[Federal Register: March 29, 2004 (Volume 69, Number 60)]
[Rules and Regulations]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
Department of Labor
Office of Labor-Management Standards
29 CFR Part 470
Obligations of Federal Contractors and Subcontractors; Notice of
Employee Rights Concerning Payment of Union Dues or Fees; Final Rule
DEPARTMENT OF LABOR
Office of Labor-Management Standards
29 CFR Part 470
Obligations of Federal Contractors and Subcontractors; Notice of
Employee Rights Concerning Payment of Union Dues or Fees
AGENCY: Office of Labor-Management Standards, Employment Standards
ACTION: Final rule.
SUMMARY: The Office of Labor-Management Standards (``OLMS'') is
publishing this final rule to implement Executive Order 13201, which
was signed by President George W. Bush on February 17, 2001. The final
rule contains minor changes made as a result of comments received
regarding the notice of proposed rule-making (``proposed rule'' or
``NPRM'') published on October 1, 2001. See 66 FR 50010.
Executive Order 13201 (``the Executive Order,'' ``the Order,'' or
``EO 13201'') requires non-exempt government contractors and
subcontractors to post notices informing their employees that under
Federal law, those employees have certain rights related to union
membership and use of union dues and fees. The Order also provides the
text of contractual provisions that Federal Government contracting
departments and agencies must include in every government contract,
except for collective bargaining agreements and contracts for purchases
under the Simplified Acquisition Threshold. These provisions include
the language of the required notices, and explain the sanctions,
penalties, and remedies that may be imposed if the contractor or
subcontractor fails to comply with its obligations under the Order.
Covered government contractors and subcontractors must include these
same provisions in their nonexempt subcontracts and purchase orders, so
that the provisions will be binding upon each subcontractor or vendor.
The final rule provides the text of the required contractual
provisions, explains exemptions, and sets forth procedures for ensuring
compliance with the Order; it also contains other related requirements.
EFFECTIVE DATE: April 28, 2004.
FOR FURTHER INFORMATION CONTACT: Don Todd, Deputy Assistant Secretary
for Labor-Management Programs, Office of Labor-Management Standards,
Employment Standards Administration, U.S. Department of Labor, 200
Constitution Avenue, NW., Room N-5605, Washington, DC 20210, 202-693-
0122 (voice) (this is not a toll-free number) or 800-877-8339 (TTY/
TDD). Copies of this final rule, including copies in alternative
formats, may be obtained by calling OLMS at 202-693-0123 (voice) or
SUPPLEMENTARY INFORMATION: The preamble to the final rule is organized
I. Background--provides a brief description of the development of
the final rule, including a list of documents connected to the rule
that OLMS has published
II. Authority--cites the legal authority supporting the final rule,
Departmental redelegation authority, and interagency coordination
III. Overview of the Rule--summarizes pertinent aspects of the
regulatory text, including a section-by-section analysis that
discusses any comments received about each section and explains any
changes made to the text as a result of those comments.
IV. Regulatory Procedure--sets forth the applicable regulatory
As described in detail in the preamble to the NPRM, Executive Order
13201 (66 FR 11221, February 22, 2001) is designed to promote economy
and efficiency in government procurement by requiring government
contractors to inform their workers that Federal labor laws give those
workers certain rights related to union membership and use of union
dues and fees. The Order provides the text of a contract clause that
government contracting departments and agencies must include in all
nonexempt government contracts and subcontracts. That clause requires
contractors to post a notice, the exact language of which is included
in the clause. The clause also requires contractors to include the same
clause in their nonexempt subcontracts and purchase orders, and
describes generally the sanctions, penalties, and remedies that may be
imposed if the contractor fails to satisfy its obligations under the
Order and the clause.
The text of the notice informs employees that they cannot be
required to join, or maintain membership in, a union in order to keep
their jobs; that under certain conditions, the law permits a union and
an employer to enter into a union-security agreement requiring
employees to pay dues and fees to the union; and that, even where such
union-security agreements exist, employees who are not union members
can only be required to pay their share of union costs relating to
certain specific activities. The notice also provides a general
description of the remedies to which employees may be entitled if these
rights have been violated, and provides contact information for further
information about those rights and remedies.
In April 2001, the Department of Labor (``DOL'' or ``the
Department'') issued an Interim Procedural Notice (``IPN'') to provide
guidance to contractors and subcontractors about how to comply with
Executive Order 13201 pending the publication of a final rule
implementing the Order. 66 FR 19988 (April 18, 2001). The IPN
authorized covered contractors to fulfill their posting obligations
under the Order by replicating the text of the notice set forth in the
Order and posting it in conspicuous places in and about their plants
and offices, including all places where notices to employees are
As noted above, OLMS published an NPRM on October 1, 2001,
proposing regulations to implement Executive Order 13201. See 66 FR
50010. The NPRM set a deadline of November 30, 2001, for receipt of
public comments about the proposed rule. However, because of anthrax-
related problems with mail delivery, OLMS published a notice in the
Federal Register on December 18, 2001, listing the six commenters from
whom comments had been received by the deadline, and asking any other
commenters who might have submitted comments via U.S. mail before the
deadline to supply duplicate copies of such comments. 66 FR 65163. The
notice set a deadline of January 2, 2002, for receipt of such duplicate
copies. Two additional sets of comments were received. However, neither
set appeared to be a duplicate copy of comments submitted before the
original deadline; rather, both sets appeared to be new comments. As a
result, the Department determined that these comments would not be
analyzed and considered in the development of this final rule. The six
timely comments that were analyzed and considered came from various
nonprofit, public policy, and trade association groups, as well as a
group of Members of Congress. No comments were received from labor
As described in detail in the NPRM, Executive Order 13201 contains
requirements similar, but not identical, to those included in Executive
Order 12800, issued on April 13, 1992, by then-President George H. W.
Bush. See 57 FR 12985 (April 14, 1992); 57 FR 13413 (April 16, 1992).
12800 was revoked on February 1, 1993, by Executive Order 12836. 58 FR
7045 (published February 3, 1993). Both Executive Orders were, and the
provisions of this final rule are, intended to inform employees of
their rights under the decisions of the United States Supreme Court in
Communications Workers of America v. Beck, 487 U.S. 735 (1988), and
related cases. As a result, the final rule is sometimes referred to as
the Beck rule, and the rights articulated in the decision are referred
to as Beck rights.
In Beck, the Court held that a union may not use fees and dues that
it collects from bargaining unit employees who have not joined the
union to finance activities that are not ``germane'' to the union's
representational purposes over the objection of such employees.
Examples of activities the Court considered ``germane'' include
collective bargaining, contract administration, and grievance
adjustment. Beck, 487 U.S. at 745, 760.
Soon after it was signed into law, Executive Order 13201 was
challenged in court on two grounds: first, that it was preempted by the
National Labor Relations Act, and second, that the President lacked
sufficient authority to issue the Order. See UAW-Labor Employment and
Training Corp., et. al. v. Chao, 2002 WL 21720, 145 Lab. Cas. P. 11,166
(D. D.C. 2002). Although the U.S. District Court for the District of
Columbia found that the Order was preempted by the National Labor
Relations Act and issued a permanent injunction barring enforcement of
the Order, that decision was appealed to the U.S. Court of Appeals for
the District of Columbia, which reversed the District Court. See UAW-
Labor Employment and Training Corp., et. al. v. Chao, 325 F. 3d 360
(D.C. Cir. 2003), reh'g denied, No. 02-5080 (Sept. 11, 2003).
A. Legal Authority
The legal authority for this final rule is Executive Order 13201,
issued pursuant to the Constitution and laws of the United States,
including the Federal Property and Administrative Services Act, 40
U.S.C. 471 et seq., now codified as amended at 40 U.S.C. 101 et seq.
B. Departmental Authorization
Section 1(b) of Executive Order 13201 delegates responsibility for
the administration and enforcement of the Order to the Secretary of
Labor, and directs the Secretary to adopt rules and regulations and
issue such orders as are deemed necessary and appropriate to achieve
the purposes of the Order. Section 9 of the Order authorizes the
Secretary to delegate any function or duty under the Order to any
officer in the Department of Labor or to any other officer in the
executive branch of the Government, with the consent of the head of the
department or agency in which that officer serves.
Pursuant to that delegation authority, Secretary's Order 4-2001,
effective May 24, 2001, and published in the Federal Register on May
31, 2001 (66 FR 29656), delegates and assigns responsibility for the
administration and enforcement of E.O. 13201 to the Assistant Secretary
for Employment Standards. The Assistant Secretary, in turn, has
delegated general responsibility for the administration and enforcement
of the Executive Order to the Deputy Assistant Secretary for Labor-
Management Programs. Under this delegation, the Deputy Assistant
Secretary for Labor-Management Programs has specific responsibility for
granting and withdrawing exemptions and waivers under this part, and
for referring for administrative enforcement cases against contractors
that have been found to have violated the provisions of the Order or
The Assistant Secretary has conveyed responsibility for conducting
compliance evaluations and complaint investigations under the Order and
this part to the Deputy Assistant Secretary for Federal Contract
C. Interagency Coordination
DOL is coordinating with the Civilian Agency Acquisition Council
regarding the amendment of the Federal Acquisition Regulation (FAR) at
48 CFR parts 22 and 55 to include language implementing the Executive
III. Overview of the Rule
The final rule is divided into three subparts. Subpart A,
``Preliminary Matters,'' contains definitions, the employee notice
clause, and exemptions. Subpart B, ``Compliance Evaluations, Complaint
Investigations, and Enforcement Procedures,'' addresses the three
topics listed in the subpart's title. Subpart C, ``Ancillary Matters,''
addresses miscellaneous matters, such as which authority the Secretary
of Labor is able to delegate under the Order and the rule, and which
official will make rulings and interpretations under the rule.
All six commenters who submitted timely comments regarding the NPRM
expressed general support for the Executive Order and the rule. One
commenter called the rule ``an important and necessary step in
rectifying unlawful practices and advising employees of their rights
under Supreme Court decisions.''
The following section discusses the timely comments received
regarding the NPRM, and explains the differences between the NPRM and
this final rule.
Section-by-Section Analysis of Comments and Revisions
Subpart A--Preliminary Matters
Section 470.1 What Definitions Apply to This Part?
