After years of gridlock, President Obama declared in his State of the Union address that he would move forward on employment issues “with or without Congress.” His first Executive Order tied to this threat increased the minimum wage for workers under new federal contracts from $7.25/hour to $10.10/hour, in part to “help build momentum for a minimum wage hike for all Americans.” This Order applies to new contracts and renewals where contract terms are changed.
Following Obama’s lead, the Milwaukee County Board passed a “living wage” ordinance requiring the County and its contractors to pay workers at least $11.33/hour. The 12-6 Board vote would be sufficient to override an anticipated veto by County Executive Abele. Democrats have also proposed raising Wisconsin’s minimum wage to $10.10/hour. Governor Walker opposes the bill: “I’m focused on helping people get jobs that pay far more than the minimum wage. You don’t get that by forcing businesses to drive out young workers.”
Obama promised that: “Wherever and whenever I can take steps without legislation to expand opportunity for more American families, that’s what I’m going to do.” Many saw this as a signal that the National Labor Relations Board would renew its efforts to advance labor friendly issues to counteract judicial invalidation of the Board’s rules requiring “Employee Rights” posters, and “Quickie Elections,” and judicial reversal of its decision prohibiting arbitration agreements that limit class action claims.
THE “NEW” QUICKIE ELECTION RULE
This was confirmed on February 6th when the NLRB, with a full complement of recently approved members, unveiled a Proposed Rule similar to, but even more far-reaching than the “Quickie Election” Rule invalidated by a federal court last year (because the agency did not have a proper quorum when it was issued). The following provisions of the Rule have been sharply criticized by the business community:
- Quickie Elections –Union elections could be held as little as 10-15 days after a petition for election is filed with the Board (vrs. 40+ days now), severely limiting employers’ opportunities to educate their workforce on the effects of unionization.
- Voter Lists – Within 2 days of receiving an election notice, employers must provide the union with contact information for all employees eligible to vote in the election. Failure to comply could result in setting aside an anti-union election result.
- Voter Eligibility – Hearings would be held within 7 days of receipt of the election notice to address voter eligibility and unit designation issues. Any objections not submitted in writing prior to hearing are waived.
- Delayed Resolution of Challenges – If challenged voters constitute less than 20 percent of the proposed unit, resolution of the challenge is delayed until after the election. This encourages unions to improperly identify working supervisors as part of the unit to eliminate the Company’s ability to use those supervisors to communicate its message to employees.
THE DOL’S “PERSUADER RULE”
In another attempt by the administration to appease union leaders, the Department of Labor (DOL) announced that it will issue the “Final” version of its “Persuader Rule” in March of 2014. If finalized as proposed, the Rule will greatly expand the circumstances in which information about labor advice received by employers will have to be reported by both the employer and the third parties providing that advice, including the employer’s attorneys and labor consultants.
In 1950s, Congress became concerned about employers’ use of clandestine “middlemen” to spy on pro-union activities, organize “vote no” campaigns, and dissuade workers from exercising their statutory rights. It subsequently enacted the Labor-Management Reporting and Disclosure Act (“LMRDA”) which incorporated reporting requirements designed to provide workers and labor organizations with a tool to identify the sources and potential bias of the information they were receiving.
Section 203(b) of the Act imposes reporting requirements where entities “undertake activities” on behalf of an employer to “directly or indirectly … persuade employees to exercise or not to exercise …. the right to organize and bargain collectively through representatives of their own choosing.” The required (and publicly available) reports must disclose the identity of the party providing the services, the nature of the services, the fees charged for the services, and the nature of any disbursements made by the entity in connection with the services.
However, Section 203(c) of the Act (the “Advice Exception”), clarified that these reporting requirements would not apply to attorneys and labor relations consultants that simply provided advice and guidance to management groups on labor and employment issues. For over 50 years both the DOL and the courts have taken the position that the “Advice Exception” applies if the attorney or consultant “has no direct contact with employees” and limits his/her activity to providing to the employer with advice or materials for use in persuading employees “which the employer has the right to accept or reject.”
