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Employers Using Labor Lawyers and/or Persuaders Likely to Face Reporting Requirements

Change may be coming for employers who hire labor relations consultants, including attorneys, to conduct union-related activities.  There is a law that governs the reporting and disclosure of financial transactions and administrative tasks of labor organizations and employers called the Labor Management Reporting and Disclosure Act of 1959.  This law requires employers and their labor counsel, among others, to report their involvement in “persuader activities” to the Department of Labor’s Office of Labor-Management Standards. Persuader activities include activities designed to persuade employees regarding their rights to unionize and bargain collectively.

Currently, there is an exception to this reporting requirement called the “advice” exception.  Under this exception, as long as the attorney is not directly communicating with the employer’s employees, neither the attorney nor the employer must report when counsel advises an employer on its labor relations rights and related strategies.

There are currently proposed regulations that interpret the “advice” exception far more narrowly than it has ever been interpreted.  This is in line with the Obama Administration’s pattern of strong support for labor organizations and continued attack on any law or policy that favors the employer.

In the proposed regulations, the definition of “persuader activities” is expanded while the definition of “advice” is greatly narrowed to allow for exceptions only in the rarest of circumstances.  Persuader activities would include preparing materials or communications for employers to use in employee communication, revising materials for training management regarding labor issues, and planning employee meetings involving labor issues.  The advice exception would be limited to situations where the lawyer or consultant exclusively counsels the employer on what they may lawfully say, ensures the client is complying with the law, or provides guidance on National Labor Relations Board practice or precedent.  Any services that are a combination of advice and persuader activities will not fit the advice exception.

The proposed regulations may become final in April 2013.  Even if the regulations are implemented in April, there remains a serious question as to their effective date.  A number of business-oriented entities, such as the United States Chamber of Commerce, the Better Business Bureau, and major labor law firms, have indicated they intend to challenge and possibly enjoin the implementation of these regulations.  If this happens, it is very possible the effective date will be delayed.  The duration of the delay is impossible to predict, but it is likely to be extensive.

If these proposed regulations become final and effective, labor counsel and consultants will have to file a report if they are engaging in persuader activity as that term is newly interpreted, and the employer for whom they are performing the services must also file a report.

So what are they filing? Employers would be required to file an LM-10 report within ninety days of the end of their fiscal year.  The LM-10 requires reporting information such as the type of activities performed by labor relations consultants and payments made to these individuals.

The labor relations consultants (including law firms) would be required to file two forms each year.  The LM-20 details the agreement/arrangement made with their client and the kind of activities that will be performed.  This must be filed within thirty days of entering into an agreement/arrangement.  The other form is the LM-21 which details receipts and disbursements regarding these activities.  This must be filed within ninety days of the end of the filer’s fiscal year.

Employers should know that these reports would be public and unions will likely try to use them against the employer.  At this time, all we can do is wait and see what happens.

Brody and Associates regularly advises its clients on all labor management issues and provides various related training programs.  If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.965.0560.