
revised to reflect the Department's elimination of the Employment 
Standards Administration and the abolition of the position of Assistant 
Secretary for Employment Standards, which, as previously noted, has 
been done.
    In response to these comments, the Department notes that 
contractors will not receive harsh sanctions for inadvertent or 
unintentional violations of the rule. Indeed, the primary purpose of 
the conciliation procedures is to seek a contractor's cooperation and 
compliance with the rule, so inadvertent and unintentional 
noncompliance will be addressed long before any sanctions may be 
imposed. Further, the Department has decided to clarify the standards 
for reinstatement of a debarred contractor, and, as suggested, those 
standards are modeled on the regulation governing reinstatement of 
contractors debarred under Executive Order 11246, 41 CFR 60-1.31. Thus, 
under amended Sec.  471.16, in connection with a reinstatement request 
to the Director of OLMS, debarred contractors are required to show that 
they have established and will carry out policies and practices in 
compliance with the Executive Order and implementing regulations. 
Before reaching a decision, the Director of OLMS may request that a 
compliance evaluation of the contractor be conducted, and may require 
the contractor to supply additional information regarding the request 
for reinstatement. If the Director of OLMS finds that the contractor or 
subcontractor has come into compliance with and will carry out the 
Executive Order and the regulation, the contractor or subcontractor may 
be reinstated. In addition, under the revised provision, the Director 
of OLMS shall issue a written decision on the request. See Sec.  
471.16.
    Finally, in response to the comment suggesting that contractors not 
be compelled to police their subcontractors to determine compliance, 
the Department concludes that the operative provision in paragraph 4 of 
the contract clause of the Executive Order does not support the 
position suggested in the comment. This provision requires a contractor 
to ``take such action with respect to any such subcontract as may be 
directed by the Secretary of Labor as a means of enforcing such 
provisions, including the imposition of sanctions for non-compliance.'' 
74 FR 6108. The provision thus indicates that a prime contractor cannot 
turn a blind eye toward noncompliance of its subcontractors, and should 
the Department become aware that a prime contractor has a significant 
number of subcontractors that are out of compliance with this rule, the 
Department may order that prime contractor to require its 
subcontractors to come into compliance. In the event that the 
contractor disregards such an order to seek compliance among its 
subcontractors, such disregard may make the prime contractor liable for 
penalties and sanctions in the same manner as if the contractor had 
failed to incorporate the contract clause or post the employee notice. 
In this regard, however, the prime contractor is liable for penalties 
and sanctions only insofar as it fails or refuses to seek compliance 
among subcontractors following an order by the Department to do so. If 
a prime contractor diligently seeks subcontractor compliance following 
such an order, but a subcontractor's compliance is not forthcoming, the 
prime contractor will not be liable for the subcontractor's 
noncompliance. As noted above, only Sec.  471.16 of this subpart was 
modified in response to comments.

Subpart C--Ancillary Matters

    A number of discrete issues unrelated to the issues addressed in 
the two previous subparts merit attention in this rule, and they are 
set out in this subpart. Consequently, this subpart addresses 
delegations of authority within and outside the Department to 
administer and enforce this rule, rulings under or interpretations of 
the Executive Order, standards prohibiting intimidation, threats, 
coercion or other interference with rights protected under this rule, 
and other provisions of the Executive Order that are included in this 
rule. The Department invited comment on these provisions and received 
none, save the suggestion discussed earlier in the context of 
enforcement that the Department delegate its enforcement role to the 
NLRB. Therefore, the provisions as proposed in this subpart will be 
retained, except that, as noted earlier, the roles and responsibilities 
given to the Assistant Secretary for ESA have been reassigned.
    Section 471.20 implements Section 11 of the Executive Order, 74 FR 
6110, which permits the delegation of the Secretary's authority under 
the Order to Federal agencies within or outside the Department. Revised 
Sec.  471.21 of the rule indicates that the Directors of OLMS and OFCCP 
will share the authority to make rulings under or interpretations of 
this rule, as appropriate and in accordance with their respective 
responsibilities under the rule. In this connection, requests for such 
rulings or interpretations must be submitted to the Director of OLMS, 
who will consult with the Director of OFCCP to the extent necessary and 
appropriate to issue the requested ruling or interpretation. Section 
471.22 seeks to prevent intimidation or interference with rights

[[Page 28394]]

protected under this rule, so it indicates that the sanctions and 
penalties available for noncompliance set out in Sec.  471.14 will be 
available should a contractor or subcontractor fail to take all steps 
necessary to prevent such intimidation or interference. Activities 
protected by this section include filing a complaint, furnishing 
information, or assisting or participating in any manner in a 
compliance evaluation, a complaint investigation, hearing or any other 
activity related to the administration and enforcement of this rule. 
Finally, Sec.  471.23 implements Section 9 of the Executive Order, 74 
FR 6109, which requires that contracting departments and agencies 
cooperate with the Secretary in carrying out her functions under the 
Order, and implements Section 15 of the Executive Order, 74 FR 6110, 
which establishes general guidelines for the Order's implementation.

IV. Regulatory Procedures

Executive Order 12866

    This final rule has been drafted and reviewed in accordance with 
Executive Order 12866, Section 1(b), Principles of Regulation. 58 FR 
51735-36, Oct. 4, 1993. The Department has determined that this rule is 
not an ``economically significant'' regulatory action under Section 
3(f)(1) of Executive Order 12866. 58 FR 51738. Based on the 
Department's analysis, including a cost impact analysis set forth more 
fully below with regard to the Regulatory Flexibility Act, 5 U.S.C. 601 
et seq., this rule is not likely to: (1) Have an annual effect on the 
economy of $100 million or more or adversely affect in a material way 
the economy, a sector of the economy, productivity, competition, jobs, 
the environment, public health or safety, or state, local, or tribal 
governments or communities; (2) create a serious inconsistency or 
otherwise interfere with an action taken or planned by another agency; 
(3) materially alter the budgetary impact of entitlements, grants, user 
fees, or loan programs or the rights and obligations of recipients 
thereof, or (4) raise novel legal or policy issues. 58 FR 51738. As a 
result, the Department has concluded that a full economic impact and 
cost/benefit analysis is not required for the rule under section 
6(a)(3)(B) of the Executive Order. 58 FR 51741. However, because of its 
importance to the public, the rule was reviewed by the Office of 
Management and Budget.

