Five Labor Law Developments Employers Should Monitor Now that Election 2012 is Over

The polls are closed, the votes are counted, and the results are in:  President Obama will remain in office for another four years.  This much, of course, is old news.  But what the days since the election have provided is time to think about what it means for employers interested in labor law issues.  Here are five areas labor professionals will want to monitor as the President's second term approaches:

  • NLRB Membership.  There are currently four members on the NLRB.  Two have been confirmed by the Senate and two hold recess appointments.  Those recess appointments have been challenged in various proceedings on the ground that the Senate wasn't actually in recess in January 2012, and thus the appointments are unlawful.  If not invalidated by court action, these two recess appointees, Member Block (D) and Member Griffin (D), should serve until near the end of 2013.  Of the two confirmed appointees, Member Hayes' term expires on December 16, 2012.  Member Hayes is the only Republican currently serving on the NLRB.  Labor professionals will want to watch for court action on the recess appointment issue, as well as whether the President attempts to obtain Senate approval next year of any additional NLRB members.
  • Notice Posting Rule.  The fate of the rule requiring employers to post a notice of employee rights under the NLRA, including the right to engage in concerted activity and union organizing, now rests with the courts.  Without a change in administration, the NLRB will surely continue to press its position that the poster requirement is lawful.  Thus, watch for the ruling from the District of Columbia Circuit Court of Appeals, which will likely issue later this year or early next.  An appeal to the Supreme Court on this important issue isn't out of the question.  
  • Persuader Rule.  Since the comment period closed on the DOL's rule redefining (and substantially expanding) the concept of "persuader" activity, the DOL has been remarkably quiet.  With the election over, and a second term set to begin, labor professionals should watch out for publication of a final rule.  The rule has drawn many negative comments, including one from the American Bar Association, which commented against the rule insofar as it applied to attorneys based on fears about the rule jeopardizing the attorney-client privilege.  The implications of this rule for employers, particularly those whose employees are currently non-union, are very serious.  Employers should, therefore, discuss this rulemaking activity with qualified labor counsel.
  • The Election Rule.  Late last year, the NLRB issued a final rule changing some of its election procedures.  That rule was to have gone into effect on April 30, 2012, but was successfully challenged in federal court.  The judge declared the rule invalid because of a procedural issue associated with voting on the rule.  Labor professionals should expect continued rulemaking activity in this area.  In fact, in a recent case (pdf), the NLRB explicitly referenced the pending rulemaking on the election process as a vehicle for changing its policy on so-called "blocking charges" -- that is, unfair labor practice charges that are filed while a union election petition is pending.
  • Protected, Concerted Activity.  During the President's first term, the NLRB moved aggressively to protect the concept of concerted activity.  Evidence of this effort is found in the NLRB's web page dedicated to the issue, the numerous decisions invalidating relatively innocuous sounding policy language, and even the notice posting rule.  Look for the NLRB to continue this focus in cases involving, for example, employee handbook policies and adverse employment decisions based on employee activity on social media.

The common theme in all of these areas is to make it easier for unions to organize employees or for employees to challenge employer actions.  Labor professionals addressing these issues will need to plan carefully to ensure that their response to these developments is lawful and appropriate.

UPDATE: Comments Submitted on DOL Persuader Rulemaking

Earlier this year, the DOL proposed a rule that would change many decades of interpretation of a federal law known as the Labor-Management Reporting and Disclosure Act (LMRDA).  The effect of the proposal is to radically expand the definition of "persuader" activities while limiting the definition of "advice" activities.  The distinction is very significant:  if an employer and an advisor -- like a lawyer or consultant -- are engaged in the former, each must file reports with the federal government disclosing, among other things, the agreement to perform persuader activities, including the financial terms of that agreement.

The DOL took comments on its proposed rule, even extending the comment period.  That period closed last week.  The proposed rule elicited nearly 6,000 comments, including submissions from the U.S. Chamber of Commerce and many other business and labor groups. 

Indeed, in a sign of just how significant the proposed rule is, even the American Bar Association (ABA) submitted comments to the rule.  The ABA comments (pdf) focus on the impact of the proposed rule on the attorney-client relationship, and the ability of labor lawyers to provide advice to their clients.  The ABA notes that, with respect to lawyers, the new interpretation "would essentially nullify the advice exemption contained in the statute and thwart the will of Congress. . . ."

Labor professionals should monitor the developments on this important, proposed rulemaking.  The impact of these regulations on employer speech during a union organizing effort could be quite significant.  If the DOL's proposed interpretation is adopted, labor professionals will need to be prepared.  Consulting now with labor counsel is an important first step.

UPDATE: Department of Labor's LMRDA Proposal has Broad Implications for HR Departments and In-House Counsel

By Allen Kinzer and Nelson Cary

Recently, we alerted you to the U.S. Department of Labor’s effort to change the reporting requirements for businesses who engage external advisors in connection with union organizing issues. As we continue to review these proposed regulations, their scope becomes even more problematic for employers. 

For example, suppose you are a human resources professional or an in-house counsel for XYZ, Inc. In your role, you provide employee relations or labor and employment legal services to XYZ, Inc. and XYZ’s corporate affiliate, AB, LLC. These services are provided under a formal or informal agreement, and there is an accounting transfer of expenses from AB to XYZ for these services. Under the DOL’s new proposal, both AB and XYZ could be required to file reports about these services and the amounts charged for them.

