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.



By Adam C. Abrahms and Steven M. Swirsky

In another major defeat for President Obama’s appointees to the National Labor Relations Board (NLRB or Board), the US Court of Appeals for the DC Circuit found that the Board lacked the authority to issue a 2011 rule which would have required all employers covered by the National Labor Relations Act (the “Act”), including those whose employees are not unionized,  to post a workplace notice to employees. The putative Notice, called a “Notification of Employee Rights Under the National Labor Relations Act,” is intended to ostensibly inform employees of their rights to join and be represented by unions and to engage in other activity protected by the Act. The rule would also have made it an unfair labor practice for an employer to fail to post the required notice and such failure also could be considered proof of anti-union animus in other Board proceedings.

Although proposed in 2011 and scheduled to become effective on April 30, 2012, the requirement has yet been put into effect. As we discussed previously, last year, the US District Court for the District of Columbia had held that the Board lacked the authority to make it an unfair labor practice for an employer to fail to post the notice, holding that this exceeded the Board’s authority under the Act. Just prior to the rule going into effect, the DC Court of Appeals issued an emergency injunction in support of the District Court’s opinion and the NLRB opted to not enforce the rule pending the appeal.

Perhaps what is most noteworthy about the Court’s recent opinion, authored by Senior Circuit Judge Randolph, is the Court’s reliance on employers’ free speech rights which are protected by Section 8(c) of the Act. That section of the Act ensures employers  the right  to communicate their views concerning unions to their employees. The Court noted that while Section 8(c) “precludes the Board from finding non coercive employer speech to be an unfair labor practice, or evidence of an unfair labor practice, the Board’s rule does both.” That is because under the rule an employer’s failure to post the required notice would constitute an unfair labor practice and the Board’s rule would have allowed the Board to “consider an employer’s ‘knowing and willful’ noncompliance to be ‘evidence of anti union animus in cases in which unlawful motive [is] an element of an unfair labor practice.”

The Court focused on the question of the right of employers to “free speech,” under both Section 8(c) of the Act and under the First Amendment to the Constitution, noting that the rule would have required employers to disseminate information and that “the right to disseminate another’s speech necessarily includes the right to decide not to disseminate it,” relying on analysis from prior Supreme Court and appellate court decisions which it referred to as “compelled speech” cases.

Interestingly, the Court’s conclusion that the Board’s rule violates Section 8(c) because it makes an employer’s failure to post the Board’s notice an unfair labor practice, and because it treats such a failure as evidence of anti-union animus, suggests the Board might be able to find an alternate route to a notice posting requirement if it did not seek to create such a remedy for an employer’s failure to post the notice.  However, the Court refused to leave the portion of the Board’s rule requiring the Notice posting in effect even without the enforcement and remedial provisions, because they were an inherent part  of the Board’s purpose in adopting the rule.  For now the beleaguered Board will need to decide whether it wishes to appeal this decision to the Supreme Court, attempt to craft  a new rule with the currently constituted Board that this same Court of Appeals has ruled was unconstitutionally appointed in its Noel Canning decision or postpone any action until a new Board is confirmed by the Senate.

In the past week media reports abound regarding a controversial allegedly “anti-union” statement made by a high level executive associated with the iconic snack cake Twinkies.  As widely reported late last year, the original Twinkie maker, Hostess Brands, Inc.,  was forced to close, liquidate and lay off its entire unionized workforce, publicly blaming the recalcitrance of its unions for the company’s downfall.  However, these statements did not cause this most recent controversy.  Rather, it was comments from an executive connected with Hostess Brands LLC, the newly formed company which acquired many of the assets of the bankrupt predecessor, including the rights to make Twinkies, which spurred public attention.

As the snack cake savior prepares to reopen plants and hire a new workforce, interest has swirled as to when and how the new company would operate.  Specifically, in an April 24th Wall Street Journal article the executive opined of the new Twinkie maker that “We do not expect to be involved in the union going forward.”

This comment sparked controversy causing Hostess Brands LLC to walk back or clarify the statements and leading to some to opine that executives should not comment on labor matters.  In fact, the headline of a May 2nd Law360 article asserted that “Silence Can Be Golden.”  This is not the first labor or union related comment by a high level executive of a company to generate controversy and it was met with predictable attention.  The question is it advisable or practical to attempt to silence executives on labor matters?

