Pulling Back the Curtain - New Disclosure Requirements for Union-Resistance Campaigns

One of the most feared prospects for many employers is a workforce unionization effort.  Management and human resources personnel will often take vigorous measures to avoid the increased labor expense and inflexibility regarding personnel decisions that seem to invariably follow once a company becomes unionized.  A multitude of labor relations consultants offer strategies and tactics designed to combat unionization efforts and to artfully present the company’s current pro-worker stance before employees decide to affiliate with a union.  Before retaining a union avoidance consultant, however, employers need to be aware of a new reporting obligation that may weigh against a decision to use the consultant.

            Under the Labor-Management Reporting and Disclosure Act, employers have long had a duty to report to the United States Department of Labor payments to, or other financial arrangements with, unions or union officials or agents.  Disclosure was also required whenever a consultant (called a “persuader”) directly communicated with a company’s employees to attempt to persuade them to reject unionization.

            The Department of Labor recently enacted a new regulation, coming into force on July 1, 2016, that substantially broadens reportable “persuader activities.”  After that date, the Department of Labor will consider “persuader activities” to include any actions or communications intended to directly or indirectly affect employee views about unionization or collective bargaining rights.  Activities that may indirectly affect employee views include a consultant’s participation in developing and coordinating communications from managers to employees, providing materials distributed to employees, leading a union avoidance seminar for management or other representatives of the employer, developing personnel policies that are designed to discourage unionization, identifying employees for discipline or reward, or supplying information to the employer about the unionization effort, whether through surveillance or otherwise. 

            The new regulation makes an employer’s use of a labor relations consultant for any task that falls within the expanded scope of the term “persuader activity” reportable, and the reports will be made publicly accessible.  The employer will have to file a report within 90 days of its fiscal year-end.  The report must include the consultant’s name and address (including the names of the persons actually providing the services if the consultant is a business), the types of activities performed, when the activities were performed, the employees and/or unions targeted by the activities, and the dates and amounts of any payments from the employer to the consultant.  Both the president and treasurer of the employer must sign the report under penalty of perjury.  The new regulations also require the consultant to file a parallel report covering many of the same topics as the employer’s report.

            The ambit of the new rule does not encompass “advice.”  The Department of Labor indicates that no report is required if a consultant merely counsels the employer on what it can lawfully say to employees or evaluates the legality of personnel policies or proposed actions without engaging in persuader activities.  The retention of an attorney for purposes aside from persuading employees to reject unionization need not be reported.  Hence, no report is required if an attorney’s duties are limited to revising policies or communications to ensure they comply with the law, or if the lawyer merely represents the employer in collective bargaining negotiations or in a labor and employment suit before a court, administrative agency or arbitrator.   Likewise, merely surveying employees (so long as the survey is not designed to persuade employees), assessing an employer’s vulnerability to unionization or obtaining information in connection with litigation is not reportable “persuader activity.”

            Determining what is “advice” as opposed to “persuader activity” will not always be easy, and employers will not have the final say in assessing whether a report is necessary.  For example, consider an attorney retained to revise an employment policy.  Under the new regulations, the attorney would appear to be giving “advice.”  If the revised policy ends up discouraging unionization, however, that could be deemed “persuader activity.”  The Department of Labor states that, in determining whether reporting is required, the purpose for which a consultant is retained is “evidenced by any accompanying communications, the timing, or other circumstances relevant to the undertaking.”  This suggests that it will be the Department of Labor or a court that ultimately decides whether a report is needed.   The regulation additionally appears to make communications between employers and their attorneys fair game, even though the attorney/client privilege would ordinarily bar disclosure of such communications.

            Employers should also consider how the reports will be used by unions and employees seeking representation by a union.  Unions will doubtless seek maximum publicity of any damaging and/or embarrassing item contained in a report during the run-up to a unionization vote.  Employees may view reports disclosing significant payments to consultants as evidence that the employer has the financial wherewithal to pay the wages and benefits sought in a unionization effort.  The reports will also reveal the employer’s attempts to discourage a vote in favor of unionization, which employees may construe as manipulation.  Additionally, if a union brings an unfair labor practices charge after losing an election, it will certainly scrutinize these reports even more thoroughly for ammunition supporting its charge.    

          The reporting obligations imposed by the new regulations should therefore factor into an employer’s decision to retain a consultant – including an attorney – during unionization efforts.  Employers should carefully assess whether the benefits from using a consultant outweigh the detriment that may follow once the disclosure required by the Department of Labor’s new regulation is made publicly available.    

             The Labor and Employment Report addresses current issues in labor and employment law.  Please contact Seth at (312) 648-2300 or seth.matus@sfnr.com if you have any questions about this blog or any other labor or employment law issue.