One commenter suggested that to improve clarity, each of the
definitions within this section should have an identifying letter. We
concur that each definition should be identified. Accordingly, we are
accepting this comment, and designating each definition in this section
Definition of ``collective bargaining agreement'': Section 470.2(a)
states that only certain contracts, including certain collective
bargaining agreements as defined in section 470.1, are exempt from the
requirements of the final rule. Section 2(a) of Executive Order 13201
refers to the specific statutory definition of collective bargaining
agreement as found in the Federal Labor Management Relations Act, 5
U.S.C. 7101 et seq. (see, e.g., 5 U.S.C. 7103(a)(8): ``collective
bargaining agreement means an agreement entered into as a result of
collective bargaining pursuant to this chapter''). The proposal
attempted to list the key elements of the collective bargaining process
by summarizing the relevant provisions of the Federal Labor Management
Relations Act, specifically those found in 5 U.S.C. 7114,
Representative Rights and Duties. While this summary provides a general
framework for this process, it is not all-inclusive. Therefore, in
order to avoid any possible confusion which may result from only a
partial listing of the steps involved in the development of a
collective bargaining agreement, and in order to maintain consistency
with section 2(a) of the Executive Order, we are striking the
definition of the term in Sec. 470.1 and amending Sec. 470.2(a) so
that it references the same definition cited in the Executive Order.
Accordingly, the definition of ``collective bargaining agreement'' in
Sec. 470.1 has been deleted, and Sec. 470.2(a) has been amended to
reference the definition of ``collective bargaining agreement'' in 5
U.S.C. 7103(a)(8) rather than Sec. 470.1.
Definition of ``subcontractor'': No change has been made to this
definition. This note is intended to clarify that in the Department's
view, the term includes the ``vendors'' referred to in section 4 of the
employee notice clause set forth in section 470.2.
Definition of ``union-security agreement'': Two commenters
submitted comments regarding this definition. One commenter suggested
that, to avoid any unnecessary confusion, the phrase ``and/or fees'' be
added to the definition following the phrase ``uniform periodic dues.''
We agree that the suggested addition would clarify the definition, and
have added the suggested phrase.
Another commenter suggested that the definition be revised to
define the term as ``an agreement entered into between a contractor and
a labor organization, whether written, oral, or understood, which
requires certain employees of the contractor to acquire union
membership or any incident of union membership, or to provide any union
any financial support, as a condition of employment.'' However, the
definition of the term that was included in the proposed rule more
closely tracks the description of union security agreements in section
2(a) of the Executive Order. We therefore decline to adopt the
Definition of ``United States'': One commenter suggested that this
definition be broadened by adding the clause ``and all other
territories or possessions belonging to the United States of America.''
Such a definition would be inconsistent with the definition of the term
used in other Department regulations. See, e.g., Department of Labor,
Office of Federal Contract Compliance Programs, Obligations of
Contractors and Subcontractors, 41 CFR 60-1.3 (August 19, 1997)
(definition of ``United States''). We have retained the definition used
in the NPRM.
Section 470.2 Under the Executive Order, What Employee Notice Clause
Must Be Included in Government Contracts?
Paragraph 470.2(a), required employee notice poster: One commenter
suggested that DOL add a pull-off pamphlet to the bottom of the
required poster, and that both the poster and the pamphlet should
contain the Internet address of a new Web page that DOL should create.
According to the commenter, both the pamphlet and the Web page should
contain basic legal advice to help employees navigate their way through
the Beck rights-related procedures of unions and the National Labor
Relations Board (NLRB). The commenter further suggested that the new
DOL Web page should include form letters, requests, and similar
documents that could be downloaded and used by employees seeking to
enforce their Beck rights, and that the required employee notice poster
should be downloadable in Adobe Acrobat ``PDF'' format from the page.
We agree that a special Web page, devoted to Executive Order 13201
and the rights of employees under the Order and the final rule, is a
good idea. We intend to create such a page on the Office of Labor-
Management Standards Web site at http://www.olms.dol.gov, and will provide
downloadable versions of the employee notice poster on the page.
However, the addition of a pull-off pamphlet to the poster, which will
be printed and distributed by DOL, would greatly add to the cost and
difficulty of production of the poster. In addition, the purpose of the
Executive Order is not to encourage or assist workers in exercising
rights they have under the Supreme Court's decision in Beck, but to
inform them of the existence of such rights. The employee notice poster
will provide the headquarters and Web site address for the National
Labor Relations Board, the agency entrusted with the enforcement of
these rights, for the benefit of workers who need such assistance. The
employee notice poster will also include a toll-free general
information number recently announced by the General Counsel of the
National Labor Relations Board.
Paragraph 470.2(a), language of poster and of required contract
clause: The same commenter suggested a number of changes to the
language of the required employee notice poster and contract clause. In
our view, however, the wording of both the poster and the contract
clause, as specified in the Executive Order itself, adequately reflect
the President's intentions in issuing the Order. Therefore, we decline
to make the changes requested by the commenter.
Paragraph 470.2(a), pass-through requirement: One commenter opposed
the requirement that contractors pass on to their subcontractors the
requirement of including the employee notice clause in subcontracts and
purchase orders. This commenter was concerned about the expense a
contractor will allegedly be required to incur in making changes to
forms for supplier agreements, purchase orders, and other contracts,
and suggested that section 3 of the Executive Order authorizes the
Secretary of Labor to issue regulations exempting contractors from the
We disagree with the commenter's interpretation of the language of
section 3. The intent of the Order was clearly that the clause be
passed to subcontractors below the first tier; otherwise, there would
be no reason for the provision in section 3(b)(v) of the Order that
authorizes the Secretary to exempt from the provisions of section 2
``subcontracts below an appropriate tier set by the Secretary.''
Further, such a blanket exemption would be inconsistent with procedures
of Executive Order 11246, upon which these regulations are based. Like
E.O. 13201, E.O. 11246 authorizes exemption for contractors below a
specified tier; however, that authority has not been incorporated in
regulations. The Department's experience with this regulatory framework
has demonstrated the absence of a tier-based exemption is not unduly
burdensome and best achieves the purpose of the Executive Order. In
addition, a contractor need not incur the expenses cited by the
commenter; nothing in the Order or the regulations precludes a
contractor from simply adding a page that contains the required
contract clause to supplier agreements, purchase orders, and other
similar documents. The expense of adding such a page would be nominal.
We therefore decline to adopt the commenter's suggestion.
Section 470.3 What Contracts Are Exempt From the Employee Notice Clause
Paragraph 470.3(c), exemption of specific contracts when special
circumstances in the national interest so require: One commenter
suggested that a sentence be added to this paragraph specifying that
``[r]equests for such exemptions are strongly discouraged, and there is
a high burden on the requester to demonstrate that such special
circumstances exist.'' The same commenter suggested that the phrase
``special circumstances in the national interest so require'' is overly
vague, and suggested that a ``narrow definition'' of the phrase or an
example of its operation be added to the paragraph. We believe that the
language from the proposed rule provides the Deputy Assistant Secretary
with the necessary flexibility to make case-by-case determinations
regarding whether such an exemption should be granted in a particular
instance, and therefore decline to adopt the suggested amendment.
Section 470.4 What Contractors or Facilities Are Exempt From the
Paragraph 470.4(a), number of employees: One commenter suggested
that the exemption in this paragraph of the proposed regulations for
contractors with fewer than fifteen (15) employees be eliminated.
Another commenter suggested that the exemption be limited to
contractors with two (2) employees,
the minimum number of employees that the National Labor Relations Board
would certify as a bargaining unit to be represented by a labor
As indicated in the preamble to the NPRM implementing Executive
Order 13201, the proposed and final rules implementing the predecessor
order, Executive Order 12800, provided an exemption for contractors
with fewer than fifteen (15) employees. See 57 FR 33406 (July 24,
1992), 57 FR 49596 (November 2, 1992). The preamble to the 1992 NPRM
explained that the exemption threshold of fifteen employees was
``consistent with that under Title VII of the Civil Rights Act of 1964,
as amended, and the eventual threshold under Title I of the Americans
with Disabilities Act.'' See 57 FR 33404.
Section 3(b) of Executive Order 13201 authorizes the same exemption
for ``numbers of workers below appropriate thresholds set by the
Secretary'' as did section 3(b) of Executive Order 12800. In the
absence of any indication to the contrary in Executive Order 13201, or
any significant change in the law since 1992, we believe that it is
consistent with the intention of Executive Order 13201 to provide the
same exemption as was provided by the final rule implementing Executive
Order 12800. In addition, as noted in the preamble to the 1992 NPRM,
the fifteen-employee threshold is consistent with that of other
significant Federal laws governing the workplace. Therefore, we have
decided to retain the exemption for contractors with fewer than fifteen
Paragraph 470.4(b), union representation: One commenter noted that
in situations (particularly construction projects) involving a prime
contractor and a number of subcontractors, ``the prime contractor
typically posts the notices to employees required by law on
construction sites at a central location, rather [than] have each
subcontractor establish its own [posting] system.'' The same commenter
noted that ``mixed'' worksites are also common in the construction
industry. On these sites, both union shop and open shop contractors
perform work at the same time; such situations arise, according to the
commenter, when the prime contract is awarded to an open shop prime
contractor that then subcontracts to union shop firms, or vice versa.
The commenter suggested that the language of this paragraph be amended
to clarify the responsibilities of prime contractors and subcontractors
in such situations, as follows: ``The posting requirement does not
apply to contractor establishments or construction work sites where no
union has been formally recognized by the prime contractor or certified
as the exclusive bargaining representative of the prime contractor's
employees.'' We agree with the commenter's concerns and have adopted
Paragraph 470.4(c), State law: This paragraph provides that the
posting requirement does not apply to contractor establishments or
construction work sites in jurisdictions where State law forbids
enforcement of union-security agreements. One commenter suggested that
the paragraph be amended to clarify whether this exemption applies in
facilities located in areas considered to be Federal enclaves. Upon
consideration, we have concluded that amending the regulatory language
to discuss each of the various types of Federal enclaves is not
appropriate because the critical question here is not whether or not an
entity is a Federal enclave, but whether or not State law applies to
that entity. We note that we do not intend the exemption in this
paragraph to apply to facilities located in Federal enclaves, or
portions thereof, that fall entirely under Federal jurisdiction. By
contrast, the exemption will apply to any facilities located in Federal
enclaves, or portions thereof, that fall under concurrent Federal and
State jurisdiction in States that have prohibited union-security
agreements. Whether or not State law applies to a particular Federal
enclave depends on a number of factors, including the extent of
authority ceded by the State to the Federal government over that
jurisdiction, and therefore is a question to be considered on a case-
by-case basis. See, e.g., Department of Labor and Industries of the
State of Washington v. Dirt & Aggregate, Inc., 837 P.2d 1018, 1020-21
(Wash. 1992) (scope of Federal jurisdiction over land ceded by State to
Federal government is governed by terms of cession agreement); cf.
