Persuader Proposal Would Give Unions An Advantage in Organizing, Employers Say

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By Gayle Cinquegrani

A proposed rule that would expand the requirements for determining when employers and the consultants they hire to help them deal with union organizing attempts would be required to file forms with the Labor Department has elicited a strong negative reaction from the business community.

The proposed rule from the Labor Department's Office of Labor-Management Standards would make the first substantive changes in almost 50 years to the forms for reporting labor persuader agreements.

DOL told BNA it received approximately 9,000 comments in response to its June 21 proposal, which would revise the interpretation of “advice” consultants offer to employers about handling union organizing efforts (76 Fed. Reg. 36,178; 29 HRR 682, 6/27/11).

Employer groups tended to see the proposal as a pro-union measure that would impair the business sector's ability to make profits and create jobs. The expanded reporting requirement would deter labor consultants from entering into persuader agreements, they charged, which could result in more labor violations. In addition, they contended that complying with the regulation would be difficult and costly.

Unions, meanwhile, asserted that the proposal is a reasonable measure that begins to bring the reporting required of employers and their persuader consultants in line with the voluminous reporting required from unions. The unions maintained that the proposal would close a loophole that leads to the underreporting of consultant persuader activity and would provide a necessary update to rules that have been in place since 1963.

Lawmakers who have weighed in on the debate have fallen into predictable camps, with Democrats stating that the proposal would restore the Labor-Management Reporting and Disclosure Act to its intended meaning and Republicans asking the labor secretary to rescind the rule and focus on creating jobs.

Lack of Direct Contact Exempts Consultants.

Section 203 of the LMRDA requires the disclosure of persuader agreements under which a consultant undertakes activities intended to directly or indirectly persuade an employer's workers concerning whether to form a union. The employer must file an LM-10 Employer Report, and the labor relations consultant must file an LM-20 Agreement and Activities Report.

Under DOL's current interpretation of the advice exception, employers and consultants are exempt from filing these forms if the consultant does not have direct contact with employees.

The proposal, however, would make an agreement reportable even if the consultant has no direct contact with workers when the consultant engages in persuader activities that go beyond the plain meaning of “advice.” An agreement also would be reportable when a consultant engages in specific persuader actions or communications, such as planning a campaign to counter union organizing or collective bargaining, even if the consultant also advises the employer.

The proposed rule would make the first changes to Forms LM-10 and LM-20 since they were introduced in 1963.

Comments on the proposal were due in late September.

More Labor Violations Predicted.

In comments urging DOL to withdraw the proposal, the National Association of Manufacturers predicted that it would “chill employers from engaging legal counsel on a broad spectrum of labor-employment issues” and therefore “employers will be more, rather than less, likely to violate a host of labor and employment relations laws.”

The association said, “The current rules regarding persuader activity disclosure are straightforward, sensible, and have presented no public concerns for decades.”

According to NAM, “The Proposed Rules will drive a sizable cohort of competent labor counsel to discontinue providing services arguably within the definition of ‘persuader activities,' ” and therefore employees will be deprived “of information they would otherwise receive from their employers to assist them in making the critical choice of whether to join a union or not join a union.”

NAM added that “the Proposed Rules will severely impair employers' rights to communicate with their employees,” explaining that “many employers will be reluctant to communicate their positions regarding unionization without counsel for fear of committing an unfair labor practice.”

The Society for Human Resource Management perceived a pro-union tilt to the proposed rule.

SHRM, an association of 250,000 HR managers, said the research cited in the proposed rule presents a picture of “alleged untold millions of dollars [being] spent in the singular purpose of eliminating organized labor” without showing the “great success” that unions have achieved in recent years through “the rise of the corporate campaign.”

SHRM's comments called many of the reports cited by DOL “results-oriented tracts which must be viewed as suspect.”

The society said that in reality, unions use corporate campaign tactics “to inflict enough damage to the target employer's business so that it will accept the union with a government supervised secret ballot election.”

According to SHRM, “In many cases, the union is not seeking to ‘organize' the employees by way of secret ballot election where they might have access to information from both sides; rather, the union's objective in many cases is unbridled access to employees while the employer remains ‘neutral,' ” often “in exchange for a cessation of corporate campaign hostilities.”

