March 26, 2009

No strings attached to federal stimulus bill?

  • Contractors should be aware of major changes to labor laws and stepped-up enforcement of those laws when working on federally funded projects.
    Stoel Rives


    The Obama administration has big plans to rebuild America’s crumbling infrastructure. That means contractors can look forward to bidding on some significant federally funded construction projects in the next few years. This is a win-win-win situation for contractors, construction industry workers and the American public.

    Of course, as everyone knows, nothing comes without a few strings attached. Here, the strings are major changes to our national labor laws and a new emphasis on enforcement of those laws.

    Before the inaugural dust had settled in Washington, President Obama had already signed into law the Lilly Ledbetter Act, effectively removing time limits for employees to bring lawsuits against their employers for paycheck discrimination.

    In late January and early February of this year, the White House issued three executive orders that will impact contractors working on federal projects:

    • The first order requires all contractors and their subs to post conspicuous notices informing employees of their right to organize unions under the national labor laws. Failure to post such notices could result in contract termination and could bar a violating contractor from working on future federally funded projects.

    • The second order concerns contractors who take over existing projects. The new contractor must offer the previous contractor’s employees right of first refusal for employment before the new contractor can offer anyone else a job. The purpose of this order is to maintain consistency of the work force on government projects even when the contractor is replaced. Failure to offer the right of first refusal to the previous contractor’s employees could result in a three-year ban from bidding on federal contracts and could expose the offending contractor to liability for reinstatement and back-pay damages.

    • The third order encourages all federal agencies to use project labor agreements on all federally funded construction projects more than $25 million. This order expressly revokes a Bush administration prohibition against federal agencies making project labor agreements a bid specification on federal construction projects.

    These are just a few examples of the changes to the labor laws already passed within the first few weeks of the Obama administration.

    There are currently 24 bills in Congress that aim to enhance employee rights. Those most likely to become law in the coming months include the following:

    • The Employee Free Choice Act, allowing card check unionization, providing binding arbitration of first contracts within 90 days, and imposing stiff penalties for violations including court-imposed restraining orders, treble back-pay damages, and civil fines up to $20,000 per violation.

    • The Re-Empowerment of Skilled and Professional Employees and Construction Tradeworkers, changing the definition of supervisor and dramatically increasing the number of employees who can unionize.

    • The Civil Rights Act of 2008, making numerous changes in the law including removal of damages caps on sex, religion and disability discrimination, as well as retaliation lawsuits.

    • The Forewarn Act, increasing the notice period for plant closings or mass layoffs from 60 to 90 days.

    President Obama has also expressed his support for raising the minimum wage to $9.50 per hour by 2010, for expanding the Family and Medical Leave Act to cover companies with 25 or more employees (currently 50), and for expanding federal discrimination laws to include sexual orientation as a protected class.

    These new and proposed laws are interesting, particularly for labor lawyers. But day-to-day life for contractors may not change noticeably just because there are some new laws on the books. The changes will be noticed only if those laws are actively enforced.

    There are numerous government agencies at both the state and federal levels that enforce all aspects of labor and employment law. Many of these agencies have been relatively quiet in recent years. That is changing.

    Lawyers who practice in labor law are reporting instances of government agencies acting more aggressive than usual, using tools and tactics that haven’t been seen for awhile. Agencies such as the Equal Employment Opportunity Commission, the National Labor Relations Board, and the Office of Federal Contract Compliance Programs are significantly increasing the number of charges they file against employers. And cases that might have been dismissed in the past are not going away so easily now.

    Whether this renewed enforcement vigor is the result of shifting politics, new laws, the recession, or some combination is not clear. What is clear is that contractors who obtain work on the upcoming stimulus projects will need to tread very carefully through the changing legal landscape of our federal (and state) labor and employment laws.

    Dan Swedlow is an attorney at Stoel Rives in Seattle where his practice focuses on labor and employment law.

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