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The American Recovery and Reinvestment Act of 2009, better known as the stimulus bill, provided $787 billion for job creation, largely in the construction industry. If you or your company is seeking new opportunities, this might be the time to consider whether to become a federal contractor. The federal contracting process can be intimidating, however, and the applicable laws can be daunting. This is a general overview of some labor and employment law issues relating to becoming a federal contractor under the ARRA.

All federal contracts under the ARRA are subject to statutes related to: wages and benefits, labor unions, affirmative action and immigration.

Wages and benefits
The ARRA requires that laborers and mechanics be paid a prevailing wage. Laborers and mechanics include at least those workers, on site, whose duties are manual or physical in nature as distinguished from managerial (including workers who use tools or who are performing the work of a trade). The prevailing wage for Oregon is the higher wage of those set by the United States Department of Labor and the Oregon Bureau of Labor and Industries, and is based on the wages earned by the majority of the workers in the area.

Labor unions
President Barack Obama, during the first days of his administration, signed four executive orders that signaled a dramatic shift in labor policies affecting federal contractors. These policy announcements require federal contractors to consider carefully the labor relations implications of contracting opportunities under the ARRA. Here is a summary of the four executive orders:

Executive order 13494 鈥� Economy in government contracting. This order prohibits federal contractors from expending federal funds to persuade their employees to exercise or not to exercise the right to organize and bargain through a representative of their own choosing. Prohibited expenses include, but are not limited to:

鈥� preparing or distributing persuasive materials;

鈥� hiring or consulting legal counsel or consultants; and

鈥� holding meetings, or planning or conducting activities with managers or supervisors during work hours.

Carrying out union avoidance activities is not completely forbidden, but contractors must ensure that they account for the funds used for such purposes separately from 鈥渁llowable鈥� expenditures submitted to the contracting agency for reimbursement.

Executive order 13495 鈥� Non-displacement of qualified workers under service contracts. Covered contracts must now contain a specific provision granting employees of a federal contractor that lose a service contract the right of first refusal for employment with the successor contractor. The successor contractor may not hire new employees, other than managers or supervisors, until all employees of the previous contractor have been offered employment. The successor employer must pay its employees at least the same wages and fringe benefits value provided by the predecessor鈥檚 collective bargaining agreement.

Executive order 13496 鈥� Notification of employee rights under federal labor laws. The order requires federal contractors to inform their employees of their rights to unionize or refrain from unionizing under the National Labor Relations Act.

Executive order 13502 鈥� Use of project labor agreements for federal construction projects. This order grants executive agencies the authority, on a project-by-project basis, to require that contractors on federal or federally funded construction projects over $25 million sign a project labor agreement.

Affirmative action
The Office of Federal Contract Compliance Programs enforces equal employment regulations that apply to government contractors. Those regulations require equal treatment of women, minorities, veterans and disabled persons.

First-tier subcontractors with 50 or more employees and a subcontract that meets certain monetary thresholds are required to identify themselves as government contractors on their annual EEO-1 forms. The monetary thresholds are:

鈥� a contract of $50,000 or more; or

鈥� government bills of lading that in any 12-month period either total or can reasonably be expected to total $50,000 or more; or

鈥� a depository of government funds in any amount; or

鈥� a financial institution that is an issuing and paying agent for U.S. savings bonds and savings notes in any amount.

Immigration
Federal contractors are at a heightened risk of being selected for government audits or investigations related to their employees鈥� legal status. Employers with federal contracts should carefully review their I-9 compliance, and do everything possible to improve it.

Pending an appeal, effective Tuesday, federal contractors will be required to use E-Verify, an Internet-based system that allows participants to verify electronically the identity and employment eligibility of their entire workforce.

Additional resources
Keep in mind that the ins and outs of contracting with the federal government are too involved and complex to be covered comprehensively in this column. For a more detailed report, go to www.littler.com and download the free Littler report An Employment Law Guide for Federal Contractors in the Wake of the American Recovery And Reinvestment Act of 2009, under Press and Publications, or call 503-221-0309.

Howard Rubin is the office managing shareholder of Littler Mendelson鈥檚 Portland office. He has represented public and private employers in employment and labor law matters for more than 20 years.聽His primary focus is traditional labor law matters such as representing employers in union organizing, negotiations, and labor arbitrations. Contact him at 503-889-8861 or [email protected].

Don Stait, a paralegal in Littler鈥檚 Portland office, assisted in preparing this article.