By: Isabel Lazar, Esq.
As labor law practitioners brace for the new broad “persuader rules,” they can’t help but wonder whether representing employers faced with issues implicating labor laws would be worth the proverbial headache. In an unprecedented move, the rules – as proposed – would vastly expand the Department of Labor’s onerous recordkeeping and reporting requirements. In particular, the obligation to report would arguably be triggered in nearly every facet of the labor attorney’s representation of his client. That, in turn, presents a whole host of concerns for the labor lawyer, not the least of which involve ethical dilemmas, intrusion into highly confidential information, and the potential waiver of the sacred attorney-client privilege. Adding insult to injury, failure to comply with the new requirements could lead to criminal sanctions. Not surprisingly, the proposed rules have been met with sharp resistance.
On November 27, 2013, the Department of Labor announced that the proposed rules, which were originally slated for a November 2013 release date, would not be issued until March 2014. At issue are rules interpreting the Labor Management Reporting and Disclosure Act of 1959 (“LMRDA”), which generally includes financial reporting and disclosure requirements for labor organizations, their officers and employees, employers and labor relations consultants. Sections 203(a) and (b) of the LMRDA impose upon employers and their labor relations consultants a duty to report any agreement or arrangement between them involving the consultants’ attempt to, directly or indirectly, persuade employees to exercise or not to exercise their rights to organize. Section 203(c), however, exempts from these requirements “the services of such [consultant] by reason of his giving or agreeing to give advice to such employers.”
Historically, the DOL has interpreted the term “advice” to exclude an employer-consultant agreement in which the consultant has no direct contact with employees and limits his activity to providing the employer with advice or materials for use in persuading employees, which the employer is free to accept or reject. The DOL’s newfound interpretation, however, dramatically narrows the communications exempted from the LMRDA’s requirements by swapping the DOL’s longstanding interpretation of the term “advice,” for one that is much more narrowly construed. Critically, the DOL has proposed redefining persuader activities as “all actions, conduct, or communications that have a direct or indirect object to persuade employees.” Accordingly, whether an attorney had direct contact with employees is no longer relevant. Neither is whether the employer was free to accept or reject the materials provided by the attorney.
According to the DOL, reportable activities will now include:
- drafting, revising, or providing materials or communication of any sort, to an employer for presentation, dissemination, or distribution to employees, directly or indirectly;
- developing or administering employee attitude surveys concerning union awareness, sympathy, or “proneness”;
- training supervisors or employer representatives to conduct individual or group meetings designed to persuade employees;
- coordinating or directing the activities of supervisors or employer representatives to engage in the persuasion of employees;
- establishing or facilitating employee committees;
- developing employer personnel policies or practices designed to persuade employees;
- deciding which employees to target for persuader activity or disciplinary action; and/or
- coordinating the timing and sequencing of persuader tactics and strategies.
Reportable activity will also include the mere supplying of information to an employer concerning the activities of employees or a labor organization in connection with a labor dispute involving such employer, including:
- research or investigation concerning employees or labor organizations;
- supervisors or employer representatives;
- employees, employee representatives, or union meetings; and
- surveillance of employees or union representatives (video, audio, Internet, or in person).
It’s not difficult to see how the DOL’s proposed reinterpretation of the advice exemption poses a threat to the sanctity of the attorney-client relationship. Indeed, an employer who hires outside counsel for the purposes of obtaining advice on a labor issue would have to disclose that relationship in a public report (accessible by unions, competitors and customers), detailing who it hired, for what purpose, and how much it is paying the attorney. Likewise, once an attorney is labeled a “persuader,” which will easily – even inadvertently – happen given that the new interpretation of what constitutes persuader activity is incredibly broad, that attorney must report detailed information about all of his clients, to whom he renders “labor relations advice or services.” Arguably, that would eliminate the protections afforded to, for instance, a management employee who seeks advice in connection with a non-persuader purpose that involves labor relations (e.g., drafting a social media policy that comports with the National Labor Relations Board’s stance on the lawfulness of such policies).
The inevitable effect (and some argue intent) of the new reporting requirements would be to dissuade employers from seeking, and attorneys from providing, legal advice. Regardless, attorneys and companies should closely follow the proposed rules and, if/when they are released, reevaluate the necessity and scope of representation with respect to labor law issues.