"First Kill All The Lawyers" - Obama's Persuader Rules Target Employer's Right to Counsel

While most Americans were preparing for their Thanksgiving Feast, President Obama showed his thanks last week to Big Labor and its hundreds of millions in campaign contributions by ignominiously allowing his recently confirmed Labor Secretary to move forward his DOL's long pending radical proposal to dramatically change the decades old "Persuader Regulations".  The Proposed Rule is designed to give unions both an organizing and bargaining advantage by significantly restricting the right and ability of employers to obtain legal counsel and lawfully communicate with employees about labor matters.

Unbalance the Playing Field - Silence the Lawyers 

As anyone with a cursory familiarity with Dick the Butcher's famous quote "The first thing we do, let's kill all the lawyers,'' from Shakespeare's ''Henry VI,'' is aware, the true expression behind the statement was that in order to destroy liberty and conquer the opposition, one must first deprive the opposition of their legal rights, including their ability to obtain the advice and support of lawyers.   Playing the role of Dick, the DOL seeks to butcher the rights of employers by revising the regulations to substantially interfere with their attorney-client relationships.

The proposed regulations drew the immediate criticism of everyone from Senators, to both employer and employee rights groups, to the American Bar Association raising serious ethical, economic and practical concerns.

Although the regulations were originally proposed in June 2011 with an extended comment period closing in September 2011, they were seemingly on the back burner as the President focused on reelection, an aggressive yet embattled NLRB and the launch of Obamacare.  However, now with his NLRB at full strength , without any fanfare, while America was distracted last Tuesday, the DOL released its Fall Rule List where for the first time it disclosed that the controversial regulations will be moving forward and a Final Rule will be released in March 2014.

The Proper Historic Advice Exemption

The Rule radically alters the regulations implementing the "Advice Exemption" to the Labor Management Reporting and Disclosure Act of 1959 ("LMRDA.").  The LMRDA requires disclosure of an employer's use of professional persuaders or middlemen who would communicate with employees on their behalf and attempt to persuade them against unionization or otherwise to support the employer's position. Recognizing the proper  role for labor counsel and the attorney-client privilege, Section 203(c) of the LMRDA provided a broad "Advice Exemption" from the disclosure requirements.

For over 50 years this Advice Exemption has been properly, effectively and simply administered by distinguishing direct communications with employees from an attorney's counsel to an employer-client with communications, drafting, rewrites or recommendations concerning such communications being exempt from LMRDA's disclosure requirements and recognized as protected attorney-client communications and attorney work product.  The existing regulations have provided a clear line of demarkation; as long an employer's lawyer or consultant did not communicate directly with employees and as long as the employer remained free to accept or reject any draft materials prepared  by them (speeches, letters, written communications, etc.), they were covered by the Advice Exemption and not subject to disclosure or reporting by the employer or the counselor.

The Proposed Rule Would Eviscerate the Advice Exemption

The new Proposed Rule intentionally eviscerates any meaningful use of the Advice Exemption.  As proposed the rule provides:

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.

76 Fed. Reg. 36182 (emphasis added).

The bolded sections above make it clear that the Advice Exemption would be swallowed up by the new expansive definition of  persuader activity as now "other actions" could include discussion regarding strategy, reviews of employer drafts and myriad other ways labor attorneys currently aid their clients.  Likewise, the "in part' and "indirectly" aspects of the definition may apply to essentially any meaningful advice or counsel provided by labor counsel as a labor counsel is typically not doing his/her job well if they are not considering both the legal and practical implications of their advice.

Moreover, if even only a portion of what an employer has its labor attorney working on in part and indirectly concerns this new expansive definition of persuader activity the Proposed Rule would require disclosure of who their advisors are, how much they paid them, the area(s) they obtained their assistance on and a specific description of each task they obtained assistance on.

Final Rule Could Interfere With Employer's Standard Labor Needs

If the Final Rule does not deviate from the Proposed Rule it could mean the following typical areas of labor attorney assistance may lose the attorney-client confidentiality employers have become accustom to rely on:

• Advice on union avoidance strategy
• Supervisory training on the NLRA
• Advice on or draft pre-election communications
• Advice on or draft pre-election speeches
• Advice on or draft communications about union negotiations
• Advice on or draft strike communications
• Advice on or draft communications to unions or employees regarding grievances, information requests, and other contract administration issues
• Review of or draft Employee Handbooks, Policies and Agreement (whether or not the employer is unionized)
• Review of or draft employee communications on any issues (bonuses, policies, etc)

The Proposed Rule may not kill lawyers but it certainly is aimed at killing the attorney-client privilege and chilling employers' ability to communicate lawfully with their employees.  This is expected spawn numerous legal challenges from a wide range of groups  but also vex employers as those challenges are litigated.

Management Memo will keep readers updated as the Final Rule comes closer and will provide Management Missives on how to cope should the Final Rule resemble the Proposed Rule.