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New Regulations Affecting Federal Contractors and Employers of Minors

Labor & Employment Alert Ely A. Leichtling, Fred Gants, Otto W. Immel

This Labor & Employment alert discusses several recently issued regulations and contains the following articles:

DOL Issues Final Rule: Federal Contractors and Subcontractors Must Post Notice Informing Employees of Their Unionization Rights and Amend Their Covered Subcontracts and Purchase Orders

New Rule Addressing Restrictions and Obligations of Defense Contractors Use of Mandatory Arbitration Provisions

New Regulations on Child Labor


On May 20, 2010, the U.S. Department of Labor ("DOL") issued final regulations requiring many federal contractors and subcontractors to post notices, both physically and electronically, informing employees of their rights under federal labor laws, including the National Labor Relations Act ("NLRA") and, in turn, including the requirement in their own covered subcontracts and purchase orders. The final regulations will be effective on June 21, 2010 and implement Executive
Order 13496, signed by President Obama shortly after he took office. We previously discussed DOL's proposed regulations in this area in an August 2009 update.

The regulations will be enforced by the DOL's Office of Federal Contract Compliance Programs ("OFCCP"), the same agency that enforces the affirmative action obligations of federal contractors and subcontractors. The OFCCP will ensure compliance with the posting and notice requirements of the Order, but not the underlying rights of employees under the NLRA itself.


The notice must be posted by federal contractors who have a single covered federal contract of at least $100,000, and by subcontractors performing work necessary to the primary covered $100,000+ contract as long as their subcontract is greater than $10,000.

The Order also applies to contracts for indefinite quantities, unless the contracting agency or contractor has reason to believe that the amount to be ordered in any one year under such a contract will be less than $100,000.

Though the reach of the Order is intentionally not limited to employers who already have unionized employees, employers who are not subject to the NLRA or who exclusively employ workers not subject to the NLRA are excepted from the Order.

The Order does not apply to current government contracts resulting from solicitations issued before June 21, 2010.

The Order also does not apply to contracts and subcontracts for work performed exclusively outside the territorial United States.

Details on the Poster

Examples of Rights
The final required employee rights notice that federal contractors and subcontractors will be required to post contains seven examples of employee rights under the NLRA, including organizing a union, discussing terms of employment with coworkers and choosing not to do any of these activities. The poster goes on to provide seven examples of illegal conduct by employers, including firing an employee for support of a union, prohibiting an employee from wearing union buttons or t-shirts or spying on peaceful union activities. Finally, the poster provides five examples of illegal union conduct, such as threatening an employee with loss of a job unless there is support of the union or using discriminatory procedures in making job referrals from a hiring hall.

Obtaining the Poster

A copy of the poster, in English and other languages, can be downloaded from the Office of Labor - Management Standards website. When a "significant portion" of the contractor's workforce is not proficient in English, the contractor must provide the notice in the native language of those employees. However, the phrase "significant portion" is not defined. Using smaller or black and white versions are not permitted; any duplicate must be exact.

Physically Posting Copies of the Poster

A contractor or subcontractor that posts notices to employees must physically post the required notice where such notices are posted at the contractor's plants and offices where employees covered by the NLRA engage in activities relating to the performance of the contract. The obligation appears to be broad in that it is not limited only to locations where the contractor posts other government posters, but rather must be posted in "conspicuous places," including "areas in which the contractor posts notices to employees about the employees' terms and conditions of employment."

Electronic Posting of the Poster

A contractor or subcontractor that customarily posts electronic notices to employees must also post this required
notice electronically. Such contractors or subcontractors can satisfy this requirement by prominently displaying
- on any website - a link to the DOL website that contains the full text of the poster. The link to the DOL website must read, "Important Notice About Employee Rights to Organize and Bargain Collectively."

Obligation to Include the Requirements of the Order in Covered Subcontracts and Purchase Orders

Covered contractors and subcontractors must, in turn, pass on the obligations of the Order to their covered subcontractors via their subcontracts and purchase orders with those covered subcontractors. As with other subcontractor clauses subject to the jurisdiction of the OFCCP, the language in the required employee notice need not be quoted verbatim in the covered subcontract or purchase order, but may instead be incorporated by reference.


The regulations provide for compliance evaluations, complaints, complaint investigations and enforcement procedures by and through the OFCCP. Sanctions and penalties include cancellation, termination or suspension of any contract, or debarment of any contractor or subcontractor from further government contracts.

