On July 1, 2016, the Office of the General Counsel for the National Labor Relations Board issued a memorandum (OM 16-23) stating that beginning with NLRB complaints issued on or after July 1, 2016, the NLRB will collect data to be reported to a federal database to comply with the Fair Pay and Safe Workplaces Executive Order issued by President Obama on July 31, 2014. The Order requires contractors and subcontractors to disclose their own labor law violations and creates in each federal agency a new position–a Labor Compliance Advisor, who will assist contracting officers in making their responsibility determinations of contractors by assessing whether the contractors’ violations of labor law are “serious,” “repeated,” “willful,” or “pervasive.”  A federal contractor’s failure to fulfill its obligations and exhibit compliance with all applicable federal and state labor laws can expose the contractor to the prospects of disqualification, suspension, or debarment.

On May 28, 2015, the Administration published proposed amendments to the Federal Acquisition Regulation, and related Department of Labor guidance to implement the Order.  Under the May 28th proposed rule, offerors on contracts or subcontracts estimated to exceed $500,000 must disclose “any administrative merits determination, arbitral award or decision, or civil judgment”against the contractor under fourteen enumerated federal statutes and Executive Orders (labor law violations) for the three years preceding the contract bid. On May 2, 2016, the proposed final regulations were received by the Office of Management and Budget for approval.

To comply with the Order, the NLRB will now collect and input four additional data points into its NxGen case management system, which will link to the federal database used by the Labor Compliance Advisors. The four data points that the NLRB will collect are:

  1. Is the charged party employer a federal contractor now or in the past? If so, its Commercial and Government Entity (“CAGE”) number;
  2. The charged party employer’s Data Universal Numbers System (“DUNS”) number, if it has one;
  3. The charged party employer’s four-character DUNS number suffix (DUNS+4), if it has one; and
  4. The charged party employer’s Employer Identification Number (EIN) or Taxpayer Identification Number (TIN).

The NLRB has developed a form requesting this information from the employer to be sent once the Regioanl Director determines to issue a complaint based on an unfair labor practice charge. The form will be transmitted with a standard email containing the following language:

The Region has made a determination to issue a complaint in the above-referenced case, absent prompt settlement. …

Please be advised that if you reach a resolution of this matter before the Region issues a complaint, such as by entering a pre-complaint informal settlement agreement with the Regional Director, no information on this case will be forwarded to this database.

You are requested to complete the Form 5554 and submit it to the Agency…. This Form provides certain information to assist with administration of the Fair Pay Safe Workplaces Executive Order.

The information you provide will be forwarded to the database accessed by Labor Compliance Advisors in making their decisions regarding contracting, only if the Regional Director issues a complaint in this matter. If a complaint issues in this matter and you have not provided the requested information, the NLRB will transmit the information it does have about the case, along with notification that the NLRB requested you to provide additional information and you failed to do so. This information may be considered by the Labor Compliance Advisors in assessing whether the charged party employer will be eligible to contract with the federal government.

The NLRB’s current implementation of the Order is troubling. As set forth above, the final rule implementing the Order has not yet been approved by the OMB. Because the rule cannot be implemented before it is approved, the NLRB is putting the cart before the horse. In addition, as we previously noted, the standards set by the proposed regulations are grossly unfair to contractors as they are designed to base contract awards, disqualification, and suspension entirely on administrative allegations – before those allegations are fairly and fully adjudicated.  NLRB complaints are not final determinations on the merits. Rather, they are merely preliminary findings of probable cause that a violation has occurred, against which employers have the right to defend themselves, including the right to challenge evidence at a hearing and confront witnesses under oath. Indeed, in some instances, the employer has complied with the law but the regional director issues a complaint nonetheless in an effort to ask the Board to change the law.

Moreover, there are unanswered questions regarding how the Order will factor into the NLRB’s decision making process of whether or not to issue a complaint. For example, where the decision to issue a complaint is a close call, will regional directors be more inclined to issue complaints  where the employer is a government contractor knowing that the Order will exert additional pressure on them to settle? Additionally, will the regional offices use the federal database and contact relevant Labor Compliance Advisors to research government contractors’ ‘history’ to pressure them to settle?

As we have discussed, the Order and proposed rule has a slew of other serious concerns and problems, thus litigation challenging the final rules is a certainty. Please continue to follow the blog for further developments.

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