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DOL fights to expand union avoidance activities reporting

Legal News Reporter

Published: September 9, 2016

The U.S. Department of Labor is planning to appeal a preliminary nationwide injunction temporarily blocking the implementation of its new interpretation of the advice exemption to the Persuader Rule.

The injunction was issued on June 27 by a federal district court judge in Texas in response to a lawsuit filed on March 31 by the National Federation of Independent Business and several other organizations.

Published in the Federal Register on March 24 by the DOL’s Office of Labor-Management Standards, the agency’s Final Rule revised the “Advice” exemption in Section 203(c) of the Labor-Management Reporting and Disclosure Act of 1959 or LMRDA. The section deals with reporting requirements for employers and labor relations consultants involved in efforts aimed at persuading “employees about how to exercise their rights to union representation and collective bargaining.”

The Final Rule amended the forms (Form LM-20 Agreement and Activities Report and the Form LM-10 Employer Report) used to report persuader agreements and arrangements.

According to the DOL website, the Final Rule would require employers and the consultants they hire, including attorneys, to “file reports not only for direct persuader activities – consultants talking to workers – but also for indirect persuader activities – consultants scripting what managers and supervisors say to workers.”

The website states, “Workers often don’t know that their employer hired a consultant to manage its message in union organizing campaigns, including by scripting speeches by managers, talking points, letters, and other documents.”

The rule was supposed to take effect on April 25, with the new reporting requirements beginning on July 1. But at the end of March three separate lawsuits were filed in federal courts in Arkansas, Minnesota and Texas by law firms, business groups and associations.

Paul Jackson, a partner in the Akron office of Roetzel & Andress, said the Persuader Rule already mandates that an employer report its “direct” persuader union avoidance activities.

“For example, if consultants are hired to meet with or communicate directly with employees to persuade them concerning union activities, reporting as to those services has long been required,” said Jackson, who represents employers in a wide range of employment-related matters.

“The new Final Rule would have made any type of advice provided by an attorney on the subject public,” he said. “We believe this would have violated attorney-client privilege.

“A federal district court judge in Texas essentially said the DOL did not have the authority to enforce its interpretation,” said Jackson. “The judge also stated that the change would have chilled the First Amendment right to free speech.”

Rachel Reight, an attorney at Baasten McKinley & Co, said the DOL has stated that the new Final Rule would not impact attorney-client privilege. She said the DOL rule is designed to shine a brighter light on employer campaigns aimed at keeping workers from organizing.

“The rule did not impact any employer’s ability to hire a consultant or change the information that could be provided by the consultant, but it did provide a means for employees to learn the source of the employer’s arguments against organizing,” said Reight, who represents employees.

“The information would have allowed employees to make more informed decisions.”

On Aug. 25, the DOL made clear that it would fight the preliminary injunction, filing a notice of appeal with the Fifth Circuit.

“I would say that most practitioners in this area expected that the DOL would appeal,” said Jackson. “I believe that the DOL, in order to prevail in its appeal, will be required to establish the decision was clearly erroneous. That would seem to me to be a very difficult hurdle for the DOL to overcome.

 “At this time, the preliminary injunction issued by the district court in Texas will remain in place until the case before the district court is fully resolved or until the preliminary injunction order is reversed by the Fifth Circuit or the United States Supreme Court.” 

Jackson said lawsuits in Minnesota and Arkansas are still pending.

“Decisions from those courts might become significant should the decision in the Texas case be overturned,” said Jackson. “The question was and is does the DOL have the authority to interpret federal law as broadly as it did to require much more disclosure than was ever required before?”

Reight said the DOL’s Final Rule would not be a heavy burden on employers since they are already required to fill out forms about union avoidance.

“The court challenges threaten the ability of workers to bargain collectively with their employer for fair terms and conditions of employment, safety rules and better wages and benefits,” said Reight.