Regulatory Flexibility Act

    The Regulatory Flexibility Act of 1980 (``RFA'') requires agencies 
promulgating final rules to prepare a final regulatory flexibility 
analysis and to develop alternatives wherever possible, when drafting 
regulations that will have a significant impact on a substantial number 
of small entities. 5 U.S.C. 601 et seq. The focus of the RFA is to 
ensure that agencies ``review rules to assess and take appropriate 
account of the potential impact on small businesses, small governmental 
jurisdictions, and small organizations, as provided by the [RFA].'' 
E.O. 13272, Sec. 1, 67 FR 53461 (``Proper Consideration of Small 
Entities in Agency Rulemaking''). However, an agency is relieved of the 
obligation to prepare a final regulatory flexibility for a final rule 
if the Agency head certifies that the rule will not, if promulgated, 
have a significant economic impact on a substantial number of small 
entities. 5 U.S.C. 605(b). Based on the analysis below, in which the 
Department has estimated the financial burdens to covered small 
contractors and subcontractors associated with complying with the 
requirements contained in this final rule, the Department has certified 
to the Chief Counsel for Advocacy of the Small Business Administration 
(``SBA'') that this rule will not have a significant economic impact on 
a substantial number of small entities.
    The primary goal of Executive Order 13496 and these implementing 
regulations is the notification to employees of their rights with 
respect to collective bargaining and other protected, concerted 
activity. This goal is achieved through the incorporation of a contract 
clause in all covered Government contracts. The Executive Order and 
this rule impose the obligation to ensure that the contract clause is 
included in all Government contracts not on private contractors, but on 
Government contracting departments and agencies, which are not ``small 
entities'' that come within the focus of the RFA. Therefore, the costs 
attendant to learning of the obligation to include the contract clause 
in Government contracts and modifying those contracts in order to 
comply with that obligation is a cost borne by the Federal government, 
and is not incorporated into this analysis.
    Once the required contract clause is included in the Government 
contract, contractors then begin to assume the burdens associated with 
compliance. Those obligations include posting the required notice and 
incorporating the contract clause into all covered subcontracts, thus 
making the same obligations binding on covered subcontractors. For the 
purposes of the RFA analysis, the Department estimates that, on 
average, each prime contractor will subcontract some portion of its 
prime contract three times, and the prime contractor therefore will 
expend time ensuring that the contract clause is included in its 
subcontracts and notifying those subcontractors of their attendant 
obligations. To the extent that subcontractors subcontract any part of 
their contract with the prime contractor, they, in turn, will be 
required to expend time ensuring that the contract clause is included 
in the next tier of subcontracts and notifying the next-tier 
subcontractors of their attendant obligations. Therefore, for the 
purpose of determining time spent on compliance, the Department will 
not differentiate between the obligations of prime contractors and 
subsequent tiers of subcontractors in assessing time spent on 
compliance; the Department assumes that all contractors, whether prime 
contractor or subcontractor, will spend equivalent amounts of time 
engaging in compliance activity.
    The Department estimates that each contractor will spend a total of 
3.5 hours per year in order to comply with this rule, which includes 90 
minutes for the contractor to learn about the contract and notice 
requirements, train staff, and maintain records; 30 minutes for 
contractors to incorporate the contract clause into each subcontract 
and explain its contents to subcontractors; 30 minutes acquiring the 
notice from a government agency or Web site; and 60 minutes posting 
them physically and electronically, depending on where and how the 
contractor customarily posts notices to employees. The Department 
assumes that these activities will be performed by a professional or 
business worker, who, according to Bureau of Labor statistics data, 
earned a total hourly wage of $31.02 in January 2009, including 
accounting for fringe benefits. The Department then multiplied this 
figure by 3.5 hours to estimate the average annual costs for 
contractors and subcontractors to comply with this rule. Accordingly, 
this rule is estimated to impose average annual costs of $108.57 per 
contractor (3.5 hours x $31.02). These costs will decrease in 
subsequent years based on a contractor's increasing familiarity with 
the rule's requirements and having already satisfied its posting 
requirements in earlier years.\20\ Based

[[Page 28395]]

upon figures obtained from USASpending.gov, which compiles information 
on federal spending and contractors across government agencies, the 
Department concludes that there were 186,536 unique Federal contractors 
holding Federal contracts in FY 2008.\21\ Although this rule does not 
apply to Federal contracts below the simplified acquisition threshold, 
the Department does not have a means by which to calculate what portion 
of all Federal contractors hold only contracts with the government 
below the simplified acquisition threshold. Therefore, in order to 
determine the number of entities affected by this rule, the Department 
counted all Federal contractors, regardless of the size of the 
government contract held. Based on data analyzed in the Federal 
Procurement Data System (fpds.gov), which compiles data about types of 
contractors, of all 186,536 unique Federal prime contractors, 
approximately 35% are ``small entities'' as defined by the Small 
Business Administration (SBA) size standards.\22\ Therefore, for the 
purposes of the RFA analysis, the Department estimates that this rule 
will affect 65,288 small Federal prime contractors.
---------------------------------------------------------------------------

