DOL persuader rule: Killing lawful advice or bringing transparency to employees?
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Friday, April 29, 2016

DOL persuader rule: Killing lawful advice or bringing transparency to employees?

By Pamela Wolf, J.D. At a House Subcommittee on Health, Employment, Labor, and Pensions hearing, witnesses expressed their views about the Labor Department’s final “persuader rule,” which some portrayed as an overreaching effort that tips the scales in favor of unions and goes so far as to impinge on attorney-client confidentiality. The only witness at the hearing who offered testimony in support of the rule, however, sketched out how, absent the transparency demanded by the rule, employees might believe that their supervisors’ arguments against the union were based on personal opinion rather than a well-orchestrated employer campaign developed by a third party consultant (much like the “third-party interloper” that employers often call unions). The hearing title left no question about how the subcommittee majority felt about the rule: “The Persuader Rule: The Administration's Latest Attack on Employer Free Speech and Employee Free Choice.” But the lone supporter of the rule called the title “Orwellian,” given that the transparency required under the final rule will leave workers no longer in the dark about their employers’ use of anti-union consultants. The persuader rule. The final rule, which was a very long time in the making, requires disclosures related to third-party consultants (including attorneys) used by employers in crafting and delivering anti-union messages to workers. It revises two public disclosure reporting forms: Form LM-10 (employer report) and the Form LM-20 (agreement and activities report). Generally, with some exceptions, these reports must be filed when an employer and a labor relations consultant make an arrangement or an agreement that the consultant will undertake efforts to persuade the employer’s workers to reject an organizing campaign or collective bargaining effort by a union. The revised forms are not yet available electronically. However, Form LM-20 Facsimile and Form LM-20 Instructions, as well as Form LM-10 Facsimile and Form LM-10 Instructions are available in pdf. Form LM-20 will be available electronically on July 1, 2016; Form LM-10 will be available on January 1, 2017. Obama Administration’s latest pro-union effort. Subcommittee Chairman David P. Roe (R-Tenn.) saw the final rule as yet another move to advance unions. “Unfortunately, this administration has spent more time advancing the interests of Big Labor at the expense of American workers and employers, and the Department of Labor’s ‘persuader’ rule is the latest example,” he said. “This new regulatory scheme may boost union dues, but it will do absolutely nothing to boost our economy or expand opportunities for the middle-class.” “Union elections aren’t just complex legal matters, they’re personal matters,” Roe observed. “The decision to join or not join a union is an important one that has a direct impact on the livelihood of millions of families—their paychecks, their benefits, and their work schedules. It’s critical that workers are able to hear from both sides and receive all the information they need to make a fully informed decision. But this rule will stifle debate and restrict worker free choice—with the sole purpose of stacking the deck in favor of organized labor.” Attorney-client confidentiality problem. Labor attorneys who may be called upon to advise employers during union campaigns, particularly on matters of union avoidance, have expressed concern about whether the final rule impinges on attorney-client confidentiality. Frost Brown Todd attorney Wm. T. (Bill) Robinson III, who is also a past president of the American Bar Association, said he was testifying in front of the subcommittee “primarily because of the new Rule’s destructive impact upon the confidential relationship between attorneys and their clients that is so essential to the American system of justice.” Robinson characterized the final rule not as a labor-management matter, but rather as “essentially an attorney-client matter involving the essential ingredient for effective legal advice—i.e., client-attorney confidentiality—to assure compliance with the law and avoidance of non-compliance.” Advice exemption. “For over 50 years, the Department of Labor has interpreted Section 203(c) of the Act, 29 U.S.C. § 433(c), generally referred to as the ‘Advice Exemption,’ as excluding from regulation under the Act all communication between attorneys and their employer-clients,” Robinson pointed out. “The Act’s regulation and public exposure of attorney communications on the subject of labor relations arose only where a lawyer communicated directly to the client’s employees.” Announced during the Kennedy Administration, the DOL’s former interpretation of the advice exemption “faithfully” tracked the language and purpose of the Section 203(c) of Labor-Management Reporting and Disclosure Act of 1959, according to Robinson, which he stressed plainly states, “Nothing in this Section shall be construed to require any employer or other person to file a report covering the services of such person by reason of his giving or agreeing to give advice to such employer or representing or agreeing to represent such employer … .” Confidentiality eliminated. But the new rule, according to Robinson, “will effectively strike from the Advice Exemption its most fundamental, essential provision: namely, confidentiality for an attorney’s advice to an employer client concerning the employer’s labor relations.” And it will no longer be clear who is in compliance and who is in violation, Robinson added, also pointing to a huge problem defending against a charge of non-compliance with the final rule: “A defense would require disclosure of confidential client attorney communications in order to mount a defense.” Under the final rule, “otherwise legal advice in compliance with the statute itself, will now actually trigger administrative disclosure under the LMRDA ... even though that advice is offered only to the attorney’s client … in all instances where the advice of the lawyer furthers the employer client’s ‘object, explicitly or implicitly, directly or indirectly, to affect an employee’s decisions concerning his or her representation or collective