Department of Labor Sets November 2013 Date For New Persuader Rules Expanding Reporting Requirements for Employers and Counsel
Last Wednesday, as most folks were consumed with getting a jump on long holiday weekend traffic, the White House released its spring Unified Agenda. The Agenda, submitted months late, details the Presidential administration’s regulatory plans for the months ahead.
The LMRDA generally includes financial reporting and disclosure requirements for labor organizations, their officers and employees, employers, labor relations consultants, and surety companies. Sections 203(a) and (b) of the LMRDA require employers and their labor relations consultants to report any agreement or arrangement between them where the consultant will undertake activities, directly or indirectly, to persuade employees to exercise or not to exercise their right to organize a union and bargain collectively.
However, Section 203(c) – the so-called “advice exception” -- exempts from these reporting requirements “the services of such [consultant] by reason of his giving or agreeing to give advice to such employer…” Section 204 also exempts certain attorney-client communications from reporting, which is defined as, “information which was lawfully communicated to [an]…attorney by any of his clients in the course of a legitimate attorney-client relationship.”
At issue under the DOL's proposed revisions is its interpretation of the term “advice” in Section 203(c). With the exception of a brief period in 2001, since 1962 the DOL has consistently interpreted "advice" to exclude an employer-consultant agreement where the consultant has no direct contact with employees and limits his activity to providing the employer and its management team with advice or materials for use in persuading employees that the employer has the right to accept or reject.
In the DOL's proposed expansive revisions, however, the application of the “advice” exemption under Section 203(c) depends on whether an activity can broadly be considered giving “advice” -- meaning an oral or written recommendation regarding a decision or a course of conduct, as opposed to engaging in direct or indirect persuasion of employees. Specifically, the revised interpretations as proposed in July 2011 state:
With respect to persuader agreements or arrangements, “advice" means an oral or written recommendation regarding a decision or a course of conduct. In contrast to advice, “persuader activity” refers to a consultant’s providing material or communications to, or engaging in other actions, conduct, or communications on behalf of an employer that, in whole or in part, have the object directly or indirectly to persuade employees concerning their rights to organize or bargain collectively. Reporting is thus required in any case in which the agreement or arrangement, in whole or in part, calls for the consultant to engage in persuader activities, regardless of whether or not advice is also given.
According the DOL's notice, under this revised interpretation reportable activities will 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, to include:
- 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).
The Act defines "labor dispute" very broadly to include not only issues regarding representation or association, but also "any controversy concerning terms, tenure, or conditions of employment."
Although the new rules provide exclusions for certain types of agreements related to both persuading employees and supplying information to employers, the scope of reportable activities is open to interpretation given this extreme modification of the long-standing scope of the “advice exception.” As a result, the proposed regulations will require employers and their counsel to report the details of these third-party relationships and the specific activities performed regardless of whether the third-parties have any direct contact with employees, as well as provide receipts and disbursements reports for any payments related to the reportable activities.
If ultimately issued, the new rule is certain to face significant and wide-ranging legal challenge. The American Bar Association and the Association of Corporate Counsel have urged the Department of Labor to leave the interpretation of the advice exemption as it has long been understood, arguing 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.
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 professional advice and representation regarding labor relations issues.