Goodyear Atomic Corp. v. Miller, 108 S. Ct. 1704 (1988) (application of
State law to government owned, contractor operated facility not
permitted unless Congress has clearly authorized such regulation).
Another commenter suggested that the same paragraph should be
expanded to include non-State jurisdictions such as Guam, which
recently enacted a right-to-work law. This commenter proposed that the
phrase ``or local'' be inserted in the regulatory language after the
word ``State.'' The proposed revision, however, would exempt a far
broader spectrum of employers than the commenter apparently intends,
including those located in municipal jurisdictions that preclude
enforcement of union-security agreements. As a result, we have
addressed the issue by adding a clarification of the meaning of the
term ``State,'' as applied in this paragraph, to the end of the
Paragraph 470.4(d), work not performed under government contracts:
Two commenters asked that the exemption in this paragraph for work not
performed under a government contract be eliminated. One of these
commenters argued that ``[s]uch discrimination against employees is
unconscionable.'' It is important to understand, however, that the
employee notice does not confer Beck rights on employees; all employees
subject to the National Labor Relations Act who are covered by a union
security agreement have such rights. The notice is merely intended to
ensure that employees of government contractors are informed about
The other commenter advocating for elimination of the exemption
contended that the Department had underestimated the cost of requesting
an exemption in writing for work not performed under a government
contract, and that the economic impact of the proposed waiver provision
would increase the cost burden on employers and the public so much that
the costs of the provision would greatly exceed the benefits. A third
commenter also believed that the Department had underestimated the cost
of preparing a written request for an exemption, but asked only that
the requirement of the written request be removed, so that the
provision would be self-executing. This commenter noted that the
preamble to the NPRM contained no explanation of the rationale for
imposing the requirement.
In response to these comments, we have recalculated the cost of
preparing such written requests. The results of this recalculation are
described below in the ``Paperwork Reduction Act'' discussion in
section IV. Despite this recalculation, we have concluded that the
exemption should be retained. Government contractors are already
required, under at least three other Federal laws administered by the
Deputy Assistant Secretary for Federal Contract Compliance, to submit
written requests for exemptions from the application of such laws for
facilities that are separate and distinct from activities of the
contractor related to the performance of a contract. See 41 CFR 60-
1.7(b)(2) (applying the same exemption under Executive Order 11246); 41
CFR 60-741.4(b)(3) (applying the same exemption under section 503 of
the Rehabilitation Act of 1973, as amended, 29 U.S.C. 793); 41 CFR 60-
250.4(b)(3) (applying the same exemption under the Vietnam Era
Assistance Act, 38 U.S.C. 4212). Eliminating the requirement of a
written request for an exemption would result in inconsistent
obligations for government contractors, and inconsistent enforcement of
laws applying to government contractors.
Subpart B--Compliance Evaluations, Complaint Investigations, and
Section 470.10 How Will the Department Determine Whether a Contractor
Is In Compliance With the Executive Order and This Part?
Paragraph 470.10(a), compliance evaluations: This paragraph
provides that the Deputy Assistant Secretary for Federal Contract
Compliance may conduct a compliance evaluation to determine whether a
contractor holding a nonexempt contract is in compliance with the
requirements of part 470. One commenter asked that the language of this
paragraph be amended to replace ``may'' with ``will,'' in effect
requiring the Deputy Assistant Secretary to conduct a compliance
evaluation of all covered contractors and subcontractors in all cases.
Section 4 of the Order, however, provides that the Secretary ``may
investigate'' any government contractor, subcontractor, or vendor to
determine whether the Order has been violated. Thus, the Executive
Order confers discretion on the Secretary to make the determination
whether a particular investigation is the best course of action under
all the circumstances. The Department seeks to retain this discretion
in the regulations and as such, we decline to adopt this suggested
Paragraph 470.10(b), contents of compliance evaluations: This
paragraph describes the determinations that the Office of Federal
Contract Compliance Programs (``OFCCP'') will make during compliance
evaluations. The same commenter who asked for the change to the
previous paragraph proposed that the language of subparagraph (b)(1) of
this paragraph be amended. The proposed amendment would require OFCCP
to determine that the contractor has posted ``accurate, correct, and
unmarred'' employee notices in ``many'' conspicuous places. This
comment addresses the notices contractors must post and the locations
where they must be posted; those matters are governed not by this
subparagraph, but by the mandatory contract clause set forth in section
470.2(a). The purpose of a compliance evaluation is simply to determine
whether a contractor or subcontractor is complying with its legal
obligations, not to impose additional obligations. Moreover, even
assuming that this subparagraph were the appropriate place to make the
suggested amendments, those amendments would impose requirements
regarding the employee notice poster that extend well beyond the
requirements imposed by laws enforced by DOL regarding other mandatory
posters. We therefore decline to adopt the suggested amendment.
The same commenter suggested that, for clarity, the phrase ``under
470.2(a)'' be added to the same subparagraph, following the word
``notice.'' We concur with the commenter's suggestion that additional
language referring to 470.2(a) would clarify the subparagraph, and have
added such language.
Finally, the same commenter suggested that the subparagraph be
amended to require that the notice be posted in ``all'' of the
contractor's establishments and/or worksites. We decline to adopt this
change, for the reasons set forth in the above discussion of section
470.4(d) regarding the elimination of the requirement to request an
exemption in writing for work not performed under government contracts.
Under other laws enforced by DOL, government contractors are not
required to post notices in facilities that are exempt from the
application of the law because the work performed at the facility is
not related to the performance of a Federal contract. Therefore,
adopting the suggested amendment for this rule would result in
inconsistent obligations for government contractors, and inconsistent
enforcement of laws applying to government contractors.
Paragraph 470.10(c), results of compliance evaluation: This
subparagraph lists the required contents of the evaluation record. The
same commenter suggested that, for clarity, the phrase ``under Section
470.13'' be added at the end of the subparagraph, following the phrase
``enforcement recommended.'' We agree that the suggested phrase would
improve the clarity of the sentence, and have adopted the suggestion.
Section 470.11 What Are the Procedures for Filing and Processing a
Paragraph 470.11(a), filing complaints: This paragraph explains who
is entitled to file complaints alleging violations of the Executive
Order and/or part 470, and where such complaints should be filed. One
commenter suggested that the word ``complainant'' be added in
parentheses after the word ``employee'' in the paragraph. We agree with
the commenter that the regulatory language should be amended to clarify
that an employee who files a complaint is called a ``complainant,'' but
we have elected to make that clarification by amending the language of
paragraph 470.11(b) instead of this paragraph.
Paragraph 470.11(c), referrals: This paragraph as drafted in the
Notice of Proposed Rulemaking carried over a Departmental practice from
the 1992 ``Beck final rule'' to refer complaints alleging use of union
dues or fees for purposes unrelated to a collective bargaining
agreement, and/or seeking a refund or future adjustment of such dues or
fees, to the National Labor Relations Board or other appropriate
agency. See 57 FR 49588, 49594 (Nov. 2, 1992). We are striking this
section in its entirety to ensure that unfair labor practice charges
will reach the NLRB in a timely manner.
The National Labor Relations Board requires complainants to file
unfair labor practice charges with it directly and within 6 months of
the alleged unfair labor practice. The referral of information
regarding an alleged misuse of union dues from the Department of Labor,
however, does not fulfill the NLRB's filing requirements. In order to
avoid potential confusion regarding the proper procedures for filing
unfair labor practice charges, and to ensure that complainants are able
to file such charges in advance of the expiration of the statute of
limitations, we are striking any reference to referrals by the
Department of Labor to the NLRB.
One commenter suggested that in addition to making such referrals,
DOL should use a special E.O. 13201-related Web page, referred to above
in the discussion of paragraph 470.2(a), to provide employees with
detailed step-by-step information about how to obtain refunds of union
dues and/or fees under Beck. The purpose of the Executive Order is not
to encourage or assist workers in exercising rights they have under the
Supreme Court's decision in Beck, but to inform them of the existence
of such rights. Accordingly, the employee notice poster will provide
the headquarters and Web site address for the National Labor Relations
Board, the agency entrusted with the enforcement of these rights, for
the benefit of workers who need such assistance. Paragraph 470.11(d)
has been redesignated as paragraph 470.11(c).
Sec. 470.12 What Are the Procedures To Be Followed When a Violation Is
Found During a Complaint Investigation or Compliance Evaluation?
One commenter suggested that both this section and the following
section be amended to require that the time period
for the Department's efforts to seek compliance with E.O. 13201 and
part 470 through conciliation be limited to ten days, not including
weekends and Federal holidays. We decline to adopt the proposed
amendments. The length of time devoted to conciliation should be based
on the facts of each case and the likelihood that a voluntary agreement
may be achieved. Conciliation efforts that last for ten days may
nevertheless result in compliance through continued efforts. The
Department does not want to impose an artificial deadline that would
preclude successful conciliation. Further, a mandatory deadline is not
necessary to ensure expeditious resolution of violations. The
Department is authorized to suspend unproductive conciliation efforts
at any time and institute enforcement proceedings. The Department
declines to impose a mandatory deadline for termination of conciliation
efforts but will, however, attempt to resolve violations as
expeditiously as possible.
Sec. 470.13 Under What Circumstances, and How, Will Enforcement
Proceedings Under the Executive Order Be Conducted?
