Tuesday, June 21, 2011

Rule Proposed By DOL Would Require Employers to Disclose Agreements With Their Attorneys

The DOL has proposed a rule that will broaden the requirements for reporting persuader activity by employers. (You can access the DOL’s Notice of Proposed Rulemaking here). While this might appear to be an obscure and mundane area of labor law, the DOL’s proposed rule change would have a profound effect on how employers respond to union organizing campaigns.

The Labor Management Reporting and Disclosure Act (“LMRDA”) requires employers to disclose agreements or arrangements between employers and labor relations consultants (including attorneys) when a consultant engages in activities to “persuade” employees in the exercise of their rights under the National Labor Relations Act. Of course, this typically involves activities during a union organizing campaign to persuade employees to vote against a union. The LMRDA includes an exemption to the reporting requirements for “advice” an employer receives. The DOL has traditionally interpreted the “advice” exception to apply when the consultant or attorney advises the employer and provides planning and materials, but does not directly address or interact with the employees. In those cases, the arrangement or agreement did not have to be reported. The DOL’s new rule will change that interpretation.

The DOL’s proposed rule would redefine and significantly narrow the scope of the “advice exemption,” and consequently broaden the scope of activity defined as direct persuader activity that employers must report. The proposal would define the term "advice" as "an oral or written recommendation regarding a decision or course of conduct." Under the DOL’s proposed rule, an agreement would be reportable in any case where the consultant engages in activities to persuade employees that go beyond the more narrow definition of “advice.” Persuader activities would be reportable when a consultant engages in any activity on behalf of an employer that would directly or indirectly persuade workers concerning their rights under the NLRA, even if the consultant does not have any direct contact with employees. According to the DOL’s press release, the rule would also require reporting even where an attorney provides “advice,” where the attorney also “plans or orchestrates a campaign or program to avoid or counter a union organizing or collective bargaining effort.” It appears that an agreement would be reportable under the revised rule if a consultant or attorney prepared speeches or materials for a union campaign.

The DOL’s press release regarding the proposed rule (available here) suggests that “[b]etter disclosure is critical to helping workers make informed decisions about their right to organize and bargain collectively.” The practical effect of the rule, however, will be to force employers to choose between (1) forgoing assistance during a union organizing campaign (which benefits the union’s chances of winning) or (2) disclosing the employer’s arrangements with the consultant/attorney (which provides a source of material for the union’s campaign).

The DOL’s proposed rule will be published in the Federal Register on June 21, 2011, and the deadline for submitting comments is August 22, 2011. We will continue to monitor the developments on this rule.

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