    \20\ The Department received two comments suggesting that the 
annual compliance costs were underestimated in the proposed rule. 
The first comment indicated that contractors will spend time each 
year reviewing the notice to assess whether it is consistent with 
legislation, or Board or court decisions. This comment also 
suggested that contractors would be ``working under contract terms 
which would not only be out-of-sync which [sic] the updated law, but 
also potentially in conflict with the updated law, thereby 
needlessly exposing them to potential liabilities or penalties.'' 
The second comment indicated that the time allocated for 
incorporation in full of the contract clause was too low, but the 
comment did not suggest an alternate figure for that allocation.
    The Department concludes that neither of these comments provides 
an adequate basis to reassess the annual compliance cost estimates 
in the proposed rule. First, a contractor will not need to review 
legislation and Board or court decisions to ensure that the notice 
in the contract clause is accurate; this is the job of the 
Department. Second, the time allotment for the incorporation of the 
contract clause, whether by reference or in full, is essentially the 
same--the contractor must ensure that its subcontracts are revised 
to include a standard-form provision that establishes the duty to 
post the notice. After the first time the contractor ensures the 
accuracy of the provision that must be incorporated, the time a 
contractor devotes to ensuring the proper inclusion of the provision 
on an ongoing basis should not increase as a result of the length of 
the provision. In any event, as noted above, the Department has 
revised the prohibition against incorporation of the contract clause 
by reference proposed in the NPRM, and the final rule now permits 
incorporation of the contract clause by reference. Finally, the 
Department rejects the premise that the notice or the contract 
clause containing it will be ``out-of-sync'' with the state of the 
law, thereby exposing a contractor to liabilities or penalties.
    \21\ The Federal Funding Accountability and Transparency Act of 
2006, Pub. L. 109-282 (Sept. 26, 2006), requires that the Office of 
Management and Budget establish a single searchable Web site, 
accessible by the public for free, that includes for each Federal 
award: (1) The name of the entity receiving the award; (2) the 
amount of the award; (3) information on the award including 
transaction type, funding agency, etc.; (4) the location of the 
entity receiving the award; and (5) a unique identifier of the 
entity receiving the award. See 31 U.S.C.A. Sec.  6101 note. In 
compliance with this requirement, USASpending.gov was established.
    \22\ The Federal Procurement Data System (``FPDS'') compiles 
data regarding small business ``actions'' and small business 
``dollars'' using the criteria employed by SBA to define ``small 
entities.'' In FY 2008, small business actions accounted for 50% of 
all Federal procurement action. However, deriving a percentage of 
contractors that are small using the ``action'' data would overstate 
the number of small contractors because contract actions reflect 
more than just contracts; they include modifications, blanket 
purchase agreement calls, task orders, and federal supply schedule 
orders. As a result, there are many more contract actions than there 
are contracts or contractors. Accordingly, a single small contractor 
might have hundreds of actions, e.g., delivery or task orders, 
placed against its contract. These contract actions would be counted 
individually in the FPDS, but in fact represent only one small 
business.
    Also reflected in FPDS, in FY 2008, small business ``dollars'' 
accounted for 19% of all Federal dollars spent. However, deriving a 
percentage of contractors that are small using the ``dollars'' data 
would understate the number of small contractors. Major acquisitions 
account for a disproportionate share of the dollar amounts and are 
almost exclusively awarded to large businesses. For instance, 
Lockheed Martin was awarded $34 billion in contracts in FY 2008, 
which accounted for 6% of all Federal spending in that year. The top 
five federal contractors, all large businesses, accounted for over 
20% of contract dollars in FY 2008. As a result, because the largest 
Federal contractors disproportionately represent ``dollars'' spent 
by the Federal government, the FPDB's data on small ``dollars'' 
spent understates the number of small entities with which the 
Federal government does business.
    The Department concludes that the percentage of all Federal 
contractors that are ``small'' is probably somewhere between 19% and 
50%, the two percentages derived from the FPDS figures on small 
``actions'' and small ``dollars.'' The mean of these two percentages 
is approximately 35%, and the Department will use this figure above 
to estimate how many of all Federal contractors are ``small 
entities'' in SBA's terms.
---------------------------------------------------------------------------

    As noted above, for the purposes of this analysis, the Department 
estimates that each prime contractor subcontracts a portion of the 
prime contract three times, on average. However, the community of prime 
contractors does not utilize a unique subcontractor for each 
subcontract; the Department assumes that subcontractors may be working 
under several prime contracts for either a single prime contractor or 
multiple prime contractors, or both. In addition, some subcontractors 
may also be holding prime contracts with the government, so they may 
already be counted as affected entities. Therefore, in order to 
determine the unique number of subcontractors affected by this rule, 
the Department estimates there are the same number of unique 
subcontractors as prime contractors, resulting in the estimate that 
186,536 subcontractors are affected by this rule. Further, for the 
purposes of this analysis, the Department assumes that all 
subcontractors are ``small entities'' as defined by SBA size standards. 
Therefore, in order to estimate the total number of ``small'' 
contractors affected by this rule, the Department has added together 
the estimates for the number of small prime contractors calculated 
above (65,288) with the estimate of all subcontractors (186,536), all 
of which we assume are small. Accordingly, the Department estimates 
that 251,824 small prime and subcontractors are affected by this rule.
    Based on this analysis, the Department concludes that this final 
rule will not have a significant economic impact on a substantial 
number of small entities. The Regulatory Flexibility Act does not 
define either ``significant economic impact'' or ``substantial'' as it 
relates to the number of regulated entities. 5 U.S.C. 601. In the 
absence of specific definitions, ``what is `significant' or 
`substantial' will vary depending on the problem that needs to be 
addressed, the rule's requirements, and the preliminary assessment of 
the rule's impact.'' See A Guide for Government Agencies: How to Comply 
with the Regulatory Flexibility Act, Office of Advocacy, U.S. Small 
Business Administration at 17 (available at http://www.sba.gov) (``SBA 
Guide''). As to economic impact, one important indicator is the cost of 
compliance in relation to revenue of the entity or the percentage of 
profits affected. Id. In this case, the Department has determined that 
the average cost of compliance with this rule in the first year for all 
Federal contractors and subcontractors will be $108.57. The Department 
concludes that this economic impact is not significant. Furthermore, 
the Department has determined that of the entire regulated community of 
all 186,536 prime contractors and all 186,536 subcontractors, 67% 
percent of that regulated community constitute small entities (251,824 
small contractors divided by all 373,072 contractors). Although this 
figure represents a substantial number of federal contractors and 
subcontractors, because Federal contractors are derived from virtually 
all segments of the economy and across industries, this figure is a 
small portion of the national economy overall. Id. at 20 (``the 
substantiality of the number of businesses affected should be 
determined on an industry-specific basis and/or the number of small 
businesses overall'').\23\

[[Page 28396]]

Accordingly, the Department concludes that the rule does not impact a 
substantial number of small entities in a particular industry or 
segment of the economy. Therefore, under 5 U.S.C. 605, the Department 
concludes that the final rule will not have a significant economic 
impact on a substantial number of small entities.
---------------------------------------------------------------------------

