New Labor Agency Rules May Be EFCA 2.0

By: Ben James
June 27, 2011
Law 360

Rules proposed last week that would speed up the union election process and force labor lawyers and consultants to disclose a wider range of information show that efforts to use agency rulemaking to help unions grow their ranks have kicked into gear, experts say, and have drawn comparisons to the failed Employee Free Choice Act.

While the two rules — one proposed by the U.S.Department of Labor and the other from the National Labor Relations Board — don't call for controversial EFCA provisions like card check or mandatory arbitration when management and labor can't come to terms on a collective bargaining agreement, the proposed rules and EFCA share the common goal of restricting employers' input in the union organizing process, experts say.

"If you have a shortened election period, and if your ability to engage labor persuaders is hampered, corporate America will really be behind the eight ball in effectively addressing union organizing efforts," said Reid Bowman, general counsel of workplace training firm ELT Inc., adding that the proposed rules were "EFCA lite".

Lawyers have been predicting for some time that federal agencies under the Obama administration would seek to give organized labor a boost similar to what unions might have enjoyed if EFCA had become law. While the changes envisioned by the DOL and NLRB's proposals aren't as sweeping as EFCA would have been, the proposed rules and the legislation have similar aims: to make it easier for unions to organize and curtail employers' input in the process, according to attorneys.

"I think it's an effort by the administration to achieve goals via regulation and administrative action that they could not achieve by legislation," McKenna Long & Aldridge LLP partner Seth Borden said of the proposed rules.

The DOL's proposed rule, announced June 20, would revise its interpretation of the term "advice" as it pertains to the persuader reporting requirements in Section 203 of the Labor-Management Reporting and Disclosure Act. This, experts say, could hamper companies efforts to seek assistance from consultants and attorneys who have traditionally assisted employers in opposing union organizing efforts.

The NLRB's proposed rule, announced June 21, would expedite union elections and give employers less time to makes its case against organization.

"These two initiatives would significantly limit the employer's voice in the process by elevating regulatory hurdles to an employer's ability to seek advice and counsel, and limiting the time which the employer has to communicate lawfully with its employees about the issue,” Borden said.

Section 203 of the LMRDA requires the disclosure of agreements or arrangements between employers and labor relations consultants under which the consultant undertakes or agrees to shoulder activities meant to sway workers on whether to exercise their rights to organize and bargain collectively, or the manner in which those rights are exercised.

But Section 203 also carves out an exemption for advice, which says that no employer or consultant has to file a report covering the services of a consultant if that consultant just gives advice, or agrees to give advice, to the employer.

Because the longstanding interpretation of the term advice has led to "significant under-reporting" under Section 203, the DOL's proposed rule seeks to limit the definition of what activities constitute advice, thus broadening the circumstances under which reporting is required, according to the DOL.

Under the proposal, willfully failing to report the services of a consultant can lead to fines and even imprisonment.

The DOL predicts the proposed rule would translate to a spike in filings of LM-20 forms, which labor consultants and others have to lodge within 30 days of entering into a reportable arrangement or agreement, as well as an increase in the number of LM-10 forms, which are filed by employers.

However, in addition to the LM-20, consultants and others, including attorneys, who have engaged in any persuader activity would have to file another form called LM-21. The form requires the filer to report receipts for all labor relations advice or services provided to all employers during that same year, regardless of whether that advice related to persuader activity.

For a law firm, that would mean disclosing all clients for which the firm has provided labor relations advice in the past year as well as how much the firm was paid for that work, according to Jeffrey Kauffman of Littler Mendelson PC.

And that, in turn, could mean that many firms may decline work calling for legal advice that could now be deemed persuader activity and thus trigger the attendant disclosure requirements, Kauffman added.

"Law firms are not in the habit of disclosing to the world a list of their clients and the fees they have received, and in fact, there are some state jurisdictions where that kind of disclosure may be a breach of ethical responsibilities and obligations to clients, so it's a Catch-22 for the law firm," said Kauffman. "I can see some law firms turning down work requested by clients that they otherwise would accept if this rule, as proposed, is finalized."

If the definition of persuader activity is broadened, companies too will have to weigh the prospects that more of their expenditures may become public, and that such information can give unions ammunition in the battle to organize workers, lawyers say.

"It is absolutely an unprecedented intrusion, in terms of its scope and its novelty, into the lawyer-client relationship," Borden said. "The extent to which that might chill the frank, candid and zealous effort with which attorneys provide advice to their clients is troubling."

The language of the LMRDA, as well as the DOL's interpretation of the law, hasn't changed in more than 50 years, Borden said. The proposed persuader activity rule is part of a trend that goes back to the labor-friendly EFCA, which failed to make it through Congress, he added.

The NLRB's proposed rule aims to fix flaws in the board's current pre- and post-election procedures that result in unnecessary delays, allow for wasteful litigation and don't take advantage of modern communication technologies.

The changes proposed by the NLRB include allowing for the electronic filing of petitions and other documents, having NLRB regional directors set pre-election hearings seven days after a hearing notice is served and post-election hearings 14 days after ballots are tallied, and deferring litigation of most voter eligibility issues until after an election.

"These two rulemaking initiatives, if implemented as proposed, would work to tie the employer's hands behind its back and also limit the employer's free speech rights and ability to talk to employees with confidence that it's lawful, or not objectionable," Kauffman said. "It is part of the administration's labor-friendly agenda that has been there from day one."

Reprinted with permission from Law 360. This piece originally ran on June 27, 2011 and can be found online at http://www.law360.com/articles/252825/new-labor-agency-rules-may-be-efca-2-0.