Obama Creates Working Families Task Force, Issues Executive Orders Covering Contractors

President Obama Jan. 30 officially launched a White House task force aimed at raising the living standards of middle class working families and issued three labor-friendly executive orders regarding the rights of workers employed by federal contractors.

Speaking at an event in the East Room of the White House attended by members of Congress, members of the president's economic team, and labor leaders, Obama asserted that "the strength of our economy can be measured directly by the strength of our middle class."

The task force will "focus on policies that will really benefit the middle class, policies to create jobs that pay well and provide a chance to save, to create jobs in growing fields and train workers to fill them, to ensure that workplaces are safe and fair as well as flexible for employees juggling the demands of work and family," Obama said.

"We need to level the playing field for workers and the unions that represent their interests, because we know that you cannot have a strong middle class without a strong labor movement," President Obama said.

The three executive orders require federal contractors to post notices informing employees of their rights under the National Labor Relations Act, prohibit federal contractors from using taxpayer money to try to influence their employees' choice of whether to have union representation, and require successor contractors to offer jobs to qualified employees of the previous company. The executive orders, which have not yet been numbered, will be published in the Federal Register.

Obama said he believes "we have to reverse many of the policies towards organized labor that we've seen these last eight years." "I do not view the labor movement as part of the problem; to me it's part of the solution," he said, drawing applause from the audience. 

"We need to level the playing field for workers and the unions that represent their interests, because we know that you cannot have a strong middle class without a strong labor movement," Obama said. He asserted that "strong, vibrant, growing unions can exist side by side with strong, vibrant, and growing businesses."

According to the AFL-CIO's Building and Construction Trades Department, Obama is preparing to issue a fourth executive order that would overturn former President Bush's Executive Order 13202 issued in February 2001 prohibiting the requirement of a project labor agreement for a federally funded construction project.

Middle-Class Working Families a 'High Priority.'

"It is a high priority of my Administration to achieve a secure future for middle-class working families, one in which they share in prosperous times and are cushioned during hard times," Obama said in the presidential memorandum creating the task force. The mission of the task force is to work with federal agencies to "expedite administrative reforms, propose Executive Orders, and develop legislative and policy proposals that can be of special importance to working families."

The task force, which was first announced by the transition team last December (246 DLR A-6, 12/23/08), is chaired by Vice President Biden and also will include the secretaries of labor, health and human services, education, and commerce, and the heads of the Office of Management and Budget, the National Economic Council, the Domestic Policy Council, and the Council of Economic Advisors.

Obama directed the task force to produce "a detailed set of recommendations" to expand education and lifelong training opportunities, improve work and family balance, restore labor standards including workplace safety, protect the incomes of middle-class working families, and protect retirement security. The memo states that the task force will hold regular meetings and conduct outreach sessions with representatives of labor, business, nonprofit organizations, state and local government agencies, and other interested persons to assist the task force's development of recommendations.

Biden announced that economist Jared Bernstein, who previously was with the progressive Economic Policy Institute and is the vice president's chief economic adviser, will be the executive director of the task force. The task force will post materials and reports on its Web site (http://www.astrongmiddleclass.gov). Biden also invited the public to "share their ideas and experiences with us" by posting messages on the site.

The task force's first meeting-to address green jobs that provide products and services that use renewable energy resources, reduce pollution, conserve energy and natural resources, and reconstitute waste-is scheduled to take place Feb. 27 in Philadelphia, the vice president said.

Notification of Employee Labor Rights Required.

"When the Federal Government contracts for goods or services, it has a proprietary interest in ensuring that those contracts will be performed by contractors whose work will not be interrupted by labor unrest," Obama said in the executive order on notification of employee rights under federal labor laws. "The attainment of industrial peace is most easily achieved and workers' productivity is enhanced when workers are well informed of their rights under Federal labor laws," he said.

