The US Department of Labor has finally issued its long awaited Final Rule radically reinterpreting the “Advice Exemption” to the Labor Management Reporting and Disclosure Act of 1959 (“LMRDA.”). The Final Rule eviscerates any meaningful use of the Advice Exemption, which would be swallowed up by the new expansive definition of persuader activity which could include discussion regarding strategy, reviews of employer drafts and myriad other ways labor attorneys currently aid their clients including essentially any meaningful advice or counsel provided by labor counsel. The move comes just over two years to the day from the DOL’s 2014 postponement of its issuance of the Final Rule.
The Advice Exemption
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. The existing regulations have provided a clear line of demarcation; 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 Final Rule will, for the first time, require employers and their outside law firms to file frequent reports concerning their relationships more frequently than under current law. Employers and their consultants must now file reports only when consultants have communicated directly with workers. But under the new rule, they will have to file reports even if the consultants are giving certain guidance to the employer without speaking or otherwise directly communicating with employees.
Although the most visible impact of the Final Rule is likely to be in connection with union organizing efforts and employer attempts to counter union promises and messages, the Final Rule is potentially much broader and may ultimately be deemed by the DOL to require employers to disclose information about a much wider range of consultants and others who they rely upon for training, communication and other activities.
Why Has the DOL Issued This Final Rule?
While the DOL claims the rule is necessary to provide workers with information it believes they need, many others believe the real goal is to assist unions in organizing.
According to Secretary of Labor Thomas Perez, “The final rule . . . is designed to ensure workers have the information they need to make informed decisions about exercising critical workplace rights such as whether to form a union or join a union.”
The rule, first proposed by the Labor Department in 2011, will require employers and third-party lawyers and other labor consultants to disclose their relationships more frequently than under current law. Employers and their consultants must now file reports only when consultants have communicated directly with workers. But under the new rule, they will have to file reports even if the consultants are giving certain guidance to the employer without contacting employees directly.
What Comes Next
The new Final Rule, which was first proposed by the Obama Administration in June 2011, has been the subject for the past five years of intense criticism of everyone from Senators, to both employer and employee rights groups, to the American Bar Association raising serious ethical, economic and practical concerns. One consistent objection was the fact that the altered Advice Exemption contained first in the Proposed Rule and now in the Final Rule seriously interferes with and compromises the attorney-client relationship and mandates the release and disclosure of information long understood to be protected by the attorney-client, work product and other legal privileges.
It is almost certain that there will be immediate challenges in the Courts to the Final Rule as going far beyond what Congress had in mind when it passed the LMRDA almost 60 years ago, and as unwarranted and impermissible intrusion on the attorney-client relationship.
- Board of Directors / Member of the Firm