New DOL Federal Contractor Labor Activities Reporting Requirement: What’s Next?

In what could either be a forerunner for new restrictions on federal contractors or a simple “check the box,” the DOL’s Office of Labor-Management Standards (OLMS) is proposing a new addition to the LM-10 forms that employers engaging in union avoidance activities are already required to file annually. They would now be required to indicate whether they are a federal contractor or subcontractor and identify the federal agency or agencies they have contracts with. But the proposal raises several questions about why DOL is doing this, since the federal government already collects this information.

Current reporting requirements: Employers who pay outside consultants (“persuaders”) in response to union organizing efforts have been required for several decades to file LM-10 forms divulging the associated expenses under the Labor-Management Reporting and Disclosure Act of 1959 (LMRDA). As long as those consultants do not interact directly with employees, no report is required. Yet, there have been efforts under previous Democratic administrations to broaden this requirement to include all outside consultants, and the Biden administration is expected to undertake the same efforts.

Existing restrictions on federal contractors: Federal contractors are already prohibited under President Obama’s Executive Order 13494 from using federal contract dollars for persuader expenses. However, the Preamble to the proposed rule notes that federal contract dollars “support directly or indirectly contractors' businesses and additional activities, which may include the decision to hire the outsider to persuade the employees.”

Recommended by White House Task Force:  Earlier this year, the White House Task Force on Worker Organizing and Empowerment, which included every single Cabinet Secretary, recommended this while also instructing DOL and the Office of Federal Procurement Policy “to develop a mechanism for ensuring that contracting agencies are aware of persuader reports filed by federal contractors.”  Notably, the Task Force also recommended:

When permitted by the statutes that authorize and appropriate this spending, federal agencies may have the ability to add labor standards to these programs and procurement that both advance their mission and ensure they do not permit the creation of barriers to worker organizing and collective bargaining. Where permitted by law and consistent with agencies’ missions, federal taxpayer dollars should be used to advance our national policy to encourage unions and collective bargaining. In many cases, facilitating worker organizing and collective bargaining will increase agencies’ ability to carry out their missions.

On its face, the new requirement seems innocuous.  For one thing, OLMS should easily be able to determine which LM-10 filers are federal contractors from its sister agency in DOL—the Office of Federal Contract Compliance Programs. 

So the obvious question is, why is this needed?  DOL provides four reasons which raise concerns: 

1. The move would enable the public to understand which Federal agencies are contracting with employers who are engaging in persuader activity. This would allow for an open public debate about the prevalence of persuader activity and the extent to which specific Federal agencies might be indirectly supporting such activities by doing business with such employers.
   
   
2. The information would be more readily available to federal contractors who might then quietly blacklist companies during the contracting process.
   
   
3. Employees would have information that would allow them to contact Congress to inquire about the amount of Federal appropriations underlying the contracts with their employers that engage in persuader activities, allowing employees to work more effectively with advocacy groups or the media.
   
   
4. The Government interest is especially acute when the Federal Government itself is paying for goods and services from those who would disrupt the harmonious labor relations that the Federal government is bound to protect. . . .Here, employees have a particular interest in knowing whether their employers are Federal contractors because, as taxpayers themselves, those employees should know whether they are indirectly financing persuasion campaigns regarding their own rights to organize and bargain collectively.

Is this the final word?  If the Biden administration takes no additional action on persuader reporting requirements, federal contractors should have little trouble complying with this new requirement.  Yet, the preamble’s words and obvious targeting of “those who would disrupt the harmonious labor relations that the Federal government is bound to protect” would seem to portend more might be coming, such as a broadening of reportable activities.  

Preview of “blacklisting” rules revival? Moreover, keep in mind any new restrictions on federal contractors per se would more likely come through the Federal Acquisition Regulations System (FAR), administered by the individual contracting agencies.  Could this be the first step in the revival of the Obama administration’s so-called “blacklisting” rules, strongly supported by then-Vice President Biden?  Those rules focused on curtailing federal contracts to alleged labor law violators. Or could it simply lead to a denial of federal contracts to any contractor who checks the new box? This would effectively force neutrality in union organizing drives on those employers if they wanted to keep those contracts.

It is far too soon to know the answers to these questions. But such new restrictions would be completely consistent with the administration’s “whole of government” approach of engaging every federal agency in addressing one of its major priorities: "mobilizing the federal government's policies, programs and practices to empower workers to organize and successfully bargain with their employers.”