Jan 29, 2002 Labor Relations

Federal Judge Invalidates Executive Order Requiring Beck Notice

In the latest development relating to the rights of employees represented by a union to refrain from union activity, a federal judge has struck down an Executive Order issued by President Bush that required government contractors to notify their employees of their right not to become union members. In UAW-Labor Employment Training Corp., et al. v. Chao, (D.C. Distr. Ct. 01-CV-00950 (HHK), January 2, 2002) (“Chao“), the U.S. District Court for the District of Columbia ruled that the Executive Order is preempted by federal labor law, because it attempts to impose additional duties on employers in an area that is covered by the National Labor Relations Act (the “NLRA”).

In February 2001, President Bush issued Executive Order No. 13,201, requiring government departments and agencies to include certain provisions in all contracts with a value of over $100,000 solicited after April 18, 2001. These provisions require that the contracting employer provide to its employees what is commonly referred to as “Beck Notice,” based on the Supreme Court’s decision in Beck v. Communications Workers, 487 U.S. 735 (1988) (“Beck“). In Beck, the Court ruled that, under the NLRA, employees represented by a union who choose not to be full-fledged union members — referred to as “agency fee” payers — may be required to pay for their share of the costs incurred by the union for collective bargaining, but that they are entitled to a refund of any portion of their agency fees spent on non-core items, such as contributions to political campaigns or charities.

The Executive Order at issue in Chao required that federal contractors include postings at the workplace informing employees that they “cannot be required to join a union or maintain membership in a union in order to retain their jobs.” The Order also sought to impose penalties and other notice requirements not required under the NLRA.

Several labor unions brought suit, seeking to invalidate the Executive Order. The plaintiff unions relied upon an earlier decision in Chamber of Commerce v. Reich, 74 F.3d 1322 (D.C. Cir. 1996) (“Chamber of Commerce“), involving an Executive Order issued by President Clinton that purported to debar from receiving federal contracts all employers who hired permanent replacement workers during a strike. The Chamber of Commerce court ruled that the Executive Order in question was preempted because it imposed a penalty not contemplated by the NLRA on employers who exercised their NLRA-protected right to hire permanent replacements. The Chao court agreed that the reasoning applied in Chamber of Commerce led to the conclusion that the Executive Order requiring Beck Notice was preempted as well.

The Government argued, in Chao, that the preemption doctrine was inapplicable “because the Order ‘implicates’ the unions’ duty of fair representation.” The court rejected this contention. While acknowledging that unions have a duty to provide fair representation to all employees in the bargaining unit, regardless of whether or not they are members of the union, the court found that the case did not involve in any manner the duty of fair representation; the lawsuit, rather, was filed by unions challenging a Government regulation.

Although it remains to be seen whether the Bush Administration will appeal this ruling, for the time being employers will not be required to provide Beck Notice as a condition of entering into contracts with the federal Government. Nothing in the Chao case, however, limits the right of any employer who chooses to do so to inform its employees of their rights under Beck.