    \23\ The Department received one comment asserting that the 
Department erroneously concluded in the proposed rule that an effect 
on an estimated 67% of the federal contractor community was 
insubstantial. To the contrary, the Department noted in the proposed 
rule, as here, that the rule was likely to affect a ``substantial 
number of federal contractors and subcontractors.'' 74 FR at 38495. 
However, the purpose of the RFA, and it focus, is to minimize the 
impact of agency regulations on particular industries or sectors of 
the economy. See SBA Guide at 15-20. As stated in the proposed rule 
and above, federal contractors and subcontractors represent all 
industries and sectors of the economy, thus the effect of the rule 
is dissipated across the economy. As an alternative approach, the 
comment urged the Department to recognize federal contractors and 
subcontractors as a discrete ``industry,'' which the Department 
declines to do because the adoption of such a standard would defeat 
the focus of the analysis. Finally, in assuming both here and in the 
proposed rule that 100% of subcontractors were small within SBA's 
terms, the Department employed an expansive estimate that 
undoubtedly inflated of the overall number of affected entities. The 
use of the broad assumption serves to illustrate the point that even 
if a substantial number of federal contractors and subcontractors 
are affected by the final rule, the effect of the rule on the 
economy as a whole is not substantial.
---------------------------------------------------------------------------

Unfunded Mandates Reform

    For purposes of the Unfunded Mandates Reform Act of 1995, this rule 
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

    As part of its continuing effort to reduce paperwork and respondent 
burden, the Department of Labor conducts a public consultation program 
to provide the general public and Federal agencies with an opportunity 
to comment on proposed and continuing collections of information in 
accordance with the Paperwork Reduction Act of 1995 (``PRA'') (44 
U.S.C. 3506(c)(2)(A)). This helps to ensure that the public understands 
the Department's collection instructions; respondents can provide the 
requested data in the desired format, reporting burden (time and 
financial resources) is minimized, collection instruments are clearly 
understood, and the Department can properly assess the impact of 
collection requirements on respondents.
    Certain sections of this rule, including Sec.  471.11(a) and (b), 
contain information collection requirements for purposes of the PRA. In 
accordance with the PRA, the August 3, 2009 NPRM solicited comments on 
the information collections as they were proposed. Additionally, the 
Department separately requested comments on the information collections 
in a 60 day notice published in the Federal Register on September 8, 
2009 (74 FR 46236), and submitted a contemporaneous request for OMB 
review of the proposed collection of information. The Department did 
not receive any comments in response to either the NPRM PRA analysis or 
the September 8, 2009 notice. OMB did not approve the collections of 
information contained in the NPRM stage of this rulemaking, and 
directed the Department to resubmit the relevant PRA documentation to 
OMB at the final rulemaking stage.
    The rule requires contractors to post notices and cooperate with 
any investigation in response to a complaint or as part of a compliance 
evaluation. It also permits employees to file complaints with the 
Department alleging that a contractor has failed to comply with those 
requirements. The application of the PRA to those requirements is 
discussed below.
    The final rule imposes certain minimal burdens associated with the 
posting of the employee notice poster required by the Executive Order 
and Sec.  471.2(a). As noted in Sec.  471.2(e), the Department will 
supply the notice, and contractors will be permitted to post exact 
duplicate copies of the notice. 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. See 5 CFR 1320.3(c)(2). Therefore, the posting requirement is 
not subject to the PRA.
    The final rule will also impose certain burdens on the contractor 
associated with cooperating with an investigation into failure to 
comply with Part 471. The regulations implementing the PRA exempt 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 as well as compliance evaluations.
    As for the burden hour estimate for employees filing complaints, 
the Department estimates, based on the experience of OFCCP 
administering other laws applicable to Federal contractors, that it 
will take an average of 1.28 hours for such a complainant to compose a 
complaint containing the necessary information and to send that 
complaint to the Department. This number is also consistent with the 
burden estimate for filing a complaint under E.O. 13201 and the now-
revoked Part 470 regulations.
    The Department has estimated it would receive a total of 50 
employee complaints in any given year, which is significantly larger 
than the estimate contained its most recent PRA submission for 
Executive Order 13201. In that submission, the Department estimated it 
would receive 20 employee complaints. This number itself had been 
revised downwards because the Department never received any employee 
complaints pursuant to the now-revoked Part 470 regulations. Because 
the applicability of the final rule and Executive Order 13496 is 
greater in scope than the now-revoked Part 470 and Executive Order 
13201 in terms of geography (the now-revoked Part 470 regulations only 
applied to states without right-to-work laws, whereas this rule applies 
nationwide), the Department has revised upwards its estimate of 
employee complaints under this rule from 20 to 50.
    Section 471.3(b) permits contracting departments to submit written 
requests for an exemption from the obligations of the Executive Order 
(waiver request) as to particular contracts or classes of contracts 
under specified circumstance. The PRA does not cover the costs to the 
Federal government for the submission of waiver requests by contracting 
agencies or departments or for the processing of waiver requests by the 
Department of Labor. The regulations implementing the PRA define the 
term ``burden,'' in pertinent part, as ``the total time, effort, or 
financial resources expended by persons to generate, maintain, retain, 
or disclose or provide information to or for a Federal agency.'' 5 CFR 
1320.3(b)(1). The definition of the term ``person'' in the same 
regulations includes ``an individual, partnership, association, 
corporation (including operations of government-owned contractor-
operated facilities), business trust, or legal representative, an 
organized group of individuals, a State, territorial, tribal, or local 
government or branch thereof, or a political subdivision of a State, 
territory, tribal, or local government or a branch of a political 
subdivision.'' 5 CFR 1320.3(k). It does not include the Federal 
government or any branch, political subdivision, or employee thereof. 
Therefore, the cost to the Federal

[[Page 28397]]

government for the submission of waiver requests by contracting 
agencies and departments need not be taken into consideration.
    The Department invited 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). As noted above, the Department received no 
comments on the PRA analysis.
    The Department notes that a federal agency cannot conduct or 
sponsor a collection of information unless it is approved by OMB under 
the PRA, and displays a currently valid OMB control number, and the 
public is not required to respond to a collection of information unless 
it displays a currently valid OMB control number. Also, notwithstanding 
any other provisions of law, no person shall be subject to penalty for 
failing to comply with a collection of information if the collection of 
information does not display a currently valid OMB control number.
    As instructed by OMB and in accordance with the PRA (5 CFR 1320.11 
(h)), in connection with this final rule, the Department submitted an 
ICR to OMB for its request of the new information collection 
requirements contained in this rule. OMB approved the ICR on May 5, 
2010, under OMB Control Number 1215-0209, which will expire on May 31, 
2013.

Executive Order 13132 (Federalism)

    The Department has reviewed this rule in accordance with Executive 
Order 13132 regarding federalism, and has determined that the rule does 
not have ``federalism implications.'' The employee notice required by 
the Executive Order and part 471 must be posted only by employers 
covered under the NLRA. 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 final rule does not impose 
substantial direct compliance costs on Indian tribal governments.