bargaining rights,’” Robinson explained, quoting from Form LM-20 instructions. The final rule’s “regulation of all attorney-client communications that contain any ‘object to persuade’ or ‘affect an employee’s decisions’ takes away, as a practical matter,” Robinson said, “the Advice Exemption’s most basic protection—the confidentiality of attorney-client communications.” Advice vs. managing or directing anti-union campaign. But Sherman, Dunn, Cohen, Leifer & Yellig attorney Jonathan D. Newman, whose firm represents unions, offered a different take on the attorney-client confidentiality issue. He said the final rule “could not be clearer: Neither an employer nor a consultant need report when a consultant or attorney advises the employer on the employer’s plans to take a course of conduct, including advice about labor laws … Where, however, labor consultants or attorneys cross over and ‘manage or direct the business’s campaign to sway workers against choosing a union—that must be reported.” Newman noted that the final rule and revised reporting forms give what he called “clear instructions and examples” about what amounts to reportable persuader activity and what does not. “For example, if an attorney confines him or herself to the traditional role of providing advice and counsel, or represents the employer in litigation, that attorney need not file a report under the Rule,” he explained. “If, however, the attorney chooses not only to provide legal counsel, but also to serve as a labor consultant by ‘developing and implementing the company’s anti-union strategy and campaign tactics,’ that attorney has chosen not just to engage in the traditional practice of law, but also to provide the same services as non-lawyer labor consultants. In so doing, the attorney has the same reporting obligation as a consultant.” Client’s lawful objective targeted. Robinson also underscored the final rule’s focus on employee decisions about whether to choose union representation. “However, neither the DOL, nor anyone else to my knowledge, has suggested that it is either unlawful or unethical for an employer to seek to persuade its employees on the advantages or disadvantages of being represented by a union, or a particular union, provided that the employer pursues this ‘object to persuade’ within lawful bounds as established by the National Labor Relations Act,” he said. Robinson noted that both small businesses and large corporations must turn to their legal counsel to make sure they remain within legal boundaries. “It is unrealistic, if not disingenuous, however, to suggest that a labor lawyer can effectively help her/his client pursue this lawful objective by giving ‘legal advice’ divorced from the client’s lawful objective.” What about the collective bargaining context? Proskauer Rose attorney Joseph Baumgarten observed that under the final rule’s new interpretation of the exemption, when lawyers or other outside consultants actually are engaged in collective bargaining, communications supporting the employer’s bargaining proposals prepared for delivery to employees at the bargaining table are exempt from reporting. “But the same or similar entirely lawful communications lose their exempt status if they are prepared for delivery to the employees in the bargaining unit at large, away from the table (say, in the form of a letter or bulletin from management),” he pointed out. “In effect, the Department is trying to take the unitary collective bargaining process and artificially parse it in a way that nullifies the exemption.” Baumgarten said that any professional “worth his or her salt,” regardless whether on the side of management or the union, would agree that when “engaged in collective bargaining,” their job is “not only to make arguments at the table, but also to advise their clients on how to ‘sell the deal’ to the whole workforce.” However, the final rule “means that lawyers cannot assist their clients away from the bargaining table without incurring an obligation to report as persuaders,” he said. It’s all about transparency. In contrast to Robinson’s focus on attorney-client confidentiality, Newman characterized the final regulation as a “transparency rule” that does not limit or prohibit labor consultant activities, but instead “ensures that, consistent with the LMRDA, indirect persuader activity is reported and transparent,” pointing also to a quote by Justice Brandeis: ‘sunlight is said to be the best of disinfectants; electric light the most efficient policeman.’ Sketching out a “typical anti-union campaign run by a labor consultant,” Newman said the consultant prepares written campaign materials; scripts for supervisory personnel to use when talking to employees; anti-union videos; and speeches that upper-level management will deliver in “closed door captive audience meetings” that employees must attend. A common tactic that consultants use is to instruct supervisors to “portray the company as ‘a family’ from the top executive down to the lowest level employee, and assert that the union is an “outside third-party interloper seeking to disrupt the family’s harmonious relationship.” The consultant may also pull together a campaign that claims if employees choose union representation, the employer would incur increased costs that will damage its ability to compete. The final rule will, “consistent with the intent of the LMRDA,” make the consultant’s relationship with the employer transparent, Newman observed. “Employees may learn that the employer has, for example, itself retained a ‘third-party’ to orchestrate its campaign and that perhaps the message from the employees’ supervisors is not a reflection of the supervisors’ views, but instead is being directed by that third-party,” Newman explained. The final rule will also permit employees to evaluate an employer’s claim about alleged costs associated with union representation against the employer’s own expenditures to retain a consultant to persuade employees to vote against the union. “In short, the transparency mandated by the Rule will enable employees to make a more informed choice,” Newman said. “The Rule will ensure that workers are no longer kept in the dark about their employers’ use of anti-union consultants, making the title of today’s hearing—‘the Administration’s attack on ... worker free choice,’ particularly Orwellian.”

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