Last week, the Department of Labor (“DOL”) forwarded long-delayed revisions to its “persuader rules” to the Office of Management and Budget – a key final step before the new rule takes effect. The DOL hopes to have the revisions finalized by March 2016. Employers, management-side consultants, and attorneys should prepare for significant changes when facing a union organizing campaign.
The DOL’s new regulations would significantly narrow its interpretation of the Labor-Management Reporting and Disclosure Act (LMRDA) that has been in force since 1962. Dubbed the “persuader rules,” these regulations address Section 203 of the LMRDA, which, among other things, requires employers to file reports with the DOL when they hire consultants or contractors (including attorneys) to persuade employees on the issue of unions. But under current regulations, and the DOL’s interpretation of its rules for the last 50 years, the Department recognized an “advice exception,” pursuant to which a labor attorney’s activities are not considered reportable as long as the attorney has no direct contact with employees and as long as the employer has the discretion to either accept or the attorney’s advice and recommendations.
Under the new rules, the advice exception would be severely constrained, limited to advising employers on what they may lawfully say to employees, on their compliance with the law, or on general guidance about NLRB practice or precedent. But employers and attorneys may have to report any actions, conduct, or communications on behalf of an employer that could directly or indirectly persuade workers concerning their right to organize and bargain collectively, regardless of whether the attorney, consultant, or contractor has direct contact with workers and regardless of whether the employer accepts or rejects the proposals. These new standards would drastically increase the reporting requirements, and as the American Bar Association argued in its comments to the proposed rule, could substantially interfere with an employer’s attorney-client relationship. The rule could also disrupt an employer’s ability to obtain legal advice when confronted by union activity, and have a chilling effect on employer free speech during union campaigns – especially since violation of the rules may lead to criminal penalties.
Franczek Radelet has been following this proposed rule change since January 2013, when the DOL first announced its plans to take final action. First proposed back in June 2011, the Obama administration originally planned for a November 2013 release date for the final rule, but has delayed the rule again and again. The DOL’s recent action strongly indicates the new rules will go into effect in 2016. If implemented, the new standards, particularly when combined with the LMRDA’s potential criminal sanctions for willful non-reporting, could drastically change the relationship between employers and their attorneys when faced with a union campaign.