Hunton Employment & Labor Law Perspectives : Employment Lawyers & Attorneys : Hunton & Williams Law Firm : Labor Law Legislative Updates

DOL’s Office of Labor-Management Standards (“OLMS”) held a public meeting on May 24th in Washington, D.C. regarding DOL’s new proposal.  The purpose of the meeting was to receive comments on the planned rulemaking, and the meeting was considered a “listening session” for DOL.  Following a brief introduction to the issues, the floor was opened to those wishing to provide related comments, which became part of the record for the planned rulemaking.

A number of labor-affiliated attendees at the meeting, including the AFL-CIO and the Mine Workers of America, and spoke in favor of the new regulatory initiative.  On the other side of the aisle, attendees from the business community, such as the U.S. Chamber of Commerce and the National Association of Manufacturers, opined that narrowing section 203(c)’s advice exception would adversely impact attorney-client communications and would hinder the free speech rights of employers.

Speaking on behalf of the U.S. Chamber of Commerce, Michael Eastman, Executive Director of Labor Law Policy, expressed concern that narrowing the advice exception will make it more difficult for employers to obtain legal advice regarding labor relations and the National Labor Relations Act (“NLRA”).  Eastman also stated that the LMRDA is designed to provide disclosure when employers engage third parties to interact with and persuade employees, “because employees may not otherwise know such individuals are agents of the employer,” but that “this is not true in the case of the employer’s supervisors, managers, and officers.” 

The rulemaking process takes some time, and we will let you know as soon as DOL publishes a formal Notice of Proposed Rulemaking, at which time comments on the proposed rule can and should be submitted.

The Department’s current policy is to construe the “advice exception” broadly to exclude arrangements where the consultant has no direct contact with employees.  This excludes, for instance, situations where the consultant coordinates a campaign to defeat a union organizing effort, so long as the consultant does not contact employees directly.

The Department now views this policy as overly broad.  It intends to publish notice and comment rulemaking to consider a narrower interpretation of the “advice exception” that more closely implements the Department’s new interpretation of the intent of the LMRDA.  The Department’s goal is twofold:  to provide greater labor-management transparency for the public, and more information to workers to ensure effective participation in the workforce. 
 
The Department has announced a Notice of Public Meeting where interested persons can provide comments, to be held May 24, 2010 in Washington, D.C.    Interested participants can register by calling 202-693-0123 or sending an email to olms-public@dol.gov.  At the same time, the Department will seek comments on whether electronic filing should be mandatory for the Form LM-10 and LM-20 reports.

The rulemaking process takes some time, so new regulations are not likely to be finalized for several months.  However, if the Department narrows the “advice exception” as planned, the impact on employers could be significant.  Employers will no longer be able to shield third-party arrangements from reporting simply by isolating consultants from direct employee contact.  A wider range of consulting arrangements will be open to public scrutiny.  Rather than face increased public reporting, employers may elect to perform in-house more of the activities designed to persuade employees as to their bargaining rights.  Employers will have to weigh the benefit of experienced third-party assistance against the cost of public disclosure.

The LMRDA requires employers on an annual basis to report fees paid to labor consultants who engage in activities designed to persuade employees not to unionize (commonly referred to as “persuader activities”).  Similarly, any labor consultant who engages in persuader activities also must file an annual report indicating the amount and source of any compensation received for such activities.  The DOL has interpreted these reporting obligations to apply to persuader activities of attorneys as well as labor consultants.

The LMRDA’s reporting requirements have long been of concern to consultants, attorneys, and employers insofar as they require disclosure of otherwise confidential professional relationships and use of private funds for such activities.

Section 433(c) of the LMRDA provides an exception for advice work.  To the extent the work performed by a management attorney or a labor consultant is limited to advice directed to the employer and its supervisors, as opposed to persuader activities directed to employees, the advice exception is a “safe harbor” from LMRDA reporting requirements. 

In its December 7 announcement, the DOL indicated that its new proposed rule will narrow the scope of the advice exception.  According to the DOL, “a narrower construction would better allow for the employer and consultant reporting intended by the LMRDA.”  Although currently the DOL has provided no further details as to how exactly it intends to narrow the advice exception, there is little doubt that the new proposed rule will require employers and labor consultants to report information about relationships and expenditures that currently would be deemed confidential.

If the new proposed regulation proceeds in the direction indicated by the DOL, it should draw strong criticism from employers, labor consultants, and attorneys.  This would be yet another step in the rapid march toward increased oversight and regulation of employers in order to create a more favorable climate for unions.  The DOL acknowledged that it expects a negative response from employers and stated that it plans to hold a public meeting to discuss the new regulations.  Once published in the Federal Register, the new rule will be subject to a mandatory public review and comment period, in which all those concerned about the DOL’s actions will have an opportunity to express their thoughts.