Paragraph 470.13(a), general provisions: One commenter asked that
subparagraph (1) of this paragraph, which provides that ``[v]iolations
of the Executive Order may result in administrative proceedings to
enforce the Order,'' be amended to require that such violations
``will'' result in such proceedings. Enforcement agencies are generally
vested with broad prosecutorial discretion in determining which matters
are litigation worthy. Such determinations are based on a complicated
balancing of a number of factors, including considerations of available
resources, likelihood of success on the merits, whether violations are
technical or substantial, the number, and the merits of, cases with
similar or more egregious violations, overall agency policies, and
competing Department-wide priorities. Although the Department will
vigorously enforce the Executive Order,the proposed amendment would
inappropriately eliminate the Department's prosecutorial discretion to
determine whether administrative proceedings are suitable in a given
case. We therefore decline to adopt the proposed amendment.
Paragraph 470.13(b)(2), administrative enforcement proceedings:
This subparagraph as written in the NPRM provided that proceedings
would be conducted in accordance with the rules for expedited
proceedings at 29 CFR 18.42 unless otherwise provided by the Office of
the Solicitor in its complaint. As a general matter, hearings in
Departmental programs are not automatically subjected to expedited
proceedings. Accordingly, we are amending this procedural rule to
eliminate this ``presumption'' of expedited proceedings. See, e.g.,
procedures for administrative proceedings to enforce Executive Order
11246 at 41 CFR part 60-30. We are deleting paragraph (b)(2), the
effect being that non-expedited hearing procedures will be followed
unless otherwise elected in accordance with the rules for expedited
proceedings at 29 CFR 18.42.
As a result of this action, paragraph (b)(3) is redesignated as
paragraph (b)(2); paragraph (b)(4) is redesignated as paragraph (b)(3);
and paragraph (b)(5) is redesignated as paragraph (b)(4).
Paragraph 470.13(b)(4), administrative enforcement proceedings:
This subparagraph explains the circumstances under which the Assistant
Secretary for Employment Standards will issue a final administrative
order in proceedings under section 470.13, and provides that where the
Assistant Secretary has found violations, the final administrative
order ``may'' order several specific actions. The same commenter that
suggested an amendment to paragraph 470.13(a), as discussed above, also
proposed that the word ``may'' in this subparagraph be replaced by
``will.'' The Department is persuaded that once it is established that
a violation has occurred, appropriate relief should be ordered. The
Department does not believe that it would ever be appropriate to not
issue an order upon a finding of a violation. Further, the number and
kinds of orders that may be imposed is sufficiently great that the
Assistant Secretary will have the flexibility needed to ensure that
there will be a suitable resolution for each violation, despite the
variations in facts that may be presented in these cases. In light of
this change, the paragraph has also been amended to phrase the list of
appropriate orders in the disjunctive, so as to avoid the impression
that all possible orders, sanctions, and remedies must be imposed upon
the finding of a violation. The paragraph has also been amended to
clarify that the Assistant Secretary may impose one or more kinds of
Section 470.14 What Sanctions and Penalties May Be Imposed for
Noncompliance, and What Procedures Will the Department Follow in
Imposing Such Sanctions and Penalties?
This paragraph requires the Department to consult with the affected
contracting agencies. Pursuant to DOL practice, that consultation would
take place after a decision on the merits has been issued and before
the Department imposes sanctions or penalties. We have amended the
regulatory text in this paragraph to clarify that procedural point.
Paragraph 470.14(c): This paragraph lists the circumstances under
which sanctions and penalties will not be imposed on a contractor that
has violated the Order or part 470. The commenter suggested that the
word ``will'' in this paragraph be replaced by ``may.'' This amendment
would permit the Assistant Secretary to impose sanctions and penalties
even in the listed situations. However, sections 5(b) and 6(a) and (b)
of E.O. 13201 preclude the Department from imposing sanctions and
penalties in these situations. The proposed amendment therefore exceeds
our authority, and is not adopted.
Paragraph 470.14(d): This paragraph and its subparagraphs (1) and
(2) list possible actions that the Assistant Secretary may take in
enforcing the Executive Order and part 470. The commenter suggested
that the word ``may'' in the paragraph be replaced by ``will,'' in
effect requiring the Assistant Secretary to take all of the actions
listed in subparagraphs (1) and (2) in every case. Section 6 of the
Executive Order vests the Secretary with discretion to impose or not
impose a number of different sanctions, and that authority has been
delegated to the Assistant Secretary. The commenter's suggestion would
require the Assistant Secretary to treat willful violations the same as
inadvertent violations, egregious violations the same as minor ones,
and repeat offenders like first-time offenders. This inflexibility
would not result in fair and evenhanded disposition of cases, and would
thus not further the purposes of the Executive Order. Requiring that
the Assistant Secretary take one or all of these actions would
circumscribe her discretion in a manner inconsistent with the Executive
Order. Therefore, we decline to adopt the proposed amendment.
Subparagraph 470.14(d)(2): This subparagraph permits the Assistant
Secretary to issue an order of debarment providing that ``one or more''
agencies must refrain from entering into further
contracts, or extensions or other modification of existing contracts,
with any noncomplying contractor. The commenter proposed that the
language of the subparagraph be amended to require the Assistant
Secretary to order ``all'' contracting agencies to refrain from
contracting with a contractor. However, the ``one or more'' language is
taken directly from section 6(b) of the Executive Order. We therefore
decline to adopt the proposed amendment.
Paragraph 470.14(f): This paragraph requires the Assistant
Secretary to publish and distribute to all executive agencies a list of
contractors that are ineligible for future contracts and subcontracts
because they have failed to comply with E.O. 13201 or part 470. The
language of the paragraph requires the Assistant Secretary to publish
and distribute the list ``[p]eriodically.'' The commenter proposed that
the paragraph be revised to require that the list be published and
distributed ``monthly,'' and that a new paragraph (g) be added to
require the Assistant Secretary to publish the list in the Federal
Register. We decline to adopt the proposed revisions. Use of the term
``periodically'' permits the Assistant Secretary to use his or her
discretion to publish the list as often as he or she deems necessary,
whether weekly, monthly, or less often. Similarly, the language of
paragraph 470.14(f) permits the Assistant Secretary to publish the list
in the Federal Register if he or she believes that such publication is
necessary or appropriate.
Subpart C--Ancillary Matters
Section 470.22 What Actions May the Assistant Secretary Take in the
Case of Intimidation and Interference?
One commenter suggested that we amend this section to ensure that
the phrase ``no person intimidates, threatens, or coerces any
individual'' is ``given the broadest definition possible.'' To
accomplish this goal, the commenter suggested two changes to the
section: first, that a ``very broad definition or example'' be added to
explain the phrase, and second, that language be added to the section
that would require the Department to ``give the broadest meaning
possible to this phrase.'' We decline to adopt either of these
suggestions. The Department intends to follow applicable caselaw in
interpreting the relevant language; it is therefore unnecessary to
address the matter in further detail in these regulations.
One commenter raised the concern that the posting requirement for
contractors and subcontractors covered by the Railway Labor Act
(``RLA'') appears duplicative of a posting requirement imposed by the
National Mediation Board, which, according to the commenter, advises
employees of their rights to join or refrain from joining a union. This
commenter acknowledged that the Executive Order does not appear to
exempt RLA employers from the posting requirement, even if they have
similar posters in place. Nonetheless, the commenter urged the
Department to ``consider the apparently duplicative posting
requirement, especially in any compliance and enforcement
The language of the Executive Order clearly contemplates that
contractors and subcontractors governed by the RLA will be subject to
the requirement of posting the employee notice poster set forth in
section 2(a) of the Order. Given the President's clear intent to
include such employers, the Department has no authority to exempt them,
on the basis of RLA coverage alone, from the posting requirements, or
from sanctions and penalties resulting from noncompliance. Moreover,
the National Mediation Board posting referenced by the commenter is not
duplicative of the notice at issue in these regulations. The National
Mediation Board posting requires employers to post a notice to
employees when an application for representation has been filed with
the National Mediation Board. That notice to employees excerpts a
portion of the Railway Labor Act discussing employees' right to select
representatives without influence or interference, and includes a short
statement concerning employees' rights to choose or not to choose union
representation. It does not discuss, as the notice at issue here does,
union security agreements and non-union members' rights to object to
the use of their agency fees for certain purposes.
IV. Regulatory Procedures
Executive Order 12866
As noted in the preamble to the NPRM, this rule constitutes an
``other significant regulatory action'' within the meaning of Executive
Order 12866. As such, this rule is subject to review by the Office of
Management and Budget. However, the Department has determined that this
rule will not 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. Therefore, the Department has concluded that this final
rule is not ``economically significant'' as defined in section 3(f)(1)
of E.O. 12866. As a result, the cost-benefit analysis called for under
section 6(a)(3)(C) of the order is not required.
No commenter disagreed with the Department's ultimate determination
that the implementation of the rule would not have an annual effect on
the economy of $100 million or more. However, two commenters disagreed
with the cost-benefit analysis published in the NPRM. As a result, the
Department recalculated the analysis, using the highest figures
suggested by the commenters, to determine whether the annual effect on
the economy could exceed $100 million if all of the commenters'
assumptions were correct. The recalculated cost of the rule remained
significantly below the $100 million threshold requirement for a formal
cost-benefit analysis. Therefore, the recalculation affirms the
Department's conclusion that this final rule is not ``economically
significant'' as defined in section 3(f)(1) of Executive Order 12866,
and that consequently, a formal regulatory economic analysis, as
described under section 6(a)(3)(C) of Executive Order 12866, is
Executive Order 12866 requires agencies to assess all costs and
benefits of available regulatory alternatives, including the
alternative of not regulating and, to the extent feasible, to specify
performance objectives, rather than specifying the behavior or manner
of compliance. Executive Order 13201 speaks with great specificity. The
Order makes the Secretary responsible to implement the Order, and
requires the Secretary to adopt rules and regulations deemed necessary
and appropriate to achieve the purpose of the Order. The Order contains
specific language that must be included in nonexempt contracts, and
provides the Secretary with authority to exempt an agency from the
Order if special circumstances require an exemption to serve the public
interest. The Order provides that the Secretary may exempt certain
classes of contracts that fall in five enumerated categories, and to
exempt ``separate and distinct'' facilities. The Secretary is
authorized to conduct investigations, receive complaints, hold
hearings, and impose sanctions. Upon a finding of a violation, the
Order permits the Secretary to direct that an agency cancel, terminate
or suspend a contract, or continue a contract conditioned upon future
compliance. The Secretary may provide that an agency refrain from
entering into contracts with noncomplying contractors, and publish
a list of contractors that have failed to comply with the Order. In
light of the great specificity with which the Order sets forth both
substantive and procedural requirements, the Order affords little in
the way of alternatives to compliance directed rulemaking.
