Questions Regarding Proposed Rule Narrowing "Advice" Exemption Dominate OLMS Web Chat

US_Dept_of_Labor2.JPGDuring a web chat run by the Office of Labor Management Standards (OLMS) to discuss the agency’s regulatory agenda, OLMS Director John Lund fielded several questions – but provided few concrete answers – regarding the OLMS’s proposal to narrow the scope of the “advice” exemption under the Labor-Management Reporting and Disclosure Act (LMRDA). This proposal would also expand what constitutes reportable “persuader activities” under the LMRDA, and subject employers and their advisors – including their attorneys – to new reporting requirements. Currently, employers are required to report information regarding persuader agreements with consultants on the Form LM-10, while consultants are required to report related information on the Form LM-20. Narrowing the “advice” exemption and expanding the definition of “persuader activities” would necessarily expand the reporting required on these forms.

Many of the participants expressed concern that determinations regarding whether attorney conduct constitutes “advice” or “persuader activity” necessarily involve an inquiry that infringes on the attorney-client privilege. In response, Lund clarified that “employers and consultants would not have to file reports concerning agreements whereby the consultants are engaged exclusively in providing advice or legal representation,” nor would they be required to disclose privileged information. Not satisfied with this answer, another questioner asked whether the OLMS has considered how it would be able to conduct an investigation into a union’s allegation that a company’s attorney has engaged in persuader activity and that the advice exemption does not apply while making sure not to overstep the bounds of attorney-client privilege. Lund did not explicitly answer this question, but instead made the broad claim that “investigators work closely with the Department’s lawyers to ensure that the privileges are protected.”

This response to the important attorney-client privilege matter prompted another participant to challenge Lund on his apparent “side-stepping” of the issue. The questioner noted:

When an election campaign is in progress, often an employer will consult with attorneys to obtain legal advise on what can/cannot be done by management in a campaign. In reading the proposed rule, it seems evident that those types of conversations will have to be disclosed, thus losing the attorney-client privilege.

In response, Lund stated:

If the activity is confined to giving advice, which the proposed rule defines as “recommendation regarding a decision or course of conduct,” no reporting requirement is triggered. For example, a consultant who exclusively counsels employer-representatives on what they may lawfully say to employees, ensures client’s compliance with the law, or provides guidance on NLRB practice or precedent, is providing “advice.”

When asked why such a rule to change the meaning of “advice” was necessary in the first place, Lund claimed that there exists a significant under-reporting of such agreements: “On average, NLRB and NMB receive about 3,500 union election petitions each year. Data shows that employers hire consultants in about 75% of these cases. However, OLMS receives, on average, only 190 reports from persuaders each year.” He further claimed that “better disclosure is critical to helping employees make informed decisions about their right to organize and bargain collectively.”

In response to a question about the scope of the LM-10 reporting requirement, Lund explained that under the proposed rule, an employer and an outside consultant must report any agreement in which the consultant engages in persuader actions, conduct, or communications, regardless of whether or not advice is given. When asked to give an example of the type of “persuader activity” a consultant would be engaged in by simply being the employer's negotiator at the bargaining table, Lund stated that “if the consultant only acts as the employer’s spokesman in negotiations and does not engage in any reportable persuader activities, then the agreement would not be reportable.”

A complete transcript of the web chat can be accessed here.

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.