On June 21, 2011, the Department of Labor’s Office of Labor-Management Standards (OLMS) will publish proposed revisions to its interpretation of the Labor-Management Report and Disclosure Act of 1959 (LMRDA), which will expand greatly what employers and their labor relations consultants must report to the Department of Labor.

The LMRDA was enacted by Congress in 1959 for the purpose of shedding light on labor-management relations, governance, and management. Its provisions include financial reporting and disclosure requirements for labor organizations, their officers and employees, employers, labor relations consultants, and surety companies. Section 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 and bargain collectively.

However, Section 203(c) 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 are its interpretation of the term “advice” in Section 203(c). With exception of a brief period in 2001, since 1962 the DOL has 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 revisions, the application of the “advice” exemption under Section 203(c) depends on whether an activity can 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 proposed revised interpretation will state:

With respect to persuader agreements or arrangements, “advice" means on 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 agreements will include those in which a consultant agrees to plan or orchestrate a campaign for an employer to avoid or counter union organizing. It will also include any planning, directing, or coordinating of the activities of management and supervisors or the providing of persuader material to them for dissemination or distribution to employees. Moreover, drafting or implementing policies for the employer designed to directly or indirectly persuade employees will also trigger a reporting obligation. 

The proposed revisions to the regulations and forms would combine to impose 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.  If the “advice exception” is indeed narrowed as proposed in the document being posted tomorrow, employers will need to report the details of these third-party relationships regardless of whether the third-parties have any contact with employees.  Employers may choose to address labor relations issues by themselves, instead of engaging experienced outsiders to assist and risking additional extensive reporting obligations.  Likewise, outside professionals may turn their talents and experience to other pursuits, rather than assuming the risk of the extensive additional disclosure.

The DOL is requesting comments to its proposed revised interpretations, which will be due 60 days after publication.  Employers would be wise to revisit any existing relationships that might fall within the broad scope of the proposed rule, assess its potential impact and to consider submitting comment.