Small Business Regulatory Enforcement Fairness Act of 1996

    This rule is not a major rule as defined by Section 804 of the 
Small Business Regulatory Enforcement Fairness Act of 1996. This rule 
will not result in an annual effect on the economy of $100 million or 
more; a major increase in costs or prices; or significant adverse 
effects on competition, employment, investment, productivity, 
innovation, or on the ability of the United States-based companies to 
compete with foreign-based companies in domestic and export markets.

List of Subjects in 29 CFR Part 471

    Administrative practice and procedure, Government contracts, 
Employee rights, Labor unions.

Text of Final Rule

0
Accordingly, a new Subchapter D, consisting of Part 471, is added to 29 
CFR Chapter IV to read as follows:

Subchapter D--Notification of Employee Rights Under Federal Labor Laws

PART 471--OBLIGATIONS OF FEDERAL CONTRACTORS AND SUBCONTRACTORS; 
NOTIFICATION OF EMPLOYEE RIGHTS UNDER FEDERAL LABOR LAWS

Subpart A--Definitions, Requirements for Employee Notice, and 
Exceptions and Exemptions

Sec.
471.1 What definitions apply to this part?
471.2 What employee notice clause must be included in Government 
contracts?
471.3 What exceptions apply and what exemptions are available?
471.4 What employers are not covered under the rule?

Appendix A to Subpart A of Part 471--Text of Employee Notice Clause

Sec.
Subpart B--General Enforcement; Compliance Review and Complaint 
Procedures
471.10 How will the Department determine whether a contractor is in 
compliance with Executive Order 13496 and this part?
471.11 What are the procedures for filing and processing a 
complaint?
471.12 What are the procedures to be followed when a violation is 
found during a complaint investigation or compliance evaluation?
471.13 Under what circumstances, and how, will enforcement 
proceedings under Executive Order 13496 be conducted?
471.14 What sanctions and penalties may be imposed for 
noncompliance, and what procedures will the Department follow in 
imposing such sanctions and penalties?
471.15 Under what circumstances must a contractor be provided the 
opportunity for a hearing?
471.16 Under what circumstances may a contractor be reinstated?
Subpart C--Ancillary Matters
471.20 What authority under this part or Executive Order 13496 may 
the Secretary delegate, and under what circumstances?
471.21 Who will make rulings and interpretations under Executive 
Order 13496 and this part?
471.22 What actions may the Director of OLMS take in the case of 
intimidation and interference?
471.23 What other provisions apply to this part?

    Authority: 40 U.S.C. 101 et seq.; Executive Order 13496, 74 FR 
6107, February 4, 2009; Secretary's Order 7-2009, 74 FR 58834, Nov. 
13, 2009; Secretary's Order 8-2009, 74 FR 58835, Nov. 13, 2009.

Subpart A--Definitions, Requirements for Employee Notice, and 
Exceptions and Exemptions


Sec.  471.1  What definitions apply to this part?

    Construction means the construction, rehabilitation, alteration, 
conversion, extension, demolition, weatherization, 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, weatherization 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, that enters into contracts.

[[Page 28398]]

    Contractor means, unless otherwise indicated, a prime contractor or 
subcontractor.
    Department means the U.S. Department of Labor.
    Director of OFCCP means the Director of the Office of Federal 
Contract Compliance Programs in the Department of Labor.
    Director of OLMS means the Director of the Office of Labor-
Management Standards in the Department of Labor.
    Employee notice clause means the contract clause set forth in 
Appendix A that Government contracting departments and agencies must 
include in all Government contracts and subcontracts pursuant to 
Executive Order 13496 and this part.
    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 non-personal services. The term 
``personal property,'' as used in this section, 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 ``non-personal services'' 
as used in this section 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) Federal financial assistance, as defined in 29 CFR 31.2.
    Labor organization means any organization of any kind, or any 
agency or employee representation committee or plan, 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 of employment, or conditions of work.
    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 13496 (74 FR 6107, 
Feb. 4, 2009).
    Person means any natural person, corporation, partnership, 
unincorporated association, State or local government, and any agency, 
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 and this part.
    Related rules, regulations, and orders of the Secretary of Labor, 
as used in Sec.  471.2 of this part, means rules, regulations, and 
relevant orders 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 non-
personal services that, 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 and this part.
    Union means a labor organization as defined above.
    United States means 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.  471.2  What employee notice clause must be included in Government 
contracts?

    (a) Government contracts. With respect to all contracts covered by 
this part, Government contracting departments and agencies must, to the 
extent consistent with law, include the language set forth in Appendix 
A to Subpart A of Part 471 in every Government contract, other than 
those contracts to which exceptions are applicable as stated in Sec.  
471.3.
    (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 471, Appendix A to Subpart A.
    (c) Adaptation of language. The Director of OLMS may find that an 
Act of Congress, clarification of existing law by the courts or the 
National Labor Relations Board, or other circumstances make 
modification of the contractual provisions necessary to achieve the 
purposes of the Executive Order and this part. In such circumstances, 
the Director of OLMS will promptly issue rules, regulations, or orders 
as are needed to ensure that all future government contracts contain 
appropriate provisions to achieve the purposes of the Executive Order 
and this part.
    (d) Physical Posting of Employee Notice. A contractor or 
subcontractor that posts notices to employees physically must also post 
the required notice physically. Where a significant portion of a 
contractor's workforce is not proficient in English, the contractor 
must provide the notice in the language employees speak. The employee 
notice must be placed:
    (1) In conspicuous places in and about the contractor's plants and 
offices so that the notice is prominent and readily Seen by employees. 
Such conspicuous placement includes, but is not limited to, areas in 
which the contractor posts notices to employees about the employees' 
terms and conditions of employment; and
    (2) Where employees covered by the National Labor Relations Act 
engage in activities relating to the performance of the contract. An 
employee shall be considered to be so engaged if:
    (i) The duties of the employee's position include work that 
fulfills a contractual obligation, or work that is necessary to, or 
that facilitates, performance of the contract or a provision of the 
contract; or
    (ii) The cost or a portion of the cost of the employee's position 
is allowable as a cost of the contract under the principles set forth 
in the Federal Acquisition Regulation at 48 CFR Ch. 1, part 31: 
Provided, That a position shall not be considered covered by this part 
by virtue of this provision if the cost of the position was not 
allocable in whole or in part as a direct cost to any Government 
contract, and only a de minimis (less than 2%) portion of the cost of 
the position was allocable as an indirect cost to Government contracts, 
considered as a group.
    (e) Obtaining a poster with the employee notice. A poster with the 
required employee notice, including a poster with the employee notice 
translated into languages other than English, will be printed by the 
Department, and 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-5609, Washington, DC 20210, or from 
any

