NLRB and the Union “Persuader Rule”

There’s a quiet movement underway in Washington that would change the rules of labor organization in ways that would deprive employers of their right to free speech, freedom of association and legal counsel, cost billions of dollars and, worst of all, cheat the nation’s workforce of the ability to make informed decisions about whether to join a union.

America’s unionized workforce is currently 11 percent, a mere 6.6 percent in the private sector. down from 20 percent in 1983 and its peak of nearly 35 percent in 1954. Labor unions pushed the Employee Free Choice Act (EFCA) to try to reverse this trend by ending secret-ballot elections and allowing unions know how employees vote on unionization.

EFCA failed twice to get through Congress. So the Department of Labor is trying another tactic: going to the National Labor Relations Board to change some rules that would favor unions over America’s business leaders and their employees.  

One proposal would overhaul the 50 year old “persuader rule,” enshrined in the Labor Management Reporting and Disclosure Act of 1959. This rule requires employers, management and legal counsel to disclose details of legal agreements regarding activity that could be considered a way to “persuade” employees as it relates to unions.

Run-of-the-mill legal advice is exempt from reporting requirements and “persuader activity” has to be pretty blatant. As a longtime attorney whose firm specializes in labor law told me, “no one in our firm has ever had to fill out one of these obnoxious forms.”

This rule has worked for decades and has been endorsed by every Presidential administration since enactment.

The proposed change, however, would consider nearly any communication involving labor and employment as “indirect persuader activity” and reportable.

Every single business that would ever talk with an attorney about an issue that falls under the jurisdiction of the National Labor Relations Board would have to report details of their meetings to the government, and so would their lawyers. Construction, retail, restaurant, lodging, grocery, healthcare, bakers, butchers, candlestick makers – you name it.

The effects would be chilling. Many employers would be too intimidated to use their legally protected right to free speech. Imagine being too afraid of the federal government to seek legal advice to help navigate the already very complicated waters of labor relations and educate their employees.

Attorney-client privilege also goes out the window. The American Bar Association calls the proposed change an “unjustified and intrusive burden on lawyers and law firms and their clients.” And it is contrary to Congress’ specific intent to protect this privilege:

“SEC. 204. Nothing contained in this Act shall be construed to require an attorney who is a member in good standing of the bar of any State, to include in any report required to be filed pursuant to the provisions of this Act any information which was lawfully communicated to such attorney by any of his clients in the course of a legitimate attorney-client relationship.”

A “trigger” provision also forces a huge ethical dilemma on lawyers. Any labor relations counsel who performs one so-called “persuader activity” with one client has to report not only that one meeting, but all labor related activities with all other clients – including non-persuader activities. Asking my counsel to review a section of my employee manual that talks about a collective bargaining agreement triggers a reporting nightmare for my lawyer as he would then have to tell the government about his and his firm’s other clients.

Then there’s the cost. The Department of Labor estimated compliance with this rule change would cost $826,000 a year. But a June 2012 report submitted to the U.S. House Committee on Oversight and Government Reform said the cost would be more than double the DOL estimate. And a former chief economist with the DOL calculated that the time spent learning about the proposed rule could cost as much as $10.6 billion in the first year, followed by up to $6.5 billion per year to obey it.

Finally, and perhaps most importantly, this proposed rule hurts employees. When employers are hesitant to seek even the most basic advice about an organizing drive, and when lawyers are hesitant to give such advice, employees are robbed of the balanced information they deserve before making a decision about the future of their workplace.

This persuader rule upgrade is a fear-inspiring job killer. The only silver lining is the proposal is so egregious, the DOL is having trouble getting support for it, forcing the NLRB to delay hearings and formal change.