The proposed changes should not be adopted because they “will broaden the activities required to be reported to the point where virtually nothing involving labor relations will be exempt,” according to the group. SHRM asserted that under the proposed rule, there never would be a purely advisory situation “because labor relations necessarily results in the communication by an employer with its own employees.”

Proposal's Cost Underestimated.

Comments submitted by the U.S. Chamber of Commerce emphasized the likely cost of complying with the proposed rule.

The chamber said the proposal's removal of “the ‘bright-line' test of direct communication with employees” that currently triggers the reporting requirement and substitution of “a confusing subjective test” based on the agreement's intent will make it harder for employers and consultants to determine if they must submit reports.

According to the chamber, even businesses “who never find the need to file the OLMS Form 10 will incur compliance costs associated with the proposed rule because of the need to conduct more careful and thorough reviews of their service arrangements than is necessary under the current ‘bright line' standard.”

The chamber said the Labor Department was “clearly wrong” in asserting that the proposed rule is not a major regulation and not economically significant and disputed DOL's estimate that the proposed rule will have an economic burden of $825,866.

The chamber said DOL used data on the number of union organizing petitions filed each year to conclude that the proposal would add approximately 2,484 Form 10 filers and 2,410 Form 20 filers.

The chamber pointed out, however, that this number considered only those employers and service providers that would actually have to file LM-10s and LM-20s and overlooked the “additional time and resources” that businesses would have to devote each year to determining whether they have an obligation to file an LM-10 or LM-20 under the proposal's “expanded definition of reportable arrangements.”

The chamber calculated that, for businesses with five or more employees, the cost of annual reviews just to determine whether they have to file an LM-10 would be between $204 million and $408 million per year. The chamber estimated that it would cost businesses between $82.1 million and $385.5 million each year to determine their obligation to file the Form LM-20.

The chamber also criticized the Labor Department for “investing resources in policy changes that will not create a single new job, but will instead create a further drag on job creation.”

Most Persuader Activity Would Remain Unreported.

On the other side of the labor-management spectrum, the AFL-CIO said it favors the proposed rule, submitting comments asserting that contemporary labor relations tactics make the proposal necessary.

The federation said, “The proposed rule appropriately modifies the Department's interpretation of Section 203 to account for the fact that the modern anti-union campaign places heavy reliance on supervisors as the consultant's trusted intermediaries as well as the use of sophisticated video and web-based communication technology.”

The federation said it has become common for consultants to use the employer's supervisors to spearhead anti-union campaigns so they can “escape reporting on their campaign ‘activities' ” under the Labor Department's “current interpretation of the ‘advice' exception.”

Consequently, union avoidance consultants often “script supervisors' conversations, train them how to read employees' verbal and non-verbal reactions, and have them ask indirect questions without explicitly asking employees how they will vote,” the AFL-CIO said.

“The provision of such materials constitutes an activity aimed at influencing employees rather than labor relations advice for the employer,” the federation charged, but “the consultants creating such anti-union materials” do not have to submit reports under the current interpretation of the advice exemption if the employer's supervisors distribute the consultants' materials.

“Most persuader activity by the labor consultants goes unreported,” the federation said. “Any pretense that the consultants are instructing the supervisors on how to comply with the law is conclusively refuted by the empirical evidence showing a strong correlation between the hiring of a consultant and unlawful behavior by the supervisors.”

The AFL-CIO said an internet search for “antiunion consultants” yielded the names of 19 consultants, but only six of them had ever filed reports with OLMS.

“The proposed LM-10 and LM-20 forms will help ward off future evasive maneuvers by providing for more detailed reporting,” the AFL-CIO said.

Like the AFL-CIO, the Service Employees International Union focused on the prevalence of labor consultants in employer's anti-union strategies. The SEIU, which represents 2.2 million members in the health care, public and property services sectors, said the proposal would adopt “a common-sense approach to the meaning of the word ‘advice' ” and would be “an appropriate and necessary narrowing of its current overbroad interpretation.”

By Gayle Cinquegrani


The public comments submitted online may be accessed at http://www.regulations.gov . Text of the proposed rule may be accessed at http://op.bna.com/dlrcases.nsf/r?Open=gcii-8hzm4k .