The executive order requires that contractors and their subcontractors agree to post workplace notices, the form and content of which will be determined by the labor secretary, and to comply with the provisions of the notice and any related rules issued by the labor secretary. If a contractor fails to comply with any of the requirements in the notice or rules, the "contract may be cancelled, terminated, or suspended in whole or in part, and the contractor may be declared ineligible for further Government contracts."

The labor secretary is allowed to grant exemptions if applying the requirements "would not serve the purposes of this order or would impair the ability of the Government to procure goods or services on an economical and efficient basis." The executive order directs the labor secretary to begin rulemaking within 120 days regarding the form and content of the notice and directs the Federal Acquisition Regulatory Council to amend the Federal Acquisition Regulation to require that solicitations include the requirements.

As part of the order, Obama revoked Executive Order 13201 issued by Bush in February 2001, which required federal contractors to post workplace notices informing them of their rights under Communications Workers of America v. Beck, 487 U.S. 735, 128 LRRM 2729 (1988), not to join a union and not to pay agency fees for nonrepresentational union expenditures. Bush's executive order did not require notification of employees' right to join a union or any other rights protected by federal labor law.

Nondisplacement of Workers Under Service Contracts.

The second executive order is on nondisplacement of qualified workers under service contracts with the federal government. When a service contract expires and another contractor is awarded the contract to perform the same service, the successor contract often hires the predecessor's employees but sometimes hires a new workforce, Obama said in the order.

The government's "procurement interests in economy and efficiency are served when the successor contractor hires the predecessor's employees," the president said. "A carryover work force reduces disruption to the delivery of services during the period of transition between contractors and provides the Federal Government the benefits of an experienced and trained work force that is familiar with the Federal Government's personnel, facilities, and requirements," he said.

The executive order requires, with certain exceptions, successor contractors that have service contracts with the federal government to provide a right of first refusal to the predecessor's employees for jobs for which they are qualified. However, the heads of departments and agencies are authorized to grant exemptions.

The labor secretary is responsible for investigating and obtaining compliance with the order and has the authority to issue sanctions and remedies, including "orders requiring employment and payment of wages lost." In the case of noncompliance with a secretary's order or willful violations of the executive order, the labor secretary may declare the contract or subcontractor "ineligible to be awarded any contract of the United States for a period of up to 3 years." The executive order directs the labor secretary to issue regulations within 180 days to implement the requirements of the order and directs the FAR Council within 180 days to issue regulations for inclusion of the requirements in federal solicitations and contracts.

Obama revoked Executive Order 13204 issued by Bush in February 2001, which in turn revoked Executive Order 12933 issued by former President Clinton in October 1994, which required that successive contractors for services in federal buildings offer a right of first refusal of employment to employees of the prior contractor.

Costs of Persuading Employees Unallowable.

The third executive order, titled "Economy in Government Contracting," addresses federal contractor costs for activities to persuade employees regarding the exercise of their labor rights.

"To promote economy and efficiency in Government contracting, certain costs that are not directly related to the contractors' provision of goods and services to the Government shall be unallowable for payment, thereby directly reducing Government expenditures," Obama said. He asserted that the order is "consistent with the policy of the United States to remain impartial concerning any labor-management dispute involving Government contractors." The executive order states that it "does not restrict the manner in which recipients of Federal funds may expend those funds."

If the government contract treats certain costs as unallowable, the executive order provides that agencies "shall treat as unallowable the costs of any activities undertaken to persuade employees-whether employees of the recipient of the Federal disbursements or of any other entity-to exercise or not to exercise, or concerning the manner of exercising, the right to organize and bargain collectively through representatives of the employees' own choosing."

However, allowable costs include those "incurred in maintaining satisfactory relations between the contractor and its employees, including costs of labor-management committees, employee publications (other than those undertaken to persuade employees to exercise or not to exercise, or concerning the manner of exercising, the right to organize and bargain collectively), and other related activities."

The FAR Council has 150 days to revise its regulations to carry out the executive order. It states that "[s]uch rules, regulations, and orders shall minimize the costs of compliance for contractors and shall not interfere with the ability of contractors to engage in advocacy through activities for which they do not claim reimbursement."