[[Page 28399]]

field office of the Department's Office of Labor-Management Standards 
or Office of Federal Contract Compliance Programs. A copy of the poster 
in English and in languages other than English may also be downloaded 
from the Office of Labor-Management Standards Web site at http://www.olms.dol.gov. Additionally, contractors may reproduce and use exact 
duplicate copies of the Department's official poster.
    (f) Electronic postings of employee notice. A contractor or 
subcontractor that customarily posts notices to employees 
electronically must also post the required notice electronically. Such 
contractors or subcontractors satisfy the electronic posting 
requirement by displaying prominently on any Web site that is 
maintained by the contractor or subcontractor, whether external or 
internal, and customarily used for notices to employees about terms and 
conditions of employment, a link to the Department of Labor's Web site 
that contains the full text of the poster. The link to the Department's 
Web site must read, ``Important Notice about Employee Rights to 
Organize and Bargain Collectively with Their Employers.'' Where a 
significant portion of a contractor's workforce is not proficient in 
English, the contractor must provide the notice required in this 
subsection in the language the employees speak. This requirement will 
be satisfied by displaying prominently on any Web site that is 
maintained by the contractor or subcontractor, whether external or 
internal, and customarily used for notices to employees about terms and 
conditions of employment, a link to the Department of Labor's Web site 
that contains the full text of the poster in the language the employees 
speak. In such cases, the Office of Labor-Management Standards will 
provide translations of the link to the Department's Web site that must 
be displayed on the contractor's or subcontractor's Web site.


Sec.  471.3  What exceptions apply and what exemptions are available?

    (a) Exceptions for specific types of contracts. The requirements of 
this part do not apply to any of the following:
    (1) Collective bargaining agreements as defined in the Federal 
Service Labor-Management Relations Statute, entered into by an agency 
and the exclusive representative of employees in an appropriate unit to 
set terms and conditions of employment of those employees.
    (2) Government contracts that involve purchases below the 
simplified acquisition threshold set by Congress under the Office of 
Federal Procurement Policy Act. Therefore, the employee notice clause 
need not be included in government contracts for purchases below that 
threshold, provided that
    (i) No agency or contractor is permitted to procure supplies or 
services in a manner designed to avoid the applicability of the Order 
and this part; and
    (ii) The employee notice clause must be included in government 
contracts 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 will be less than the simplified acquisition 
threshold set in the Office of Federal Procurement Policy Act.
    (3) Government contracts resulting from solicitations issued before 
the effective date of this rule.
    (4) Subcontracts of $10,000 or less in value, except that 
contractors and subcontractors are not permitted to procure supplies or 
services in a manner designed to avoid the applicability of the Order 
and this part.
    (5) Contracts and subcontracts for work performed exclusively 
outside the territorial United States.
    (b) Exemptions for certain contracts. The Director of OLMS may 
exempt a contracting department or agency or groups of departments or 
agencies from the requirements of this part with respect to a 
particular contract or subcontract or any class of contracts or 
subcontracts when the Director finds that either:
    (1) The application of any of the requirements of this part would 
not serve its purposes or would impair the ability of the Government to 
procure goods or services on an economical and efficient basis; or
    (2) Special circumstances require an exemption in order to serve 
the national interest.
    (c) Procedures for requesting an exemption and withdrawals of 
exemptions. Requests for exemptions under this subsection from a 
contracting department or agency must be in writing, and must be 
directed to the Director of OLMS, U.S. Department of Labor, 200 
Constitution Avenue, NW., Room N-5603, Washington, DC, 20210. The 
Director of OLMS may withdraw an exemption granted when, in the 
Director's judgment, such action is necessary or appropriate to achieve 
the purposes of this part.


Sec.  471.4  What employers are not covered under this part?

    (a) The following employers are excluded from the definition of 
``employer'' in the National Labor Relations Act (NLRA), and are not 
covered by the requirements of this part:
    (1) The United States or any wholly owned Government corporation;
    (2) Any Federal Reserve Bank;
    (3) Any State or political subdivision thereof;
    (4) Any person subject to the Railway Labor Act;
    (5) Any labor organization (other than when acting as an employer); 
or
    (6) Anyone acting in the capacity of officer or agent of such labor 
organization.
    (b) Additionally, employers exclusively employing workers who are 
excluded from the definition of ``employee'' under the NLRA are not 
covered by the requirements of this part. Those excluded employees are 
employed:
    (1) As agricultural laborers;
    (2) In the domestic service of any family or person at his home;
    (3) By his or her parent or spouse;
    (4) As an independent contractor;
    (5) As a supervisor as defined under the NLRA;
    (6) By an employer subject to the Railway Labor Act; or
    (7) By any other person who is not an employer as defined in the 
NLRA

Appendix A to Subpart A of Part 471--Text of Employee Notice Clause

    ``1. During the term of this contract, the contractor agrees to 
post a notice, of such size and in such form, and containing such 
content as the Secretary of Labor shall prescribe, in conspicuous 
places in and about its plants and offices where employees covered 
by the National Labor Relations Act engage in activities relating to 
the performance of the contract, including all places where notices 
to employees are customarily posted both physically and 
electronically. The ``Secretary's notice'' shall consist of the 
following:

``Employee Rights Under The National Labor Relations Act''

    ``The NLRA guarantees the right of employees to organize and 
bargain collectively with their employers, and to engage in other 
protected concerted activity. Employees covered by the NLRA* are 
protected from certain types of employer and union misconduct. This 
Notice gives you general information about your rights, and about 
the obligations of employers and unions under the NLRA. Contact the 
National Labor Relations Board, the Federal agency that investigates 
and resolves complaints under the NLRA, using the contact 
information supplied below, if you have any questions about specific 
rights that may apply in your particular workplace.
    ``Under the NLRA, you have the right to:
     Organize a union to negotiate with your employer 
concerning your wages, hours, and other terms and conditions of 
employment.
     Form, join or assist a union.

