Three New Executive Orders Benefit Organized Labor

05 February 2009 Publication
Author(s): Mark J. Neuberger Michael A. Okaty

Legal News Alert: Senior Living

On January 30, 2009, just over a week after being sworn in, President Barack H. Obama signed three separate executive orders, each of which affects employers that contract with the federal government and may significantly help labor unions organize workers. Firms in the senior living industry should carefully analyze the specifics of these orders and quickly determine if they apply to their organizations and how they will impact their labor relations.

The first of these orders will prohibit federal agencies from allowing as reimbursable costs any expenses incurred by contracting employers “to persuade employees — whether employees of the recipient of the Federal disbursements or of any other entity — to exercise or not to exercise, or concerning the manner of exercising, the right to organize and bargain collectively through representatives of the employees’ own choosing.” The second order will require employers with certain federal contracts to post a notice “containing such content as the Secretary of Labor shall prescribe” that advises employees of their rights under federal labor law. This order will further require such employers to “comply with all provisions of the Secretary’s Notice, and related, rules, regulations and orders of the Secretary of Labor.” Additionally, this order rescinds Executive Order 13201, which since February 2001 had required employers with federal contracts to post notices alerting employees in unionized workplaces of their right to pay so-called “service” fees to unions rather than full union dues. Finally, a third executive order will require employers that take over certain federal service contracts to offer employees of the predecessor contractor continued employment before any new employees are hired — effectively guaranteeing that unionized workforces will remain so.

Senior living providers can take some solace in the fact that the U.S. Department of Labor (DOL) has historically taken the position that financial reimbursement programs such as Medicare and Medicaid, are not contracts. By way of analogy, the DOL has enforced Executive Order 11246 since 1965, which requires government contractors to engage in affirmative action for minorities and females. The DOL takes the position that provider agreements pursuant to which health care providers receive reimbursement for services covered under Medicare Parts A and B as well as provider agreements with state Medicaid agencies are not covered government contracts under Executive Order 11246. Accordingly, a senior living provider should not be covered by these new executive orders if its only relationship with the federal government is as a participating provider under reimbursement programs. However, senior living providers would likely be covered if they have entered into contractual arrangements to provide specific services such as health care to retired military personnel under a contract with the United States Department of Veterans Affairs or the U.S. Department of Defense. A definitive determination of whether a particular organization is covered by these new executive orders can only be made by carefully reviewing the documents that set forth the terms of the relationship between the senior living provider and the federal government. Regulations to be published by the Federal Acquisition Regulatory Council and the DOL also should provide further guidance when they are issued.

Since the National Labor Relations Act completely preempts labor management issues, and the limitation preventing contractors from advocating against unions may be viewed as a restriction of the First Amendment right of free speech, court challenges to these executive orders can be expected. It is quite possible that courts will strike down at least certain provisions of the new executive orders. Senior living providers with federal contracts and those that are uncertain of the applicability of these new orders should consult with an attorney for clarification.

Legal News Alert is part of our ongoing commitment to providing up-to-the-minute information about pressing concerns or industry issues affecting our senior living clients and our colleagues.

Please contact your Foley Senior Living attorney if you have any questions about these topics or want additional information regarding senior living industry matters. Authors and editors:

Mark J. Neuberger
Miami, Florida

Michael A. Okaty
Orlando, Florida