The Office of Management and Budget (OMB) has reviewed this final
rule for consistency with the President's priorities and the principles
set forth in E.O. 12866.
Regulatory Flexibility Act
This final rule will not substantially change existing obligations
for Federal contractors; it will merely require certain contractors to
post notices informing their employees of certain rights those
employees already hold under Federal law, and to include clauses in
contracts with subcontractors and vendors, requiring those
subcontractors and vendors to post the same employee notices.
Accordingly, we conclude that the final rule will not have a
significant economic impact on a substantial number of small business
entities. The Secretary of Labor has certified this conclusion to the
Chief Counsel for Advocacy at the Small Business Administration.
Therefore, under the Regulatory Flexibility Act, 5 U.S.C. 605(b), a
regulatory flexibility analysis is not required.
Unfunded Mandates Reform
For purposes of the Unfunded Mandates Reform Act of 1995, as well
as Executive Order 12875, Enhancing the Intergovernmental Partnership,
this final rule does not include any Federal mandate that will result
in increased expenditures by State, local, and tribal governments, or
in increased expenditures by the private sector of more than $100
million in any one year.
Paperwork Reduction Act
Certain sections of this final rule, including Sec. Sec. 470.2(b),
470.4(d), and 470.11(a) and (b), contain information collection
requirements. As required by the Paperwork Reduction Act (PRA), the
Department has submitted a copy of these sections to OMB for its
The final rule also requires contractors and subcontractors to post
notices, investigate complaints, and, where appropriate, file requests
for waivers. The application of the PRA to those requirements is
The final rule imposes certain minimal burdens associated with the
posting of the employee notice poster required by the Executive Order
and Sec. 470.2(a) of the rule. As noted in section 470.2(d), the
Department will supply the poster, and contractors will be permitted to
make and post exact duplicate copies thereof. Under the regulations
implementing the PRA, ``[t]he public disclosure of information
originally supplied by the Federal government to [a] recipient for the
purpose of disclosure to the public'' is not considered a ``collection
of information'' under the Act. 5 CFR 1320.3(c)(2). Therefore, the
posting requirement is not subject to the PRA.
The final rule also imposes certain burdens associated with the
filing and processing of a complaint on both the complainant and the
contractor. We estimate, based on OFCCP's experience administering
other laws applicable to Federal contractors, that it will take an
average of 1.28 hours for a complainant to compose a complaint
containing the necessary information, and to send that complaint to
DOL. No comments were received that challenged this estimate of 1.28
hours in the Paperwork Package submitted to the Office of Management
and Budget in 2001. We have used data from the Bureau of Labor
Statistics National Compensation Survey: Occupation Wages in the United
States (NCS), 2001 (Summary 02-05), the most recent survey available,
to calculate the cost of these burden hours. The NCS Summary indicates
that the average hourly wage for union workers during 2001 was $19.50
per hour. We therefore estimate that the cost to a complainant of
filing a complaint under EO 13201 and this final rule will be $25.36,
or $24.96 ($19.50 x 1.28) + .40 postage and envelope. We further
estimate that 1,046 individual complaints will be filed each year under
the Executive Order and this final rule. No comments were received that
challenged this estimate of 1,046 complaints in the Paperwork Package
submitted to the Office of Management and Budget in 2001. Therefore, we
project that this collection of information will impose on employees
who file complaints a total cost burden of $26,526.56 ($25.36 per
complaint x 1,046 complaints).
With regard to the burdens for the contractor, the regulations
implementing the PRA exempt from the requirements of the Act any
information collection requirements imposed by an administrative agency
during the conduct of an administrative action against specific
individuals or entities. See 5 CFR 1320.4(a)(2). 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. 5 CFR 1320.4(c). Therefore, this exemption will apply to
the Department's investigation of complaints alleging violations of the
Order or this final rule.
Finally, Sec. 470.4(d) of this final rule will permit a contractor
to apply in writing for a waiver from the requirement to post the
employee notice contained in Sec. 470.2(a). Our analysis of the
burdens that will be imposed on contractors as a result of this
requirement is based upon several factors discussed in the cost-benefit
analysis in the preamble to the NPRM. Various commenters submitted
comments regarding each of these factors. The following is a review of
each of the factors, the comments submitted on each factor, and the
Department's reconsideration of that factor.
(a) The first factor considered in the analysis was the estimated
number of yearly requests that OFCCP would receive from contractors
seeking waivers from the obligations of E.O. 13201 for facilities not
involved in performing work on a Federal contract. The Department
developed its estimates for the NPRM based on estimates regarding the
number of waiver requests received by OFCCP under Executive Order
11246, section 503 of the Rehabilitation Act of 1973, and section 4212
of the Vietnam Era Veterans' Readjustment Assistance Act. These laws
were selected because they apply to the same Federal contractors and
subcontractors as does E.O. 13201, and because the regulations
implementing these laws require the same written requests for exemption
under the same circumstances as were provided in Sec. 470.4(d) of the
NPRM. 41 CFR 60-1.5(b)(2), 60-741.4(b)(3), 60-250.4(b)(3); see
discussion above regarding paragraph 470.4(d).
In the NPRM, the Department estimated that one-tenth of one percent
(.1%) of Federal contractors annually would be likely to submit
requests for waivers under E.O. 13201. Based on an estimate that
200,000 supply, service, and construction contractors would be subject
to the proposed rule, the Department estimated that 200 contractors per
year (.1% of 200,000) would be likely to request a waiver under the
rule. Two commenters objected to these estimates. Both commenters
suggested that a far higher percentage of contractors and
subcontractors would request waivers under E.O. 13201 than under the
other laws administered by OFCCP, because labor organizations would be
likely to pressure the contractors and subcontractors to submit such
requests. One commenter estimated that at least nine percent of Federal
contractors ``operate some facilities where union
organizations are present,'' and, based on that estimate, suggested
that 18,000 contractors would submit requests in the first year of
implementation of the Order.
Based on the concerns expressed by these commenters, the Department
reviewed the statistics used in the preamble to the NPRM and the data
underlying those statistics. Review of that data, including data
obtained from E.E.O. 1 reports filed with the Equal Employment
Opportunity Commission, indicated that the figure of 200,000 actually
represents the number of separate contractor establishments, not the
number of contractors and that there are approximately 16,000 separate
supply-and-service contractors and 10,000 construction contractors that
hold Federal contracts. No reliable records are available that indicate
how many, or what percentage, of those contractors have formally
recognized a union or have had a union certified as the exclusive
bargaining representative of its employees.
The Department also reviewed the requests for separate-facility
waivers OFCCP received from Federal contractors and subcontractors,
under the three laws listed above, from January 1999 through December
2001. OFCCP's records indicate that during that period, the agency
received only 16 individual letters from contractors requesting
separate-facility waivers, or an average of 5.3 requests per year. Even
if that number were increased tenfold as a result of pressure from
labor organizations, the number of requests received per year would
total only 53, approximately a quarter of the number estimated by the
Department in the NPRM. Moreover, the estimate of 18,000 requests per
year, suggested by the commenter mentioned above, is based not only on
the incorrect estimate of the number of Federal contractors provided in
the preamble to the NPRM, but also on the assumption that every Federal
contractor and subcontractor that operates ``some facilities where
labor organizations are present'' would submit a waiver request. We
view the latter assumption as unreasonable. As a result, we believe
that the Department's estimate that 200 contractors a year will request
separate-facility waivers is reasonable, and decline to adopt the
(b) The second factor in the analysis was the estimated time that
would be required for a contractor to develop a letter requesting a
waiver from the obligations of E.O. 13201 for facilities not involved
in performing work on a Federal contract. In the NPRM, the Department
estimated that it would take an average of one hour to prepare and mail
each waiver request, using 12 minutes of managerial time and 48 minutes
of administrative time. Two commenters objected, contending that this
estimate was too low. One commenter noted that applying for a waiver is
likely to involve the use of in-house or outside counsel, and that some
labor organizations are likely to demand to bargain over whether the
employer should apply for such a waiver. The other commenter surveyed
contractors that submitted waiver requests between 1990 and 1992, and
estimated that those contractors expended an average of 15 hours per
request, 90 percent of which was managerial/professional time and 10
percent of which was administrative/clerical time.
As a result of the concerns expressed by these commenters, the
Department reviewed the records of those contractors that requested
separate-facility waivers from OFCCP between 1999 and 2001. We also
reviewed guidance developed by OFCCP on the criteria that would be
considered by the Deputy Assistant Secretary in deciding whether to
grant separate facility exemptions/waivers from the requirements of
Executive Order 11246 (E.O. 11246) and the affirmative action
provisions of the Vietnam Era Veterans' Readjustment Assistance Act of
1974 (VEVRAA). Guidance provided with respect to the appropriateness of
an exemption under those provisions is also relevant here. That
guidance is contained in OFCCP ADM Notice 260, dated September 13, 2002
(``Directive''). Based on this review, we have accepted the second
commenter's estimate of 15 hours as the average amount of time
contractors will need to complete a waiver request. We have also
accepted the commenter's estimate that 90 percent of this time will be
managerial/professional and 10 percent administrative/clerical.
The test that a contractor must meet for obtaining a separate
facility exemption under E.O. 11246 and the affirmative action
provisions of VEVRAA is identical to the test for obtaining an
exemption under this regulation. This test requires a two-part showing:
(1) The facility for which an exemption is sought is in all respects
separate and distinct from activities of the contractor related to the
performance of a government contract; and (2) such an exemption will
not interfere with or impede the effectuation of the relevant statutory
or regulatory requirements, Directive p.2. The Directive explains how
these standards are met by requiring that a showing be made under the
Separate and Distinct
(i) Whether any work at the facility directly or indirectly
supports or contributes to the satisfaction of the work performed on a
(ii) The extent to which the contractor derives benefits from a
government contract, directly or indirectly, at the facility to be
(iii) Whether any costs associated with operating the facility are
charged to a government contract;
(iv) Whether working at the facility for which an exemption/waiver
is sought is a prerequisite for advancement in job responsibility or
pay at facilities connected to a government contract; and whether
working at facilities connected to a government contract is a
prerequisite for advancement in job responsibility or pay at the
facility for which an exemption/waiver is sought;
(v) Whether employees who normally work at the facility are
required to perform work related to a government contract at another
(vi) Whether the facility regularly or substantially transfers
employees to or from facilities at which a government contract is
(vii) Such other factors that the Deputy Assistant Secretary deems
are necessary or appropriate for considering whether the facility is in
all respects separate and distinct from the activities of the
contractor related to the performance of a contract.