Practical Guidance

From a compliance standpoint, federal contractors and subcontractors should review all new federal contracts and subcontracts to determine whether and when the Order will apply to them. If covered, they will also need to determine where they will physically post hard copies of the required poster, and whether and how they will electronically post on their web site. Covered contractors and subcontractors will also need to revise their covered subcontract and purchase order terms to incorporate the requirements of the Order.

Yet, the impact and burden of the Order goes far beyond technical compliance. Posting of the required notices will lead to an increased awareness among employees of their unionization rights. Covered contractors and subcontractors, therefore, will need to assess their stance toward unionization and what steps they want to take to what will likely be increased efforts to unionize or susceptibility to organizing campaigns. This might include an assessment of their wages and benefits, their employee communication policy, work rules concerning solicitation and distribution, and training of managers and supervisors on legal responses to possible organizing efforts.

Questions on federal contractors' and subcontractors' obligations to post notices on their employees' unionization rights, and revise their subcontract and purchase order language, as well as broader questions concerning union activities and the impact on employees of the new regulations should be directed to Ely Leichtling at (414) 277-5681 / [email protected], Fred Gants at (608) 283-2618 or [email protected] or your local Quarles & Brady LLP attorney.


A new interim rule prohibits employers from receiving federal defense contracts in excess of $1 million if they seek to enforce mandatory arbitration provisions against employees or independent contractors making Title VII or sexual assault and harassment claims. Beginning on June 17, 2010, defense contractors are also required to provide an affirmative certification that their subcontractors likewise comply with the mandatory arbitration prohibitions.

The rule prohibits the use of funds appropriated or otherwise made available by the Appropriations Act for fiscal year 2010 for any contract in excess of $1 million, if the contractor or its subcontractors require mandatory arbitration of claims brought pursuant to Title VII of the Civil Rights Act of 1964 or tort claims arising out of or related to sexual assault or harassment, including assault and battery, intentional infliction of emotional distress, false imprisonment, or negligent hiring, supervision or retention.

Defense contractors covered by the rule (i.e., those with contracts utilizing fiscal year 2010 funds in excess of $1 million) with employees who executed mandatory arbitration agreements as a condition of employment can still comply with the rule by not taking any action to enforce the existing arbitration agreements when faced with claims of discrimination under Title VII or any of the covered tort claims. Title VII protects employees from discrimination on the basis of gender, race, color, religion and national origin. Defense contractors subject to the rule's requirements should not enter into mandatory arbitration agreements with new employees or independent contractors that are contrary to this rule.

The only apparent exception to the rule is a provision that the secretary of defense or a deputy secretary may waive the application of the rule to a contract, as determined on a case-by-case basis and if necessary to avoid harm to national security.

The U.S. Department of Defense adopted the interim rule effective on May 19, 2010. The rule implements an amendment to the Appropriations Act signed by President Obama on December 19, 2009.


In time for students to be released for summer vacation, the U.S. Department of Labor recently published regulations covering the employment of younger workers. The regulations, which take effect on July 19, 2010, provide additional guidance on the types of jobs younger workers are allowed to perform, as well as opportunities available for students to participate in school-supervised work-study programs. The new regulations also expand the occupations prohibited for younger workers as oppressive and hazardous, and assess new civil penalties for violations of child labor laws. The new regulations are available here.

Although the Fair Labor Standards Act ("FLSA") requires that workers must be at least 16 years old to work in nonagricultural occupations, the secretary of the Department of Labor is authorized to regulate occupations and conditions that are deemed suitable for workers between 14 and 15 years of age. Accordingly, the new regulations indicate in which occupations, and under what conditions workers ages 14-15 may work that will not interfere with their schooling or with their health and well-being.

Permissible Work for 14- and 15-Year-Olds

Under the old regulations, the employment of 14- and 15-year-olds was limited to retail, food service and gasoline
service establishments. The new regulations now allow for employment in industries such as advertising, banking and information technology, as well as for work of an intellectual or artistic nature. The new permissible occupations for workers ages 14-15 include: office and clerical work; computer programming; writing software; tutoring; serving as a peer counselor or teacher's assistant; singing; playing a musical instrument; cashiering; modeling; price marking; assembling orders; packing and shelving; bagging and carrying out customers' orders; kitchen work and other work involved in preparing and serving food and beverages, including operating dishwashers, toasters, dumbwaiters, popcorn poppers, coffee grinders; and for 15-year-olds, lifeguarding. The new regulations also clarify that any job not specifically permitted is prohibited.

