By Scott K. Dauscher and Thomas A. Lenz
On June 21, 2011, the United States Department of Labor, Office of Labor-Management Standards, issued a little-known Notice of Proposed Rulemaking whereby the DOL seeks to expand the scope of and requirements of the Labor Management Reporting and Disclosure Act of 1959 (29.U.S.C. 433). The proposed rule reverses long-standing practices under the law and subjects employers and those who provide advice to employers regarding union activities, such as attorneys and labor consultants, to increased reporting requirements. The public comment period ends on September 21, 2011, and the new rule is expected to be adopted shortly thereafter. The proposed rule has been viewed by some in the business community as a political favor for unions designed to enhance their ability to unionize employees. A copy of the proposed rule and the opportunity to submit comments can be viewed by clicking here.
Employers subject to union organizing campaigns or collective bargaining negotiations often retain the services of third-parties, whether they be attorneys, labor consultants or other advisors, to provide advice for responding to union organizing campaigns. Under the current LMRDA, employers and labor consultants must file public disclosure documents, including the amount paid to the consultant, with the Department of Labor when the consultant engages in activities to persuade employees whether and how to exercise their right to organize and collectively bargain. (29 U.S.C. 433(a)).
The LMRDA contains an exemption, however, from the reporting requirements for persons giving "advice" to the employer. This "advice exemption" has been interpreted to include advice that can be accepted or rejected by the employer and that is contained in a prepared speech or other written material, provided the employer, not the consultant, is the one interacting with the employees. In such circumstances, the consultant does not interact with the employees directly, but simply meets with the employer and advises on how to persuade the employees on the issues of unionization.
Under the new rule proposed by the DOL, the interpretation of the "advice exemption" is severely limited, thereby greatly expanding the scope of the LMRDA. The new rule, if adopted, would limit the "advice exemption" to an "oral or written recommendation regarding a decision or course of conduct." (NPRM, FR, June 21, 2011.) The narrow definition of "advice" proposed by the DOL would expand the scope of the LMRDA to cover activities historically considered exempt from the rule. Any other activity by a third party advisor would be subject to the disclosure requirements of the rule if that activity that has the "potential" to persuade employees regarding union representation.
This rule is so broad that it could include almost anything, such as writing or producing written materials for speeches made by the employer to its employees, crafting training materials, training supervisors and other management employees, and drafting employee policies or any other activity which could arguably be considered as "having the potential to persuade employees regarding union representation." Thus, even if a third party advisor's activity is wholly unrelated to unionization, if it indirectly could affect an employee's choice to become union or not, the activity would be subject to the reporting requirement of the new rule.
In addition to re-defining the "advice exemption" and expanding the scope of the LMRDA, the new rule would create new reporting requirements. Employers will be required to report internal costs, including wages paid, for these activities. The reports filed by the employer will be made public for all to see, including the employees and the union.
Under the LMRDA, officers of a company are personally responsible for filing the required reports and their accuracy. Penalties for failing to file an accurate disclosure statement include criminal prosecution and civil liability.
We will report here on any further developments. In any event, employers should seek counsel from experienced labor attorneys about potential LMRDA reporting obligations if and when employee relations advice is obtained.
