Hunton Employment & Labor Perspectives

The Department of Labor has recently announced a regulatory initiative that would narrow the “advice exception” to the reporting requirements of section 203 of the Labor-Management Reporting and Disclosure Act (LMRDA).  Section 203 requires employers to annually report via Form LM-10 any agreement or arrangement with a third-party consultant to persuade employees as to the collective bargaining rights, or to obtain certain information about the activities of employees or a labor organization involved in a labor dispute with the employer.  The retained consultant must also file a report concerning the agreement or arrangement (Form LM-20).  However, one of the statutory exceptions in section 203(c) provides that no report need be filed when the consultant gives “advice” to the employer.

The Department’s current policy is to construe the “advice exception” broadly to exclude arrangements where the consultant has no direct contact with employees.  This excludes, for instance, situations where the consultant coordinates a campaign to defeat a union organizing effort, so long as the consultant does not contact employees directly.

The Department now views this policy as overly broad.  It intends to publish notice and comment rulemaking to consider a narrower interpretation of the “advice exception” that more closely implements the Department’s new interpretation of the intent of the LMRDA.  The Department’s goal is twofold:  to provide greater labor-management transparency for the public, and more information to workers to ensure effective participation in the workforce.

The Department has announced a Notice of Public Meeting where interested persons can provide comments, to be held May 24, 2010 in Washington, D.C.    Interested participants can register by calling 202-693-0123 or sending an email to olms-public@dol.gov.  At the same time, the Department will seek comments on whether electronic filing should be mandatory for the Form LM-10 and LM-20 reports.

The rulemaking process takes some time, so new regulations are not likely to be finalized for several months.  However, if the Department narrows the “advice exception” as planned, the impact on employers could be significant.  Employers will no longer be able to shield third-party arrangements from reporting simply by isolating consultants from direct employee contact.  A wider range of consulting arrangements will be open to public scrutiny.  Rather than face increased public reporting, employers may elect to perform in-house more of the activities designed to persuade employees as to their bargaining rights.  Employers will have to weigh the benefit of experienced third-party assistance against the cost of public disclosure.