New DOL Rule Interpretation Deals Another Blow to Employers Facing Union Organizing and Eviscerates Attorney-Client Privilege

Volume 10, Issue 11
September 27, 2011

The Labor-Management Reporting and Disclosure Act ("LMRDA"), on the books since 1959, has long required employers, labor relations consultants and attorneys to report to the U.S. Department of Labor ("DOL") certain "persuader activity" - actions undertaken to persuade employees not to vote for a union. The failure to report such persuader activity can result in civil as well as criminal penalties.

Since passage of the LMRDA, if the activity of an employer's labor relations consultants and attorneys constituted "advice," there was no requirement to file a report with the DOL. "Advice" has always meant "that the consultant has no direct contact with employees and limits his activity to providing to the employer or his supervisors advice or materials for use in persuading employees which the employer has the right to accept or reject."

Unfortunately, the DOL has now changed the meaning of what constitutes advice for the purposes of the LMRDA reporting obligations. On June 21, 2011, the DOL issued what it considers to be an "interpretive rule" that changes its interpretation of the LMRDA and, particularly, its advice exemption. Under what is effectively a new rule, the advice exemption is considerably narrowed by requiring reporting of "any direct or indirect activity" that has "an object to directly or indirectly persuade employees," which now includes as reportable conduct: (1) the training of supervisors or employer representatives to conduct individual or group meetings designed to persuade employees; and (2) any other actions, even those without direct contact between the lawyer or consultant and the employees, if persuading employees is an object, direct or indirect, of the person's activity pursuant to an agreement or an arrangement with an employer. Thus, advice will only consist of the counseling of employer representatives concerning what they may lawfully say to employees, compliance with the law and guidance on NLRB practice or precedent, but only if persuading employees is not an object of such activity. Additionally, under the new interpretation, the mere preparation of written persuader materials or revisions to an employer's union campaign materials, by an attorney or labor relations consultant would be reportable conduct.

Even more disconcerting, because the DOL has styled its action as an "interpretation," it takes the position that its new interpretation is effective immediately and views the current rulemaking process as an optional activity to allow for "broad public consultation."

The DOL's new interpretation changes the rules of the game significantly as it places substantial burdens on companies that seek outside assistance to respond to a union organizing campaign, regardless of whether such assistance comes from attorneys or other consultants. It also places onerous burdens on the attorneys who work with and advise employers in how to best address union organizing efforts.

KZA believes the DOL's new interpretation of persuader activity is designed to discourage companies from seeking legal advice and other guidance concerning union campaigns, thereby limiting companies' ability to successfully oppose union organizing and/or causing them to make mistakes that will aid unions in their legal challenges to any unsuccessful organizing campaigns. There is little doubt that the DOL's actions are politically-motivated and part of the current Administration's efforts to repay unions for their support in the 2008 election and secure their support for the 2012 election. In addition to greatly diminishing the attorney-client privilege by requiring the disclosure of sensitive and confidential client information, as asserted by the American Bar Association, we also believe that the DOL's new interpretation and other changes go well beyond the statutory limits of the LMRDA and infringes on the First Amendment rights of employers by chilling their rights to communicate truthfully and in a legally appropriate manner with their employees - who are entitled to such communication and information from their employers.

For these reasons, KZA is involved with the Worklaw® Network's efforts to oppose the DOL's new persuader rules. Focusing their practices exclusively in the area of labor and employment law, the Worklaw® Network is an international network of independent management labor and employment law firms formed for the professional exchange of information. Kamer Zucker Abbott has been the exclusive Nevada member firm of the Worklaw® Network since 1995 and actively involved in formulating the Worklaw® Networks' comments to the DOL concerning these changes.

We will keep our clients updated with developments on this important change in the law.

KZA Employer Report articles are for general information only; they are not intended and should not be construed to be legal advice. Reading or replying to such articles does not establish an attorney-client relationship. In addition, because the subject matters and applicable laws discussed in Employer Report articles are often in a state of change and not always applicable to every type of business entity or organization, readers should consult with counsel before making decisions based on the same.