Another milestone in the government’s quest to upend labor relations in the United States passed last week.  The deadline for filing comments with the Department of Labor (“DoL”) about its proposal to narrow the “advice” exemption under the Labor Management Reporting and Disclosure Act (“LMRDA”) expired September 21, 2011.  Several interested parties filed comments both for, but mostly against, the proposed changes.

The issues can be summarized as follows:

  • The LMRDA, passed in 1959, requires the unions, employers and labor relations consultants to file a publicly available report detailing certain financial transactions. 
  • Labor relations consultants (any third party hired by an employer) are required to report the fees they receive for assisting labor relations matters in organizing and collective bargaining where the object is to “persuade” employees.
  • The LMRDA exempts from reporting any assistance given that is “advice.”
  • For the entire 52 years since the passage of the LMRDA, “advice” has been interpreted by the Department of Labor and the courts as a bright-line rule:  if the labor relations consultant has no direct contact with employees, then there is no duty to report.  Orchestrating or advising on an organizing campaign, and assisting an employer with organizing campaign materials that are distributed by supervisors or managers are not reportable activities.
  • This year, however, the Department of Labor suddenly discovered that the interpretation of “advice” has been wrong for the entire existence of the LMRDA.
  • In June, the Department of Labor proposed narrowing the “advice” exemption.  It now seeks to have labor relations consultants, which it asserts includes attorneys as well, report any monies received for assisting an employer persuade employees about union organizing or collective bargaining.
  • If the proposed interpretation is adopted, virtually any aspect of an employer’s response to union organizing would be reportable, if a labor relations consultant was involved.
  • The new interpretation would require financial reports be filed in any situation where an outside party assists an employer with communication with its own employees, no matter how indirect the assistance.  This would include: attorney-client conversations about a union campaign where ultimately a message to employees is crafted or “enhanced”; money spent to send managers and human resources personnel to seminars where union avoidance might be discussed; money spent to train supervisors on lawfully responding to organizing; the creation of websites to assist getting employees information about a union organizing campaign.

This initiative represents a naked attempt to inhibit employer communication and response.  It is a complicated issue, but note that unions engage in corporate campaigns where all manner of inappropriate tactics are used, are not required to report the details about how such activities are funded.  The LMRDA was enacted to deal with certain inappropriate conduct; not lawful, appropriate employer conduct.  Yet, the DoL would have all employers and labor relations consultants report the monies spent on such lawful activities.

We assisted the Society for Human Resources Management (“SHRM”) in responding to the DoL’s proposed changes.  The rationale cited by the Department of Labor for the “real” interpretation of advice is just wrong.  For example, the DoL asserts the newly discovered interpretation is supported by the legislative history.  As addressed in SHRM’s comments.pdf, the DoL cherry-picked only the tiniest of fragments of the legislative history, while ignoring the rest, to justify its results-oriented interpretation:

The legislative history of the LMRDA runs a total of 1927 pages.  The [DoL’s proposed rulemaking] cites to only five of the pages, all from the same Senate Committee on Labor and Public Welfare (“Labor Committtee”)…..No other parts of the legislative history are referenced. . .

A detailed and thorough review of the legislative history is set forth in the SHRM comments.  This review shows there is no support for the DoL’s position.

Several other influential parties opposed the changes as well.  Notably, U.S. Chamber’s comments.pdf illustrate how the proposed interpretation is so vague that it raises more questions than it answers.  Also, just as it did in 1959, the American Bar Association filed its own strong opposition.pdf to the proposed change, noting that the DoL’s interpretation, if adopted, would erode the attorney-client privilege.

The DoL will now evaluate the input it received and make its decision.