Other factors could include the number of facilities connected to
the contractor's government contracts and the nature of the
contractor's contractual relationship with the government.
Interfere With or Impede
(i) Whether the waiver will be used as a subterfuge to circumvent
the contractor's obligations under Federal, State, or local equal
employment opportunity laws;
(ii) The contractor's record of compliance with Federal, State or
local equal employment opportunity laws; and
(iii) Such other factors that the Deputy Assistant Secretary deems
are necessary or appropriate for considering whether the granting of
the exemption/waiver would interfere with or impede the effectuation of
either the Executive Order or the affirmative action provisions of
A contractor must submit proof under these criteria sufficient to
demonstrate that its facility is separate and distinct and that the
waiver will not be used to interfere with or impede the contractor's
compliance with this Executive Order.
Because the showing required for obtaining a waiver/exemption under
E.O. 11246 and VEVRAA is identical to that required under E.O. 13201, a
contractor who has obtained a waiver under E.O. 11246 or VEVRAA will be
entitled to a waiver pursuant to this regulation provided it would not
impede the effectuation of E.O. 13201.
If this information is reasonably accessible to the contractor, it
may take him an average of 90 minutes to prepare a response under each
of the stated criteria, for a total preparation time of 15 hours.
Contractors with few facilities may require less time; contractors with
many facilities may require more. Similarly, the preparation time may
vary depending on the accessibility of the required documentation.
Fifteen hours is only predictive as an average; it may be more or less
at the extremes.
(c) The third factor in this analysis was the estimated average
hourly compensation rate for managerial and administrative employees.
In the NPRM, the Department based its estimates of this compensation on
the information contained in the 1999 version of the Bureau of Labor
Statistics (BLS) publication ``Employer Costs for Employee
Compensation'' (USDL 99-173). One commenter pointed out that the
Department should have used BLS's estimated hourly compensation rates
from 2001. We interpret this comment as requesting that the most
current data be used, which in this case is contained in the BLS
December 2002 edition of the Employee Compensation publication (USDL
03-130). This edition lists the average compensation for executive,
administrative, and managerial positions as $42.56 per hour, and for
administrative support as $18.74 per hour.
Total Time Expended: 200 waivers a year x 15 hours = 3000 hours.
Executive, Administrative, and Managerial Time: .90 x 3000 hours =
Executive, Administrative, and Managerial Cost: 2700 hours x $42.56
Administrative Support Time: .10 x 3000 hours = 300 hours.
Administrative Support Cost: 300 hours x $18.74 = $5,622.
Postage and Envelope: 200 x .40 = $80.00.
Total Annualized Cost Estimate: $120,614.
Dividing the total annualized cost estimate of $120,614 by the
estimated number of waivers (200), we calculate that the estimated
average cost of separate-waiver requests per Federal contractor
establishment will be $603.07.
(d) One commenter pointed out that the cost-benefit analysis in the
NPRM failed to take into consideration the time burden for contractors
and subcontractors to familiarize themselves with the waiver
requirement and to determine whether it is applicable to their
circumstances. For purposes of this calculation only, we assume that
this factor should be taken into consideration under the Paperwork
Reduction Act of 1995, and accept the commenter's estimate that such a
review will require approximately 40 minutes--66 percent of one hour--
of total managerial time per contractor. Based on a Federal contractor
universe of 26,000, we have estimated the costs of such a review as
Executive, Administrative, and Managerial Time: .66 hour x 26,000
contractors = 17,160 hours.
Executive, Administrative, and Managerial Cost: 17,160 hours x
$42.56 = $730,329.60.
Total Annualized Estimate of Familiarization Cost: $730,329.60.
Dividing the total annualized familiarization cost estimate of
$730,329.60 by the estimated Federal contractor universe of 26,000, we
calculate that the average cost for each Federal contractor to
familiarize itself with the waiver requirement will be $28.09.
(e) A commenter also pointed out that in the cost-benefit analysis
in the NPRM, we failed to take into consideration the cost to the
Federal government for processing waiver requests. However, 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 government for processing waiver requests need not be
taken into consideration.
(f) Finally, one commenter contended that the cost-benefit analysis
in the NPRM failed to take into consideration the cost associated with
adding the employee notice clause to subcontractor contracts,
subcontracts, purchase orders, and supplier agreements, and asserted
that the cost of rewriting and printing all of these documents will be
one of the most significant contractor costs associated with the
Executive Order. However, Sec. 470.2(b) of the rule explicitly permits
contractors and subcontractors to incorporate the employee notice
clause by reference, rather than by quoting the text of the clause
verbatim. This option permits contractors and subcontractors to comply
with the regulations simply by having their staff type a single
sentence onto already-existing form documents, rather than by
discarding and reprinting such already-existing forms. Moreover, even
if the contractor or subcontractor wishes to incorporate the entire
text of the employee notice clause in its documents, such incorporation
may be accomplished merely by appending an addendum page to each
document and ensuring that all parties signing the document are aware
of the addendum. Therefore, the burdens that will be imposed upon
contractors as a result of the requirement will be minimal.
Executive Order 13132 (Federalism)
We have reviewed this final rule in accordance with Executive Order
13132 regarding federalism, and have determined that the rule does not
have ``federalism implications.'' Some States do hold Federal contracts
as defined in this rule. However, as described above in the discussion
of other regulatory procedures, we have concluded that the impact of
the requirements of posting notices, and requesting waivers, that the
rule will impose on those States will be negligible. Therefore, the
rule does not ``have substantial direct effects on the States, on the
relationship between the national government and the States, or on the
distribution of power and responsibilities among the various levels of
Executive Order 13175 (Consultation and Coordination With Indian Tribal
The Department certifies that this final rule does not impose
substantial direct compliance costs on Indian tribal governments.
Executive Order 13045 (Protection of Children From Environmental Health
Risks and Safety Risks)
In accordance with Executive Order 13045, the Department has
evaluated the environmental safety and health effects of the final rule
on children. The
Department has determined that the final rule will have no effect on
Executive Order 12630 (Governmental Actions and Interference With
Constitutionally Protected Property Rights)
This final rule is not subject to Executive Order 12630,
Governmental Actions and Interference with Constitutionally Protected
Property Rights, because it does not involve implementation of a policy
with takings implications.
Executive Order 12988 (Civil Justice Reform)
This final rule has been drafted and reviewed in accordance with
Executive Order 12988, Civil Justice Reform, and will not unduly burden
the Federal court system. The final rule has been written so as to
minimize litigation and provide a clear legal standard for affected
conduct, and has been reviewed carefully to eliminate drafting errors
Environmental Impact Assessment
The Department has reviewed the final rule in accordance with the
requirements of the National Environmental Policy Act (NEPA) of 1969
(42 U.S.C. 4321 et seq.), the regulations of the Council on
Environmental Quality (40 CFR part 1500), and the Department's NEPA
procedures (29 CFR part 11). The final rule will not have a significant
impact on the quality of the human environment, and thus, the
Department has not conducted an environmental assessment or prepared an
environmental impact statement.
Executive Order 13211 (Actions Concerning Regulations that
Significantly Affect Energy Supply, Distribution, or Use)
This final rule is not subject to Executive Order 13211, because it
will not have a significant adverse effect on the supply, distribution,
or use of energy.
List of Subjects in 29 CFR Part 470
Administrative practice and procedure, Government contracts, Union
dues, Labor unions.
Signed in Washington, DC this 22 day of March, 2004.
Victoria A. Lipnic,
Assistant Secretary for Employment Standards.
Deputy Assistant Secretary for Labor-Management Programs.
Charles E. James, Sr.,
Deputy Assistant Secretary for Federal Contract Compliance.
Accordingly, a new subchapter C, consisting of part 470, is added to 29
CFR chapter IV to read as follows:
SUBCHAPTER C--EMPLOYEE RIGHTS CONCERNING PAYMENT OF UNION DUES OR FEES
PART 470--OBLIGATIONS OF FEDERAL CONTRACTORS AND SUBCONTRACTORS;
NOTICE OF EMPLOYEE RIGHTS CONCERNING PAYMENT OF UNION DUES OR FEES
Subpart A--Preliminary Matters
470.1 What definitions apply to this part?
470.2 Under the Executive Order, what employee notice clause must be
included in Government contracts?
470.3 What contracts are exempt from the employee notice clause
470.4 What contractors or facilities are exempt from the posting
Subpart B--Compliance Evaluations, Complaint Investigations, and
470.10 How will the Department determine whether a contractor is in
compliance with the Executive Order and this part?
470.11 What are the procedures for filing and processing a
470.12 What are the procedures to be followed when a violation is
found during a complaint investigation or compliance evaluation?
470.13 Under what circumstances, and how, will enforcement
proceedings under the Executive Order be conducted?
470.14 What sanctions and penalties may be imposed for
noncompliance, and what procedures will the Department follow in
imposing such sanctions and penalties?
470.15 Under what circumstances must a contractor be provided the
opportunity for a hearing?
470.16 Under what circumstances may a contractor be reinstated?
Subpart C--Ancillary Matters
470.20 What authority under this Rule or the Executive Order may the
Secretary delegate, and under what circumstances?
470.21 Who will make rulings and interpretations under the Executive
Order and this part?
470.22 What actions may the Assistant Secretary take in the case of
intimidation and interference?
470.23 What other provisions apply to this part?
Authority: E.O. 13201, 3 CFR, 2001 Comp., p.754, (66 FR 11221),
issued pursuant to the Constitution and laws of the United States,
including the Federal Property and Administrative Services Act, 40
U.S.C. 471 et seq., now codified as amended at 40 U.S.C. 101 et seq.
Subpart A--Preliminary Matters
Sec. 470.1 What definitions apply to this part?
(a) Assistant Secretary means the Assistant Secretary for
Employment Standards, United States Department of Labor, or his or her
(b) Construction means the construction, rehabilitation,
alteration, conversion, extension, demolition, or repair of buildings,
highways, or other changes or improvements to real property, including
facilities providing utility services. The term construction also
includes the supervision, inspection, and other on-site functions
incidental to the actual construction.