Rep. Miller, Union Leaders Praise Obama.

Rep. George Miller (D-Calif.), chairman of the House Education and Labor Committee applauded the president's actions, saying that Obama "reaffirmed that the interests of hard working Americans will not take a back seat to corporations and CEOs." Overturning Bush's executive orders "is an important step to restore a rational balance regarding the rights of employees in the workplace," and the task force "is an important step towards ensuring that federal laws and regulations support the growing and sustaining of the middle class," Miller said. He observed that "[a]s our nation strives to rebuild the ailing economy, families must be able to share in the increased prosperity."

Obama "today began to chip away at the corporate control over workers" that prevailed during the Bush administration, AFL-CIO President John Sweeney said. "It's flabbergasting," he said, "in the midst of a painful recession, to see Exxon Mobil's $45.2 billion record profit, million dollar Wall Street bonuses, and more corporate jets for the bailout recipients as they rail against workers' rights." He asserted that the task force is a good beginning in the process "to restore balance between workers and corporations."

Anna Burger, chair of the Change to Win labor federation, thanked Obama and Biden "for continuing to stand up for working families by taking bold actions to restore the economy, rebuild the middle class and renew the American dream." The executive orders "show that the administration recognizes the federal government's responsibility, as the nation's largest purchaser of goods and services, to set model employment standards for private sector workers, as well as for the direct Federal workforce," Burger said. Pledging to work with the task force on behalf of union members "as well as the millions more who are struggling to secure a fair voice in the workplace," she said "we must explore every avenue available to create change that works now and for generations to come."

International Brotherhood of Teamsters General President Jim Hoffa praised the president and the vice president "for their concern and attention to the struggles of America's middle class" and for "the repeal of Bush-era policies that hurt workers." Hoffa said he is "proud" that the new administration "is taking bold steps to restore hope and sanity in this severe time of distress, angst and uncertainty for workers."

Calling the president's actions "tremendously important," UNITE HERE General President Bruce Raynor said the "economy has always depended on working families." He asserted that "[n]ow is the time to ensure that every worker has a living wage, affordable health care, a secure retirement, and a safe workplace."

Formation of the task force "is a critical step in revitalizing the engine of the American economy," Joe Hansen, president of the United Food and Commercial Workers, said. "Obama has made it clear that he truly understands the challenges working families face, that we have to level the economic playing field, and that he is committed to using all of the levers of government to restore and expand our nation's middle class," Hansen said.

Business Groups, NRTW Criticize Actions.

In contrast to the unanimous praise from union leaders, a U.S. Chamber of Commerce official commented that he was "disappointed" with the third executive order, which he said is intended "to interfere with an employer's ability to communicate with its employees about whether they should be represented by a union." Randel Johnson, vice president for labor, immigration, and employee benefits, said the executive order will convert "the FAR regulations into neutrality agreements where employers waive their free speech rights and allow unions to approach their employees without being able to respond."

Daniel V. Yager, chief policy officer and general counsel of the HR Policy Association, said he will be reviewing the executive orders "with our members, most of which are federal contractors, to examine the impact on their operations." He expressed hope that there will be "widespread input" regarding the content of the DOL-designed notice of employee labor rights and expressed concern that the executive order on unallowable costs "will impact the ability of employees to hear both sides of the story" regarding union representation.

"After spending more than a billion dollars in forced union dues to get Obama elected, the union bosses have received their first major payoff," Mark Mix, president of the National Right to Work Legal Defense Foundation, said. He asserted that the executive order requiring workplace notices of employee labor rights "advertis[es], and essentially endors[es], the formation of unions under a theory (long discredited by academic research) that forcing employees into union collectives will somehow prevent 'substantial obstructions to the free flow of commerce.' " He also objected that the labor secretary "would become an additional judge, jury, and executioner of federal labor laws with respect to federal contractors."