Back in June 2011, the Department of Labor’s Office of Labor-Management Standards (OLMS) published proposed revisions to its interpretation of the Labor-Management Report and Disclosure Act of 1959 (LMRDA), which were intended to expand greatly what information employers and their labor relations consultants must report to the Department of Labor. The proposed revisions to the regulations and related forms would narrow the "advice exception" to the law's disclosure and reporting requirements -- imposing extensive and sweeping new reporting obligations on employers who would utilize the expertise of outside consultants, attorneys or other professionals when addressing labor relations issues.
Due this past week, at least seventy-three submissions were received by the Department of Labor in response to the proposed revisions. While all are available at Regulations.gov, we highlight a few notable submissions here.
The American Bar Association (ABA) wrote to express its "serious concerns" that the proposed rules are inconsistent with both the statutory language of the LMRDA and the rules of professional conduct pertaining to lawyer-client confidentiality. The ABA recommended that the Department preserve its "existing, well-established interpretation of the advice exemption."
Daniel Schwartz of Pullman & Comley notes the significance of the ABA's submission thus:
The ABA’s position here is important because on many labor & employment matters, it abstains because there is typically not a consensus between management-side and employee-side attorneys. This issue, however, touches all attorneys and is necessary, in the ABA’s words , to defend “the confidential client-lawyer relationship” and would impose an “unjustified and intrusive burden on lawyers and law firms and their clients”.
The rule is still in its proposed stage, but the ABA’s input here could be quite important for another reason as well. The ABA’s involvement in the “red flag” rules was crucial to getting that rule overturned. Time will tell if the ABA’s involvement here will have a similar impact.
Similarly, the Association of Corporate Counsel (ACC) and its Employment and Labor Law Committee submitted comments urging the withdrawal of the proposed rules. ACC argues:
The simplest test for determining whether the attorney-client relationship and its associated privileges have been undermined is to ask: will a client with legitimate interests be less likely to retain counsel due to the fear that others will learn of confidential information? Here, the answer is very straightforward: yes. And the danger of this outcome cannot be highlighted enough -- without adequate legal counsel, the minefields of contemporary labor law will become significant traps for the unwary.
Finally, the Society for Human Resources Management (SHRM) questioned the DOL's lack of "broad consultation" in its formulation of the proposed regulations, the lack of demonstrated need for these changes, and the substantive foundation of the proposal. In sum:
SHRM believes the proposed changes are not supported by the statute, are ill conceived, and will lead to many unintended negative consequences. SHRM urges the Division to not adopt the proposed changes. At a minimum, the Division should undertake its own study of the labor relations climate and seek additional stakeholder input before undertaking such sweeping changes.
We agree with most of the arguments set forth in these submissions, consistent with our initial response to the proposal back in June. We expressed similar reservations in articles in Human Resources Executive Online and Law360:
"It is absolutely an unprecedented intrusion, in terms of its scope and its novelty, into the lawyer-client relationship," Borden said. "The extent to which that might chill the frank, candid and zealous effort with which attorneys provide advice to their clients is troubling."
Employers, consultants and attorneys alike should all follow developments closely, as the issuance of a Final Rule along these lines will have a substantial impact on the manner in which they obtain advice and representation regarding labor relations issues.