Clarification of Work Hours

The new regulations clarify the work hours and time of day limitations applicable to 14- and 15- year-old workers.
Under the new regulations, between June 1 through Labor Day and when school is not in session, workers ages 14-15 may only work between the hours of 7 a.m. and 9 p.m., no more than 8 hours per day, and 40 hours in one week. When school is in session, they may only work outside of school hours between 7 a.m. and 7 p.m., no more than three hours a day and 18 hours a week.

Occupations Deemed Oppressive and Hazardous Under the New Regulations

Although all jobs that are not specifically permitted are prohibited, the new regulations also specify occupations that minors ages 14-15 may not work in, because they are deemed "oppressive" under the FLSA. While the list is not exhaustive, the prohibited occupations include: manufacturing; mining; processing; working with hoisting apparatus; working with power-driven machinery such as lawn mowers and golf carts; all work requiring the use of ladders, scaffolds, or their substitutes; occupations in warehousing, storage, communications, and public utilities; and public messenger services.

In response to the many injuries (and even deaths) that have occurred as a result of youth peddling, the regulations also include a new ban on youth peddling and door-to-door sales. Under the new regulations, youth peddling, which entails selling goods or services to customers at locations other than the employer's establishment such as at the customer's residences, on street corners or at public transportation stations is prohibited for workers ages 14-15. The new ban on youth peddling also prohibits workers ages 14-15 from working as "sign wavers," holding, wearing or waving signs unless inside or directly in front of the employer's establishment. An exception to the youth peddling ban was made for fundraising and door-to-door charitable sales, which would permit activities like candy bar sales for school fundraisers.

A comparison of the major changes between the old regulations and the new regulations for workers ages 14-15 is available here.

Likewise, the new regulations also expand prohibitions on various occupations that are deemed to be particularly hazardous, and therefore, prohibited even for workers between the ages of 16 and 18. Under the old regulations, workers ages 16-17 were prohibited from working in logging and sawmilling, with power-driven hoisting equipment, in meat processing, with power-driven meat processing machines, with power-driven bakery equipment, with balers and compactors, with paper product processing machines, and with band saws, circular saws and guillotine shears. The new regulations expand each of these prohibited occupations. For example, under the new regulations, not only are workers between the ages of 16 and 18 prohibited from working with power-driven hoisting equipment, they are now prohibited from working with, tending, riding upon, repairing, servicing or disassembling an elevator, crane, manlift, hoist or high-lift truck, regardless of weight. Likewise, the prohibition on working with band saws, circular saws and guillotine shears is now expanded to include chain saws, reciprocating saws, wood chippers and abrasive cutting discs, regardless of the material processed by this equipment.

A comparison of the major changes between the old regulations and the new regulations for workers ages 16-17 is available here.

New Work-Study Programs

Additionally, the regulations now provide for the participation of workers ages 14-15 in school-supervised and administered work-study programs. These programs must be in occupations permitted under the regulations and must meet the educational standards established by the State Educational Agency in the respective state. To participate, the superintendent of the school district supervising the work-study program must submit a letter of application to the administrator of the Wage and Hour Division at least 60 days before the school year begins. After the program has been approved, the designated teacher-coordinator, the employer and the student must enter into a written agreement providing for the objectives of the program, the specific job duties, the number or hours and times of day that the minor will be employed per week and a certification that employment of the minor will comply with all applicable child labor laws.

New Assessment of Civil Money Penalties

Finally, like the FLSA, the new child labor regulations include many exceptions and exemptions to consider. Under the new regulations, anyone who violates the child labor regulations may be subject to a penalty of $11,000 for each employee and of $50,000 if the violation results in the death or serious injury of an underage employee.

Before employing minors, you should also check applicable regulations under state laws. Given the various laws regulating child labor, please contact us to help you answer any questions you may have before employing younger workers this summer.

For more information about the prohibition on mandatory arbitration or the new regulations on child labor,
please contact Otto Immel at (239) 659-5041 / [email protected], Marian Zapata-Rossa at (602) 229-5447 / [email protected] or your local Quarles & Brady attorney.

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