At issue is Section 203 of the Labor-Management Reporting and Disclosure Act (LMRDA). It requires, among other things, that employers file reports with the DOL when they enter into an agreement with a consultant or contractor to persuade employees about unions. The DOL proposes to interpret Section 203 to require reporting when the contractor engages in “persuader activity,” which the DOL proposes to define as:

providing material or communications to, or engaging in other actions, conduct, or communications on behalf of an employer that, in whole or in part, have the object directly or indirectly to persuade employees concerning their rights to organize or bargain collectively. 

The DOL’s examples of “persuader activity” include:

  • Developing employer personnel policies or practices designed to persuade employees; and
  • Training supervisors or employer representatives to conduct individual or group meetings designed to persuade employees.

In our hypothetical, suppose XYZ’s in-house lawyer or HR professional drafts or revises an “open door” or complaint policy for AB’s employee handbook. Persuader activity? Or, XYZ’s in-house lawyer or HR professional trains AB’s supervisors on the Do’s and Don’ts of how to respond to questions from employees regarding unions. Persuader activity? Or, XYZ’s in-house lawyer or HR professional trains AB’s supervisors on how to respond to harassment complaints and how to properly and fairly discipline employees. Persuader activity?

Here’s the DOL’s guidance in its proposed interpretation: Does each activity directly or indirectly have the object of persuading employees concerning their rights to union representation? If yes, then the DOL’s proposal requires both XYZ and AB to report the arrangement between them and annually report the accounting transfers from AB to XYZ. The forms are the LM-10 for AB and the LM-20 and LM-21 for XYZ.

Given the intrusive scope of these rules, one would think the regulation would have elicited more comments. As of July 13, however, only 34 comments have been filed.  We anticipate that some of the major, business-oriented groups, like the U.S. Chamber of Commerce, will ultimately submit written comments.  The deadline for submission of formal comments to the DOL is August 22, 2011.  We will continue to monitor those submissions and update this blog with new developments.

Big Brother Watching You? DOL Demands More Information from Employers About Union Avoidance Activities

By Nelson Cary and Allen Kinzer

Yesterday, the U.S. Department of Labor (DOL) proposed to do away with an interpretation of the Labor-Management Reporting and Disclosure Act (LMRDA) that has prevailed for nearly 50 years.  At issue is Section 203 of the LMRDA, which requires, among other things, that employers file reports with the DOL when they enter into an agreement with a consultant or contractor (including attorneys) to persuade employees on the issue of unions.

Section 203(c) of the LMRDA contains an exception to the reporting requirement for "advice" given to an employer.  Since 1962, with the exception of a few days during the end of the Clinton Administration, the DOL's interpretation of the advice exemption provided that services of an attorney drafting letters or speeches to employees or reviewing communications the employer drafted to ensure legality were "advice" and thus not reportable.  In essence, so long as an attorney submitted oral or written material to an employer and the employer had the decision whether to accept or reject the advice, the attorney's activities were not reportable under the “advice exception."  If the attorney (or other consultant or contractor) met directly with employees, however, the activities became reportable. 

Under the proposed interpretation, the “advice exception” would be limited to advising employers what they may lawfully say to employees, employers' compliance with the law, or general guidance on NLRB practice or precedent. Reportable activities would now include any actions, conduct or communications on behalf of an employer that could directly or indirectly persuade workers concerning their right to organize and bargain collectively, regardless of whether the consultant has direct contact with workers and regardless of whether the employer accepts or rejects the proposals.  This interpretation specifically includes preparation of persuasive scripts, letters, videos, or other digital media for use by an employer or revisions to employer documents by an attorney or consultant. (See page 61 of DOL Notice (.pdf))

Further, under the new interpretation, persuader activities may additionally include:

  • Training or directing supervisors and other management representatives;
  • Creating employer policies to prevent organizing;
  • Determining the timing and tactics of employer activities; and
  • Providing seminars or webinars offered by attorneys or consultants that include "union avoidance" topics where guidance is offered to attendees.

(See page 62 of DOL Notice.)  In addition to this substantially different interpretation of the LMRDA, the DOL also proposes to make changes to the LM-10 and LM-20 forms.  These are the forms used by the employer and consultant, respectively, to provide the information the DOL requires them to report.  The DOL also wants to implement an E-Filing system.

The implications for the labor professional of the DOL's proposal are difficult to understate.  The proposed changes drastically reinterpret the reporting requirements for employers and attorneys/consultants and significantly amend the forms and instructions for reporting under Section 203.  The DOL's proposed interpretation expands the reach of the LMRDA and increases, therefore, the scope of conduct that could trigger potential criminal liability on the part of employers (and others engaged in persauder activity) who fail to comply.  A substantial chilling of an employer's right to free speech during a union organizing campaign, which Section 8(c) of the NLRA purports to guarantee, may be the ultimate result.

Labor professionals will want to act proactively.  Among other things, they should consult with their attorney to determine how the proposed interpretation impacts their existing relationships.  Employers or their trade organizationas may also want to submit comments to the DOL on the proposed interpretation.  The deadline for receipt of comments is August 22, 2011.  After comments are received, the DOL will finalize its interpretation, publishing it in the Federal Register.