[[Page 28400]]

     Bargain collectively through representatives of 
employees' own choosing for a contract with your employer setting 
your wages, benefits, hours, and other working conditions.
     Discuss your terms and conditions of employment or 
union organizing with your co-workers or a union.
     Take action with one or more co-workers to improve your 
working conditions by, among other means, raising work-related 
complaints directly with your employer or with a government agency, 
and seeking help from a union.
     Strike and picket, depending on the purpose or means of 
the strike or the picketing.
     Choose not to do any of these activities, including 
joining or remaining a member of a union.
    ``Under the NLRA, it is illegal for your employer to:
     Prohibit you from soliciting for a union during non-
work time, such as before or after work or during break times; or 
from distributing union literature during non-work time, in non-work 
areas, such as parking lots or break rooms.
     Question you about your union support or activities in 
a manner that discourages you from engaging in that activity.
     Fire, demote, or transfer you, or reduce your hours or 
change your shift, or otherwise take adverse action against you, or 
threaten to take any of these actions, because you join or support a 
union, or because you engage in concerted activity for mutual aid 
and protection, or because you choose not to engage in any such 
activity.
     Threaten to close your workplace if workers choose a 
union to represent them.
     Promise or grant promotions, pay raises, or other 
benefits to discourage or encourage union support.
     Prohibit you from wearing union hats, buttons, t-
shirts, and pins in the workplace except under special 
circumstances.
     Spy on or videotape peaceful union activities and 
gatherings or pretend to do so.
    ``Under the NLRA, it is illegal for a union or for the union 
that represents you in bargaining with your employer to:
     Threaten you that you will lose your job unless you 
support the union.
     Refuse to process a grievance because you have 
criticized union officials or because you are not a member of the 
union.
     Use or maintain discriminatory standards or procedures 
in making job referrals from a hiring hall.
     Cause or attempt to cause an employer to discriminate 
against you because of your union-related activity.
     Take other adverse action against you based on whether 
you have joined or support the union.
    ``If you and your coworkers select a union to act as your 
collective bargaining representative, your employer and the union 
are required to bargain in good faith in a genuine effort to reach a 
written, binding agreement setting your terms and conditions of 
employment. The union is required to fairly represent you in 
bargaining and enforcing the agreement.
    ``Illegal conduct will not be permitted. If you believe your 
rights or the rights of others have been violated, you should 
contact the NLRB promptly to protect your rights, generally within 
six months of the unlawful activity. You may inquire about possible 
violations without your employer or anyone else being informed of 
the inquiry. Charges may be filed by any person and need not be 
filed by the employee directly affected by the violation. The NLRB 
may order an employer to rehire a worker fired in violation of the 
law and to pay lost wages and benefits, and may order an employer or 
union to cease violating the law. Employees should seek assistance 
from the nearest regional NLRB office, which can be found on the 
Agency's Web site: http://www.nlrb.gov. ``Click on the NLRB's page 
titled ``About Us,'' which contains a link, ``Locating Our 
Offices.'' You can also contact the NLRB by calling toll-free: 1-
866-667-NLRB (6572) or (TTY) 1-866-315-NLRB (6572) for hearing 
impaired.
    ``* The National Labor Relations Act covers most private-sector 
employers. Excluded from coverage under the NLRA are public-sector 
employees, agricultural and domestic workers, independent 
contractors, workers employed by a parent or spouse, employees of 
air and rail carriers covered by the Railway Labor Act, and 
supervisors (although supervisors that have been discriminated 
against for refusing to violate the NLRA may be covered).
    ``This is an official Government Notice and must not be defaced 
by anyone.
    ``2. The contractor will comply with all provisions of the 
Secretary's notice, 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 13496 of January 30, 2009. Such 
other sanctions or remedies may be imposed as are provided in 
Executive Order 13496 of January 30, 2009, 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 13496 of January 30, 2009), 
so that such provisions will be binding upon each subcontractor. 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 non-compliance: Provided, however, if 
the contractor becomes involved in litigation with a subcontractor, 
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.''

Subpart B--General Enforcement; Compliance Review and Complaint 
Procedures


Sec.  471.10  How will the Department determine whether a contractor is 
in compliance with Executive Order 13496 and this part?

    (a) The Director of OFCCP may conduct a compliance evaluation to 
determine whether a contractor holding a covered 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 required by Sec.  471.2(a) is posted in 
conformity with the applicable physical and electronic posting 
requirements contained in Sec.  471.2(d) and (f); and
    (2) The provisions of the employee notice clause are included in 
government contracts, subcontracts or purchase orders entered into on 
or after June 21, 2010, or that the government contracts, subcontracts 
or purchase orders have been exempted under Sec.  471.3(b).
    (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 under Sec.  471.13.


Sec.  471.11  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 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:
    (1) The employee's name, address, and telephone number;
    (2) The name and address of the contractor alleged to have violated 
the Executive Order and this part;

[[Page 28401]]

    (3) An identification of the alleged violation and the 
establishment or construction work site where it is alleged to have 
occurred;
    (4) Any other pertinent information that will assist in the 
investigation and resolution of the complaint; and
    (5) The signature of the employee filing the complaint.
    (c) Complaint investigations. In investigating complaints filed 
with the Department under this section, the Director of OFCCP 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.  471.12  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 Director 
of OFCCP will make reasonable efforts to secure compliance through 
conciliation.
    (b) Before the contractor may be found to be in compliance with the 
Executive Order or this part, 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 
subcontractors to include the employee notice clause), and must commit, 
in writing, not to repeat the violation.
    (c) If a violation cannot be resolved through conciliation efforts, 
the Director of OFCCP will refer the matter to the Director of OLMS, 
who may take action under Sec.  471.13.
    (d) For reasonable cause shown, the Director of OLMS may 
reconsider, or cause to be reconsidered, any matter on his or her own 
motion or in response to a request.


Sec.  471.13  Under what circumstances, and how, will enforcement 
proceedings under Executive Order 13496 be conducted?