Each situation will be different and certainly there will be times where public comment is not advisable, however, there are other times where the opinion or position of the company, announced from the highest levels, can advance an employer’s labor goals or even support corporate or marketing efforts.  For example, allowing employees, investors, customers and/or suppliers know what a company intends or is prepared for can be reassuring and yield positive results.  Informing employees of the realities or risks associated with union may even be considered the ethical or honest thing to do.  When crafted and used properly such comments can be a powerful weapon, both in communicating to employees and the market.  In recognition of this, and acknowledging that unions are rarely silent, self-imposed unilateral disarmament is not always the best option.

To be clear, compliance with the National Labor Relations Act is full of pitfalls, especially under the current aggressively pro-union Board, and comments can result in legal and PR issues.  That said, employers and their executives should start by understanding they too have rights and that Section 8(c) of the Act protects the privilege of every employer to engage in free speech.  Specifically, Section 8(c) guarantees employers to right to communicate establishing:

The expressing of any views, argument, or opinion, or the dissemination thereof, whether in written, printed, graphic, or visual form, shall not constitute or be evidence of an unfair labor practice under any of the provisions of this Act, if such expression contains no threat of reprisal or force or promise of benefit.

This allows employers and executives to, among other things, lawfully communicate in the following ways:

  • Assert facts such as “the employees did not get paid during the strike and ended up losing their jobs after listening to union leaders.
  • Express opinions, any thing from “I think the unions resulted in the closure of our predecessor’s plants and lay off their employees” to “I think the unions sucked the filling out of the Twinkies and left nothing for the employee’s future.
  • Share their experiences, for example, “We sat through the discussions with the union during the bankruptcy and let them know we would be forced to lay off employees without concessions but the union refused to agree to a reasonable compromise and the employees all lost their jobs.”

Moreover, the law permits employers to have an affirmative position and policy disfavoring union involvement in their business or asserting a tough line bargaining philosophy.  For example, it is lawful for any employer, or executive, to assert in policy or comment:

  • The Company’s position is that while people should be free to join or not join a union, we believe we are the kind of company where employees will decide they do not need a union to speak for them.  We are committed to informing our employees of the reasons we are opposed to third party interference and taking all appropriate actions to lawfully maintain our union free status.

Given the law, certainly establishing a policy to gag executives on labor issues is an a option, but a more realistic and effective approach is to involve and (sparingly) utilize the top executives in labor relations.  In doing so executives should be guided by established corporate policy, educated and prepared on not only what and when to communicate but the process to make sure communications are both legally and strategically appropriate.

 Management Missives

  • Executives and management alike should feel empowered by labor relations communications, not stifled. This is possible with proper legal oversight and preparation.
  • The cornerstone of any labor relations communications strategy should be a written and established policy detailing the corporate position on labor issues.  Such policies can be phrases as Labor Relations, Third Party Interference, Union Free Status or another similar policy which best encapsulates the corporate position.  In developing the policy is it important both to make sure that it is in compliance with the NLRA and also that it has the approval of the highest levels of executive leadership.  Their buy in can be of paramount importance when and if the policy comes in to play.
  • Executives should not only approve of the policy before it is adopted but time should be invested in making sure they understand the policy and how it can be used by them as a guide and tool to advance the company’s objectives.
  • Executives should be educated, beyond the policy, on the do’s and don’ts related to labor related communications.  Obviously, time constraints will typically not permit a full training but quick instruction during a board or management meeting and refresher emails or notices when labor issues are heating up not only guard against potential liability but provide executives needed tools.
  • As any labor related communication has the potential to lead to an unfair labor practice charge, executives should be advised to work with labor counsel, as well as labor relations and public relations, prior to communicating.  This includes any type of communication, whether it be about an intent to operate non-union, responses to union organizing, issues involved in union negotiations, strike related comments or merely general comment of unions.
  • Remember, no two situations are identical.  Employers and their executives need to think strategically about using their Executive Privilege to communicate lawfully about labor matters.