(c) Construction work site means the general physical location of
any building, highway, or other change or improvement to real property
which is undergoing construction, rehabilitation, alteration,
conversion, extension, demolition, or repair, and any temporary
location or facility at which a contractor or subcontractor meets a
demand or performs a function relating to the contract or subcontract.
(d) Contract means, unless otherwise indicated, any Government
contract or subcontract.
(e) Contracting agency means any department, agency, establishment,
or instrumentality in the executive branch of the Government, including
any wholly owned Government corporation, which enters into contracts.
(f) Contractor means, unless otherwise indicated, a prime
contractor or subcontractor, at any tier.
(g) Department means the U.S. Department of Labor.
(h) Employee notice clause means the contract clause that
Government contracting departments and agencies must include in all
nonexempt Government contracts and subcontracts pursuant to Executive
(i) Government means the Government of the United States of
(j) Government contract means any agreement or modification thereof
between any contracting agency and any person for the purchase, sale,
or use of personal property or nonpersonal services. The term
``personal property,'' as used in this 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 ``nonpersonal
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
(1) Agreements in which the parties stand in the relationship of
employer and employee; and
(2) Federally assisted contracts.
(k) Labor organization means any organization of any kind in which
employees participate and which exists for the purpose, in whole or in
part, of dealing with employers concerning grievances, labor disputes,
wages, rates of pay, hours, or other terms or conditions of employment.
(l) Modification of a contract means any alteration in the terms
and conditions of that contract, including amendments, renegotiations,
(m) Order or Executive Order means Executive Order 13201 (66 FR
11221, February 22, 2001).
(n) Person means any natural person, corporation, partnership,
unincorporated association, State or local government, and any agency,
instrumentality, or subdivision of such a government.
(o) 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
(p) Related rules, regulations, and orders of the Secretary of
Labor, as used in section 470.2 of this part, means rules, regulations,
and relevant orders of the Assistant Secretary for Employment
Standards, or his or her designee, issued pursuant to the Executive
Order or this part.
(q) Secretary means the Secretary of Labor, U.S. Department of
Labor, or his or her designee.
(r) Subcontract means any agreement or arrangement between a
contractor and any person (in which the parties do not stand in the
relationship of an employer and an employee):
(1) For the purchase, sale or use of personal property or
nonpersonal services which, in whole or in part, is necessary to the
performance of any one or more contracts; or
(2) Under which any portion of the contractor's obligation under
any one or more contracts is performed, undertaken or assumed.
(s) 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.
(t) Union means a labor organization as defined in paragraph (k) of
(u) Union-security agreement means an agreement entered into
between a contractor and a labor organization which requires certain
employees of the contractor to pay uniform periodic dues and/or fees,
initiation fees, or other payments to that labor organization as a
condition of employment.
(v) United States, as used herein, shall include the several
States, the District of Columbia, the Virgin Islands, the Commonwealth
of Puerto Rico, Guam, American Samoa, the Commonwealth of the Northern
Mariana Islands, and Wake Island.
Sec. 470.2 Under the Executive Order, what employee notice clause
must be included in Government contracts?
(a) Government contracts. Except in contracts exempted in
accordance with Section 470.3 and collective bargaining agreements as
defined in 5 U.S.C. 7103(a)(8), all Government contracting agencies
must, to the extent consistent with law, include the following
provisions in Government contracts entered into on or after April 28,
2004, that resulted from solicitations issued on or after April 18,
``1. During the term of this contract, the contractor agrees to
post a notice, of such size and in such form as the Secretary of Labor
will prescribe, in conspicuous places in and about its plants and
offices, including all places where notices to employees are
customarily posted. The notice must include the following information
(except that the last two sentences must not be included in notices
posted in the plants or offices of carriers subject to the Railway
Labor Act, as amended (45 U.S.C. 151-188)).
``NOTICE TO EMPLOYEES
``Under Federal law, employees cannot be required to join a union
or maintain membership in a union in order to retain their jobs. Under
certain conditions, the law permits a union and an employer to enter
into a union-security agreement requiring employees to pay uniform
periodic dues and initiation fees. However, employees who are not union
members can object to the use of their payments for certain purposes
and can only be required to pay their share of union costs relating to
collective bargaining, contract administration, and grievance
``If you do not want to pay that portion of dues or fees used to
support activities not related to collective bargaining, contract
administration, or grievance adjustment, you are entitled to an
appropriate reduction in your payment. If you believe that you have
been required to pay dues or fees used in part to support activities
not related to collective bargaining, contract administration, or
grievance adjustment, you may be entitled to a refund and to an
appropriate reduction in future payments.
``For further information concerning your rights, you may wish to
contact the National Labor Relations Board (NLRB) either at one of its
Regional offices or at the following address or toll-free number:
National Labor Relations Board, Division of Information, 1099 14th
Street, NW., Washington, D.C. 20570, 1-866-667-6572, 1-866-315-6572
``To locate the nearest NLRB office, see NLRB's website at http://www.nlrb.gov.
``2. The contractor will comply with all provisions of Executive
Order 13201 of February 17, 2001, and related rules, regulations, and
orders of the Secretary of Labor.
``3. In the event that the contractor does not comply with any of
the requirements set forth in paragraphs (1) or (2) above, this
contract may be cancelled, terminated, or suspended in whole or in
part, and the contractor may be declared ineligible for further
Government contracts in accordance with procedures authorized in or
adopted pursuant to Executive Order 13201 of February 17, 2001. Such
other sanctions or remedies may be imposed as are provided in Executive
Order 13201 of February 17, 2001, or by rule, regulation, or order of
the Secretary of Labor, or as are otherwise provided by law.
``4. The contractor will include the provisions of paragraphs (1)
through (4) herein in every subcontract or purchase order entered into
in connection with this contract unless exempted by rules, regulations,
or orders of the Secretary of Labor issued pursuant to section 3 of
Executive Order 13201 of February 17, 2001, so that such provisions
will be binding upon each subcontractor or vendor. The contractor will
take such action with respect to any such subcontract or purchase order
as may be directed by the Secretary of Labor as a means of enforcing
such provisions, including the imposition of sanctions for
noncompliance: However, if the contractor becomes involved in
litigation with a subcontractor or vendor, or is threatened with such
involvement, as a result of such direction, the contractor may request
the United States to enter into such litigation to protect the
interests of the United States.''
(b) Inclusion by reference. The employee notice clause need not be
quoted verbatim in a contract, subcontract, or purchase order. The
clause may be made part of the contract, subcontract, or purchase order
by citation to 29 CFR part 470.
(c) Adaptation of language. The Assistant Secretary may make such
changes in the contractual provisions of the Executive Order as may be
necessary to reflect Acts of Congress, clarifications in the law by the
courts, or otherwise to fully and accurately inform employees of their
rights under the Executive Order.
(d) Obtaining employee notice poster. The required employee notice
poster, printed by the Department, will be provided by the Federal
contracting agency or may be obtained from the Division of
Interpretations and Standards, Office of Labor-Management Standards,
U.S. Department of Labor, 200 Constitution Avenue, NW., Room N-5605,
Washington, DC 20210, or from any field office of the Department's
Office of Labor-Management Standards or Office of Federal Contract
Compliance Programs. A copy of the poster 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.
Sec. 470.3 What contracts are exempt from the employee notice clause
(a) Transactions below the Simplified Acquisition Threshold. The
requirements of this part do not apply to Government contracts for
purchases that fall below the Simplified Acquisition Threshold, as that
threshold is defined in the Office of Federal Procurement Policy Act,
41 U.S.C. 403. Therefore, the employee notice clause need not be
included in contracts for purchases below that threshold, provided
(1) No agency, contractor, or subcontractor is permitted to procure
supplies or services in a way designed to avoid the applicability of
the Order and this part; and
(2) The employee notice clause must be included in contracts and
subcontracts for indefinite quantities, unless the contracting agency
or contractor has reason to believe that the amount to be ordered in
any year under such a contract or subcontract will be less than the
Simplified Acquisition Threshold.
(b) Government contracts resulting from solicitations issued before
April 18, 2001. Pursuant to section 14 of the Order, the requirements
of this part do not apply to Government contracts that result from
solicitations issued before April 18, 2001, the effective date of the
(c) Specific contracts. The Deputy Assistant Secretary for Labor-
Management Programs may exempt a contracting agency or any person from
requiring the inclusion of any or all of the employee notice clause in
any specific contract, subcontract, or purchase order when the Deputy
Assistant Secretary deems that special circumstances in the national
interest so require. Requests for such exemptions must be in writing,
and must be directed to the Deputy Assistant Secretary for Labor-
Management Programs, U.S. Department of Labor, 200 Constitution Avenue,
NW., Room N-5605, Washington, DC, 20210.
(d) Withdrawal of exemption. When any contract or subcontract is of
a class exempted under this section, the Deputy Assistant Secretary for
Labor-Management Programs may withdraw the exemption for a specific
contract or subcontract or group of contracts or subcontracts when, in
the Deputy Assistant Secretary's judgment, such action is necessary or
appropriate to achieve the purposes of the Order.
Sec. 470.4 What contractors or facilities are exempt from the posting
(a) Number of employees. The requirement to post the employee
notice given in Sec. 470.2(a) (hereafter, posting requirement) does
not apply to contractors and subcontractors that employ fewer than 15
(b) Union representation. The posting requirement does not apply to
contractor establishments or construction work sites where no union has
been formally recognized by the prime contractor or certified as the
exclusive bargaining representative of the prime contractor's
(c) State law. The posting requirement does not apply to contractor
establishments or construction work sites in jurisdictions where state
law forbids enforcement of union-security agreements. For purposes of
this paragraph, the term ``state'' is intended to include any of the
entities identified as comprising the United States, as defined in
(d) Work not performed under Government contracts. Upon the written
request of the contractor, the Deputy Assistant Secretary for Labor-
Management Programs may waive the posting requirements with respect to
any of a contractor's facilities if the Deputy Assistant Secretary
finds that the contractor has demonstrated that:
(1) The facility is in all respects separate and distinct from
activities of the contractor related to the performance of a contract;
(2) Such a waiver will not interfere with or impede the
effectuation of the Executive Order.
