The Pitfalls of Persuasion: Proposed Rule Changes May Limit Employer's Access to Legal Advice During Union Campaigns

The Department of Labor (“DOL”) is currently considering significant changes to the Labor-Management Reporting and Disclosure Act (“LMRDA”) that may discourage some employers from seeking legal advice, or even prevent attorneys from providing legal services in some situations.  Specifically, the proposed changes would eliminate the “advice” exception to the so-called “persuader rule.”   The changes have not yet taken effect, and some legal organizations, inlcuding the American Bar Association, have come out against the DOL's proposed changes.

 The “Persuader” Rule:

In its current form, the persuader rule requires employers and any “consultants” to disclose private details of their relationship if: (1) the consultant assists the employer in persuading workers to exercise, not exercise, or how to exercise their rights to organize and bargain collectively; or (2)  the consultant provides the employer with information concerning the activities of employees or a labor organization in connection with a labor dispute involving that employer.  No disclosure is necessary, however, when the labor dispute is part of an administrative, arbitral or judicial proceeding.

For years now, employers, and their attorneys, have enjoyed a broad “advice” exception to the persuader rule.  The advice exception excuses employers, and their attorneys, from the rule’s disclosure requirements provided the attorney speaks only with the employer when advising on union avoidance matters.  In effect, the exception allows employers to freely seek legal advice during union organizing campaigns so long as the attorney avoids direct contact with employees.

Proposed Changes To Persuader Rule:

The DOL's proposed changes would eliminate the advice exception.  The effect would be to subject employers and their attorneys to the persuader rule’s disclosure requirements.  This means employers and their attorneys would have to disclose the existence of an attorney/client relationship, the general nature of the legal representation, a description of the tasks performed by the attorneys, and even information regarding attorney’s fees. 

Possible Impact of the Proposed Changes:

 Should these changes take effect, it could have the following impacts: 

• The ethical rules of many states, including Maine and Massachusetts, prohibit attorneys from disclosing many facts about their clients without their client’s permission.  The mandatory disclosures under the persuader rule include information protected by these state ethical rules.  As a result, the DOL’s proposed changes could prevent attorneys from advising clients on some labor matters for fear of breaching their ethical duties; 
• The proposed changes might make some employers think twice before seeking legal advice.  The detailed disclosures required by the proposed rule include sensitive information that most employers might want to avoid disclosing - especially when faced with a union campaign; 
• Employer free speech could also be limited due to the chilling effects on outside counsel.  Legal advice during union organizing campaigns, historically treated as exempt from LMRDA reporting, is often critical given the complexities (and ever-shifting nature) of labor law.  If employers are without access to counsel in such circumstances, they might feel inhibited or even stop having open discussions with employees about unionization in order to avoid violating the law.  

As is evident, the DOL’s proposed changes to the persuader rule could have dramatic and far-reaching consequences for some employers.  For that reason, it is important for employers to be proactive in educating their workforce on unionization issues.