The United States Department of Labor (“DOL”) has issued a final rule requiring all federal contractors and subcontractors to notify employees of their rights regarding payment of union dues and fees. 69 Fed. Reg. 16376 (March 29, 2004). The so-called “Beck rights” of employees were first recognized by the United States Supreme Court in Communications Workers v. Beck, 487 U.S. 735 (1988), followed by President Bush’s Executive Order 13201 (Feb. 17, 2001) instructing DOL to promulgate regulations requiring contractors to notify employees of these rights. The Beck decision held that while employees may not be forced to “join” a union by becoming active union members, they may nonetheless be required to pay to a union an agency fee to cover the union’s “core” activities of collective bargaining, contract administration and grievance adjustment, conducted on behalf of employees. Employees are entitled to a refund of any portion of their union dues spent on activities other than these core activities, such as political campaign contributions.

Effective April 28, 2004, the final rule requires federal contractors to post at their worksites an official poster printed by DOL which states that workers may be entitled to a refund if they believe their union fees have been used for other purposes such as political campaign activities. Notwithstanding the effective date of April 28, 2004, federal contractors that entered into new contracts on or after April 18, 2001, were already required to comply with the Executive Order’s notice posting requirements, pursuant to an interim order issued in April 2001. 66 Fed. Reg. 19988 (April 18, 2001).

All federal contracts, except those expressly exempted, must include a provision that the contractor agrees to post the Beck rights notice. In addition, federal contractors and subcontractors must include a clause in federally connected subcontracts and purchase orders requiring subcontractors and vendors to post notices in their work areas. The penalties for noncompliance are harsh, including contract suspension or cancellation and possible ineligibility for future federal contracts.

Exemptions for Some Contractors

Collective bargaining agreements and certain purchase contracts are expressly excluded from these requirements. For instance, contracts for purchases below the “simplified acquisition threshold” (currently $100,000) are expressly exempted from the rule. Contractor establishments or construction worksites where no union has been formally recognized by the prime contractor are exempted, even if a subcontractor’s employees at the same worksite are union-represented. Also exempted are contractors and subcontractors that employ fewer than 15 persons or that perform work outside the United States that does not involve recruitment or employment within the United States. The posting requirement also does not apply to work sites in so-called “right to work” jurisdictions where state law forbids enforcement of union-security agreements.

DOL is authorized to grant exemptions for other contracts, subcontracts, or purchase orders where DOL determines that “special circumstances in the national interest so require.” DOL may also waive posting requirements for certain facilities that are “in all respects separate and distinct” from a contractor’s activities related to performance of its federal contract. DOL’s Office of Labor-Management Standards (“OLMS”) is charged with reviewing, granting, and withdrawing exemptions.

Complaint Investigation and Enforcement Proceedings

The final rule describes expanded investigation and enforcement mechanisms for handling Beck complaints received from workers. Workers may file complaints with either DOL’s Office of Federal Contract Compliance Programs (“OFCCP”) or OLMS. OLMS will refer cases involving possible violations to OFCCP, which will have responsibility for conducting compliance evaluations and complaint investigations. If DOL determines that violations have occurred, administrative enforcement proceedings may be initiated that may culminate in contract suspension or other penalties.

Notice Posting Requirements

DOL has made available official notice posters to be displayed by all covered contractors and subcontractors. The official poster is available on DOL’s website at www.olms.dol.gov. It is imperative that contractors obtain an official notice poster, as contractors are required to post the official DOL-issued poster or an “exact duplicate copy” of the same size.