(e) Work outside the United States. The posting requirement does
not apply to work performed outside the United States that does not
involve the recruitment or employment of workers within the United
Subpart B--Compliance Evaluations, Complaint Investigations and
Sec. 470.10 How will the Department determine whether a contractor is
in compliance with the Executive Order and this part?
(a) The Deputy Assistant Secretary for Federal Contract Compliance
may conduct a compliance evaluation to determine whether a contractor
holding a nonexempt contract is in compliance with the requirements of
this part. Such an evaluation may be limited to compliance with this
part or may be included in a compliance evaluation conducted under
other laws, Executive Orders, and/or regulations enforced by the
(b) During such an evaluation, a determination will be made
(1) The employee notice required by Section 470.2(a) is posted in
conspicuous places in and about each of the contractor's establishments
and/or construction work sites not exempted under section 470.4 of this
part, including all places where notices to employees are customarily
(2) The provisions of the employee notice clause are included in
nonexempt Government contracts entered into on or after April 28, 2004,
that resulted from solicitations issued on or after April 18, 2001.
(c) The results of the evaluation will be documented in the
evaluation record, which will include findings regarding the
contractor's compliance with the requirements of the Executive Order
and this part and, as applicable, conciliation efforts made, corrective
action taken and/or enforcement recommended under Section 470.13.
Sec. 470.11 What are the procedures for filing and processing a
(a) Filing complaints. An employee of a covered contractor may file
a complaint alleging that the contractor has failed to post the
employee notice as required by the Executive Order and this part; and/
or has failed to include the employee notice clause in nonexempt
subcontracts or purchase orders. Complaints may be filed with the
Office of Labor-Management Standards (OLMS) or the Office of Federal
Contract Compliance Programs (OFCCP) at 200 Constitution Avenue, NW.,
Washington, DC 20210, or with any OLMS or OFCCP field office.
(b) Contents of complaints. The complaint must be in writing and
must include the name, address, and telephone number of the employee
who filed the complaint (the complainant), the name and address of the
contractor alleged to have violated the Executive Order, an
identification of the alleged violation and the establishment or
construction work site where it is alleged to have occurred, and any
other pertinent information that will assist in the investigation and
resolution of the complaint. The complainant must sign the complaint.
(c) Complaint investigations. In investigating complaints filed
with the Department under paragraph (a) of this section, the Deputy
Assistant Secretary for Federal Contract Compliance will evaluate the
allegations of the complaint and develop a case record. The record will
include findings regarding the contractor's compliance with the
requirements of the Executive Order and this part, and, as applicable,
a description of conciliation efforts made, corrective action taken,
and/or enforcement recommended.
Sec. 470.12 What are the procedures to be followed when a violation
is found during a complaint investigation or compliance evaluation?
(a) If any complaint investigation or compliance evaluation
indicates a violation of the Executive Order or this part, the
Department will make reasonable efforts to secure compliance through
(b) The contractor must correct the violation found by the
Department (for example, by posting the required employee notice, and/
or by amending its subcontracts or purchase orders with nonexempt
subcontractors and vendors to include the employee notice clause), and
must commit, in writing, not to repeat the violation, before the
contractor may be found to be in compliance with the Executive Order or
(c) If a violation cannot be resolved through conciliation efforts,
the Deputy Assistant Secretary for Labor-Management Programs may
proceed in accordance with Section 470.13.
(d) For reasonable cause shown, the Deputy Assistant Secretary for
Labor-Management Programs may reconsider, or cause to be reconsidered,
any matter on his or her own motion or pursuant to a request.
Sec. 470.13 Under what circumstances, and how, will enforcement
proceedings under the Executive Order be conducted?
(a) General. (1) Violations of the Executive Order may result in
administrative proceedings to enforce the Order. The bases for a
finding of a violation may include, but are not limited to:
(i) The results of a compliance evaluation;
(ii) The results of a complaint investigation;
(iii) A contractor's refusal to allow a compliance evaluation or
complaint investigation to be conducted; or
(iv) A contractor's refusal to provide information as required by
the Executive Order and the regulations in this part.
(2) If a determination is made that the Executive Order or the
regulations in this part have been violated, and the violation has not
been corrected through conciliation, the Deputy Assistant Secretary for
Labor-Management Programs may refer the matter to the Solicitor of
Labor for institution of administrative enforcement proceedings.
(b) Administrative enforcement proceedings. (1) Administrative
enforcement proceedings will be conducted under the control and
supervision of the Solicitor of Labor, under the hearing procedures set
forth in 29 CFR part 18, Rules of Practice and Procedure for
Administrative Hearings Before the Office of Administrative Law Judges.
(2) The administrative law judge will certify his or her
recommended decision issued pursuant to 29 CFR 18.57 to the Assistant
Secretary. The decision will be served on all parties and amici.
(3) Within 25 days (10 days in the event that 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 Assistant Secretary.
(4) After the expiration of time for filing exceptions, the
Assistant Secretary may issue a final administrative order, or may make
such other disposition of the matter as he or she finds appropriate. In
an expedited proceeding, unless the Assistant Secretary issues a final
administrative order within 30 days after the expiration of time for
filing exceptions, the administrative law judge's recommended decision
will become the final administrative order. If the Assistant Secretary
determines that the contractor has violated the Executive Order or the
regulations in this part, the final administrative order will order the
contractor to cease and desist from the violations, require the
contractor to provide appropriate remedies, or, subject to the
procedures in Section 470.14, impose appropriate sanctions and
penalties, or any combination thereof.
Sec. 470.14 What sanctions and penalties may be imposed for
noncompliance, and what procedures will the Department follow in
imposing such sanctions and penalties?
(a) After a final decision on the merits has issued and before
imposing the sanctions and penalties described in paragraph (d) of this
section, the Assistant Secretary will consult with the affected
contracting agencies, and provide the heads of those agencies the
opportunity to respond and provide written objections.
(b) If the contracting agency provides written objections, those
objections must include a complete statement of reasons for the
objections, among which reasons must be a finding that, as applicable,
the completion of the contract, or further contracts or extensions or
modifications of existing contracts, is essential to the agency's
(c) The sanctions and penalties described in this section, however,
will not be imposed if:
(1) The head of the contracting agency continues personally to
object to the imposition of such sanctions and penalties, or
(2) The contractor has not been afforded an opportunity for a
(d) In enforcing the Order and this part, the Assistant Secretary
(1) Direct a contracting agency to cancel, terminate, suspend, or
cause to be canceled, terminated or suspended, any contract or any
portions thereof, for failure of the contractor to comply with its
contractual provisions as required by section 2 of the Executive Order
and the regulations in this part. Contracts may be canceled,
terminated, or suspended absolutely, or continuance of contracts may be
conditioned upon compliance.
(2) Issue an order of debarment under section 6(b) of the Order
providing that one or more contracting agencies must refrain from
entering into further contracts, or extensions or other modification of
existing contracts, with any noncomplying contractor.
(e) Whenever the Assistant Secretary has exercised his or her
authority pursuant to paragraph (d) of this section, the contracting
agency must report the actions it has taken to the Assistant Secretary
within such time as the Assistant Secretary will specify.
(f) Periodically, the Assistant Secretary will publish and
distribute, or cause to be published and distributed, to all executive
agencies a list of the names of contractors that have, in the judgment
of the Assistant Secretary under section 470.13(b)(4) of this part,
failed to comply with the provisions of the Executive Order and this
part, or of related rules, regulations, and orders of the Secretary of
Labor, and as a result have been declared ineligible for future
contracts or subcontracts under the Executive Order and the regulations
in this part.
Sec. 470.15 Under what circumstances must a contractor be provided
the opportunity for a hearing?
Before the Assistant Secretary takes the following action, a
contractor must be given the opportunity for a hearing before the
(a) Issues an order debarring the contractor from further
Government contracts under section 6(b) of the Executive Order and
Sec. 470.14(d)(2) of this part; or
(b) Includes the contractor on a published list of noncomplying
contractors under section 6(c) of the Executive Order and Sec.
470.14(f) of this part.
Sec. 470.16 Under what circumstances may a contractor be reinstated?
Any contractor or subcontractor debarred from or declared
ineligible for further contracts or subcontracts under the Executive
Order may request reinstatement in a letter to the Assistant Secretary.
If the Assistant Secretary finds that the contractor or subcontractor
has come into compliance with the Order and this part and has shown
that it will carry out the Order and this part, the contractor or
subcontractor may be reinstated.
Subpart C--Ancillary Matters
Sec. 470.20 What authority under this part or the Executive Order may
the Secretary delegate, and under what circumstances?
Section 9 of the Executive Order grants the Secretary the right to
delegate any of his/her 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. 470.21 Who will make rulings and interpretations under the
Executive Order and this part?
Rulings under or interpretations of the Executive Order or the
regulations contained in this part will be made by the Assistant
Secretary or his or her designee.
Sec. 470.22 What actions may the Assistant Secretary take in the case
of intimidation and interference?
The sanctions and penalties contained in Section 470.14 of this
part may be exercised by the Assistant Secretary against any contractor
or subcontractor who fails to take all necessary steps to ensure that
no person intimidates, threatens, or coerces any individual for the
purpose of interfering with the filing of a complaint, furnishing
information, or assisting or participating in any manner in a
compliance evaluation, complaint investigation, hearing, or any other
activity related to the administration of the Executive Order or the
regulations in this part.
Sec. 470.23 What other provisions apply to this part?
(a) The regulations in this part implement Executive Order 13201
only, and do not modify or affect the interpretation of any other
Department of Labor regulations or policy.
(b) Consistent with section 8 of the Executive Order, each
contracting department and agency must cooperate with the Assistant
Secretary, the Deputy Assistant Secretary for Labor-Management
Programs, and/or the Deputy Assistant Secretary for Federal Contract
Compliance, and must provide such information and assistance as the
Assistant Secretary or Deputy Assistant Secretary may require, in the
performance of his or her functions under the Executive Order and the
regulations in this part.
(c) Consistent with section 13 of the Executive Order, nothing
contained in the Executive Order or this part, or promulgated pursuant
to the Executive Order or this part, is intended to confer any
substantive or procedural right, benefit, or privilege enforceable at
law by any party against the United States, its agencies or
instrumentalities, its officers or employees, or any other person.
[FR Doc. 04-6823 Filed 3-26-04; 8:45 am]