DOL’s Proposed Modification to the Advice Exception
The DOL is now proposing a radical narrowing of “Advice Exception.” Specifically, the revised interpretation of the Advice Exception in the Rule proposed by the Department provides:
With respect to persuader agreements or arrangements, “advice” means an oral or written recommendation regarding a decision or a course of conduct. In contrast to advice, “persuader activity” refers to a consultant’s 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. Reporting is thus required in any case in which the agreement or arrangement, in whole or in part, calls for the consultant to engage in persuader activities, regardless of whether or not advice is also given.
According the DOL, under this revised interpretation “reportable activities” will include:
- drafting, revising, or providing materials or communication of any sort, to an employer for presentation, dissemination, or distribution to employees, directly or indirectly;
- developing or administering employee attitude surveys concerning union awareness, sympathy, or “proneness”;
- training supervisors or employer representatives to conduct individual or group meetings designed to persuade employees;
- coordinating or directing the activities of supervisors or employer representatives to engage in the persuasion of employees;
- establishing or facilitating employee committees;
- developing employer personnel policies or practices designed to persuade employees;
- deciding which employees to target for persuader activity or disciplinary action;
- coordinating the timing and sequencing of persuader tactics and strategies.
- research or investigation concerning employees or labor organizations;
- supervisors or employer representatives;
- employees, employee representatives, or union meetings; and/or
- surveillance of employees or union representatives (video, audio, Internet, or in person).
Expanded Scope of Reportable Activities
Although the LMRDA has traditionally been limited to union organizing and bargaining matters, the DOL suggests, without statutory support, that reportable activities should be expanded to include persuasive activities related to any “labor dispute” and any “concerted activities” undertaken by employees. The Act defines “labor dispute” very broadly to include not only issues regarding organizing efforts and collective bargaining, but also “any controversy concerning terms, tenure, or conditions of employment.” Similarly, “concerted activity” under Section 8 of the National Labor Relations Act has been interpreted very broadly.
Of significant additional concern is the fact that once a lawyer or other consultant is labeled a “persuader,” the Proposed Rule requires that he or she must report detailed information about all clients to whom they have furnished any “labor relations advice or services” – not just those clients to whom “persuader advice” was rendered or for whom “persuader activities” were performed. Reports under the DOL’s proposed Persuader Rule require disclosure of:
- the identity of all clients for whom “labor relations advice or services” were performed;
- the nature of the services performed;
- the amount of fees charged for the services; and
- the nature and amount of any expenditures made by entity in providing such services.
Non-Compliance can Result in Significant Sanctions
Given the overly broad and vague parameters of the “persuader activities” that may trigger LMRDA reporting requirements under the proposed Rule, it is likely that many employers and their attorneys will unintentionally violate the Act if the proposed Rule is adopted without change. Penalties can include up to a year in jail and up to a $10,000 penalty for failure to file the required forms or for filing them incorrectly.
Compliance Can Result in Ethical Violations
Even if attorneys recognize a potential reporting requirement, they will be faced with an ethical dilemma. The Rules of Professional Conduct dealing with “Confidentiality of Information” state that “lawyer shall not reveal information relating to the representation of a client unless the client gives informed consent…” The range of confidential client information that lawyers are not permitted to disclose includes the identity of the client, the nature of the representation and the amount of legal fees paid by the client to the lawyer. By requiring lawyers to disclose confidential client information to the government regarding the identity of the client, the nature of the representation, and details concerning legal fees, the requirements imposed by the Rule are inconsistent with a lawyer’s ethical duties.
Despite strong objections to the proposed “Quickie Election” and “Persuader” Rules, many observers believe that both will be issued in final form without substantial change. Unions want all the help they can get stem the decline in membership, and they don’t feel that their support for President Obama’s presidential campaigns has been adequately reciprocated. Mid-term elections are coming up. Given the tone of President Obama’s State of the Union Address, it is likely that the NLRB and the DOL will advance the Rules discussed above, and that litigation will once again have to be pursued to rein in overly ambitious agency actions.