On June 21, 2011, the U.S. Department of Labor, Office of Labor-Management Services announced a notice of proposed rulemaking that would significantly revise so-called "persuader" regulations under the Labor-Management Reporting and Disclosure Act of 1959 ("LMRDA") and compel increased employer reporting. The proposed rule could substantially impact employers dealing with employees on the subject of unions and is yet another regulatory attempt to make it easier for unions to organize workers, increase membership dues, and fund their political activities. The comment period for the proposed rule runs through August 22, 2011. The public can submit comments to the proposed rule online at http://www.regulations.gov.
Background: "Persuaders" Under the LMRDA
The LMRDA requires employers and their outside labor-relations consultants to file reports with the DOL regarding so-called "persuader" activities. Persuader activities, generally, are activities that attempt to influence employees' choice on labor union representation. The law requires employers to report to the DOL any agreement with a labor relations consultant or other independent contractor "where an object thereof is, directly or indirectly - (1) to persuade employees to exercise or not to exercise . . . the right to organize and bargain collectively through representatives of their own choosing. . . ." 29 U.S.C. § 433(b).
LMRDA reports are publicly available once filed. The law requires the third-party "persuaders" to include in their reports their revenues from such labor relations advice or services and to disclose the sources of such payments.
Ironically, there is no concomitant reporting obligation when third parties assist unions in such "persuader" activities.
These reporting requirements contain a so-called "advice" exception for many of the activities undertaken by consultants and law firms in their representation of employers. 29 U.S.C. 433(c).
Additionally, under the longstanding interpretation of the LMRDA "advice" exception, reportable "persuader activities" now arise only when a labor consultant, including an attorney, directly speaks to employees in an effort to persuade them to reject union representation. At present, any written material prepared by a lawyer or labor consultant is not reportable so long as the purpose of the writing is to advise the employer and not to directly persuade employees.
Proposed Rulemaking Seeks to Narrow Advice Exemption
The DOL's proposed rule seeks to narrow the "advice" exemption and increase reporting by employers, labor consultants and law firms who assist employers dealing with union issues. The agency asserts that the current interpretation of the term "advice" under Section 433(c) is too broad and has resulted in the "underreporting" of persuader activity. Labor unions have long urged the DOL to more aggressively enforce reporting requirements against employers.
Under the proposed rule, what constitutes reportable "persuader activity" will be broadened and will not require personal or direct contact with employees. The "advice" exception will be narrowed to make such services as the following reportable: providing persuader material to employers for dissemination or distribution to employees; coordinating or directing the activities of supervisors or employer representatives to engage in the persuasion of employees; and drafting or implementing employer policies with an objective of persuading employees.
The proposed rule would not completely do away with the "advice" exception. It would still apply, but in more limited circumstances, such as where a lawyer or consultant advises an employer as to what the employer may lawfully say to employees or instructs the employer how to comply with NLRB law.
Proposal's Potential Effects
The full range of possible implications of the proposed rule is now being assessed. If the proposed rule is adopted and given the most pro-union interpretation, a third party's assistance to an employer during a union organizing campaign or similar threat of unionization might trigger a reporting requirement for both the employer and the third party. This report would force the disclosure of sensitive financial and other information about both the employer and the third party. Also, because such reports are public, the disclosures would be available to the campaigning union to use in its propaganda by showing employees how much the company is spending to "bust" the union.
Under the proposal, employers' ability to openly communicate with their legal counsel, outside labor consultants, and employees could become far more challenging. If the new rule is approved, employers may hesitate to take advantage of outside assistance when defending an organizing drive. As a result, workers may not be fully or accurately informed prior to elections. Unions, which are not required to be truthful in organizing, will capitalize on the employer's silence caused by the possible burdens of the reporting requirements.