The U.S. Department of Labor (“DOL”) has announced that as of July 1, 2016 employers will have to disclose agreements they have with third-party lawyers and consultants they hire to help analyze and discuss with workers the idea of remaining union free. The Final Rule goes into effect on April 25, 2016 and requires disclosure of arrangements, agreements, and payments made on or after July 1, 2016.
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For decades, employers and outside consultants only had to disclose conversations when the outside consultants contacted employees directly. The original rule was designed to prevent employers from hiring middlemen to pose as employees or other neutrals to directly persuade employees not to unionize. The new rule will require employers, third-party lawyers, and their consultants to file reports any time they are giving guidance about remaining union free. These activities will include conducting union-avoidance seminars and drafting materials (e.g. speeches, talking points, documents) for employers to use and distribute to employees. The new rule will also require employers, third-party lawyers, and other labor consultants to report their relationships more frequently than under current law. Additionally, once a third-party lawyer or consultant reports a single instance of “persuader” advice or service, he or she must disclose “all labor relations advice and services” annually, even if that advice and services do not involve persuader activity. Failure to file, or the filing of false or incomplete information, exposes the employer, third-party lawyers and consultants to civil and criminal penalties.
These third-party lawyers and consultants are sometimes referred to as persuaders. However, often times this pejorative label is misplaced where the lawyers and consultants are simply advising the employer about how to legally navigate an election and communicate their ideas. Unions make it their business to know and use these rules as weapons. Employers typically don’t deal with organization efforts. So when one happens, employers look to those that are more familiar with the dos and don’ts associated with conducting a fair and free election. The third-party lawyers and consultants are often hired to ensure the employees have the complete picture before making any unionization decision.
Various trade associations, the American Bar Association (ABA), and lawyers across the country oppose the new rule because the mandated disclosure forces lawyers to reveal clients’ identities, financial arrangements, and services rendered, which lawyers are not at liberty to disclose pursuant to their ethical obligations. The DOL said the information required to be reported is not covered by attorney-client privilege because the rule does not require the lawyer to divulge the substance of what lawyers and clients discuss. It is yet to be seen what impact this opposition will have on the implementation of the new rule, but it’s unlikely that the rule will be implemented unchallenged.
Many believe this new rule is meant to provide organized labor with another advantage in elections. The DOL and the NLRB are working to tip the scales in favor of unionization efforts after years of decline. First the NLRB’s quickie election rules; now the DOL implements the persuader rule that they hope will discourage companies from seeking guidance they need to make sure employees are told both sides positions before an election takes place. Companies that are discouraged from seeking outside resources will simply leave the election in the hands of professional union organizers. Wondering what union goody is next? Keep your eyes out for mandatory recognition following a “card check” organization drive. Stay tuned.