    (a) General. (1) Violations of the Executive Order or this part may 
result in administrative enforcement proceedings. 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 cooperate with the compliance 
evaluation or complaint investigation, including failure to provide 
information sought during those procedures.
    (v) A contractor's refusal to take such action with respect to a 
subcontract as directed by the Director of OFCCP or the Director of 
OLMS as a means of enforcing compliance with the provisions of this 
part.
    (vi) A subcontractor's refusal to adhere to requirements of this 
part regarding employee notice or inclusion of the contract clause in 
its subcontracts.
    (2) If a determination is made by the Director of OFCCP that the 
Executive Order or the regulations in this part have been violated, and 
the violation has not been corrected through conciliation, he or she 
will refer the matter to the Director of OLMS for enforcement 
consideration. The Director of OLMS may refer the matter to the 
Solicitor of Labor to begin 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 in 
29 CFR part 18, Rules of Practice and Procedure for Administrative 
Hearings Before the Office of Administrative Law Judges.
    (2) The administrative law judge will certify his or her 
recommended decision issued under 29 CFR 18.57 to the Administrative 
Review Board. The decision will be served on all parties and amicus 
curiae.
    (3) Within 25 days (10 days if the proceeding is 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 25 days (7 days if the proceeding is 
expedited) after receipt. All exceptions and responses must be filed 
with the Administrative Review Board.
    (4) After the expiration of time for filing exceptions, the 
Administrative Review Board may issue a final administrative order, or 
may otherwise appropriately dispose of the matter. In an expedited 
proceeding, unless the Administrative Review Board 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 Administrative 
Review Board determines that the contractor has violated the Executive 
Order or the regulations in this part, the final administrative order 
will order the contractor to cease and desist from the violations, 
require the contractor to provide appropriate remedies, or, subject to 
the procedures in Sec.  471.14, impose appropriate sanctions and 
penalties, or any combination thereof.


Sec.  471.14  What sanctions and penalties may be imposed for 
noncompliance, and what procedures will the Department follow in 
imposing such sanctions and penalties?

    (a) After a final decision on the merits has issued and before 
imposing the sanctions and penalties described in paragraph (d) of this 
section, the Director of OLMS 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, which must include 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 will not 
be imposed if:
    (1) The head of the contracting agency, or his or her designee, 
continues to object to the imposition of such sanctions and penalties, 
or
    (2) The contractor has not been given an opportunity for a hearing.
    (d) In enforcing the Executive Order and this part, the Director of 
OLMS may take any of the following actions:
    (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 to comply with its contractual provisions 
required by Section 7(a) 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 7(b) of the Executive 
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 non-complying contractor.
    (3) Issue an order of debarment under Section 7(b) of the Executive 
Order providing that no contracting agency may enter into a contract 
with any non-complying subcontractor.

[[Page 28402]]

    (e) Whenever the Director of OLMS exercises the authority in this 
section, the contracting agency must report the actions it has taken to 
the Director of OLMS within such time as the Director of OLMS will 
specify.
    (f) Periodically, the Director of OLMS will publish and distribute 
to all executive agencies a list of the names of contractors and 
subcontractors that have, in the judgment of the Director of OLMS, 
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 under the Executive Order and the regulations in this part.


Sec.  471.15  Under what circumstances must a contractor be provided 
the opportunity for a hearing?

    Before the Director of OLMS takes either of the following actions, 
a contractor or subcontractor must be given the opportunity for a 
hearing:
    (a) Issues an order for cancellation, termination, or suspension of 
any contract or debarment of any contractor from further Government 
contracts under Sections 7(a) or (b) of the Executive Order and Sec.  
471.14(d)(1) or (2) of this part; or
    (b) Includes the contractor on a published list of non-complying 
contractors under Section 7(c) of the Executive Order and Sec.  
471.14(f) of this part.


Sec.  471.16  Under what circumstances may a contractor be reinstated?

    Any contractor or subcontractor debarred from or declared 
ineligible for further contracts under the Executive Order and this 
part may request reinstatement in a letter to the Director of OLMS. In 
connection with a request for reinstatement, debarred contractors and 
subcontractors shall be required to show that they have established and 
will carry out policies and practices in compliance with the Executive 
Order and implementing regulations. Before reaching a decision, the 
Director of OLMS may request that a compliance evaluation of the 
contractor or subcontractor be conducted, and may require the 
contractor or subcontractor to supply additional information regarding 
the request for reinstatement. If the Director of OLMS finds that the 
contractor or subcontractor has come into compliance with the Executive 
Order and this part and has shown that it will carry out the Executive 
Order and this part, the contractor or subcontractor may be reinstated. 
The Director of OLMS shall issue a written decision on the request.

Subpart C--Ancillary Matters


Sec.  471.20  What authority under this part or Executive Order 13496 
may the Secretary delegate, and under what circumstances?

    Section 11 of the Executive Order grants the Secretary the right to 
delegate any functions or duties 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.


Sec.  471.21  Who will make rulings and interpretations under Executive 
Order 13496 and this part?

    The Director of OLMS and the Director of OFCCP will make rulings 
under or interpretations of the Executive Order or the regulations 
contained in this part in accordance with their respective 
responsibilities under the regulations. Requests for a ruling or 
interpretation must be submitted to the Director of OLMS, who will 
consult with the Director of OFCCP to the extent necessary and 
appropriate to issue such ruling or interpretation.


Sec.  471.22  What actions may the Director of OLMS take in the case of 
intimidation and interference?

    The Director of OLMS may impose the sanctions and penalties 
contained in Sec.  471.14 of this part against any contractor or 
subcontractor who does not 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 or enforcement of the Executive 
Order or this part.


Sec.  471.23  What other provisions apply to this part?

    (a) The regulations in this part implement only the Executive 
Order, and do not modify or affect the interpretation of any other 
Department of Labor regulations or policy.
    (b) Each contracting department and agency must cooperate with the 
Director of OLMS and the Director of the OFCCP, and must provide any 
information and assistance that they may require, in the performance of 
their functions under the Executive Order and the regulations in this 
part.
    (c)(1) This subpart does not impair or otherwise affect:
    (i) Authority granted by law to a department, agency, or the head 
thereof; or
    (ii) Functions of the Director of the Office of Management and 
Budget relating to budgetary, administrative, or legislative proposals.
    (2) This subpart must be implemented consistent with applicable law 
and subject to the availability of appropriations.
    (d) Neither the Executive Order nor this part creates any right or 
benefit, substantive or procedural, enforceable at law or in equity by 
any party against the United States, its departments, agencies, or 
entities, its officers, employees, or agents, or any other person.

    Signed in Washington, DC, May 7, 2010.
John Lund,
Director, Office of Labor-Management Standards.

Patricia A. Shiu,
Director, Office of Federal Contract Compliance Programs.
[FR Doc. 2010-11639 Filed 5-19-10; 8:45 am]
BILLING CODE 4510-CP-P