Hunton Employment & Labor Perspectives

The U.S. Department of Labor (DOL) recently announced that it will propose new regulations that potentially could expand employers’ and labor consultants’ reporting obligations under Section 203(c) of the Labor-Management Reporting and Disclosure Act (LMRDA). This may require employers to disclose some information that currently is not reportable, such as information related to advice from labor consultants and perhaps even attorneys.

The LMRDA requires employers on an annual basis to report fees paid to labor consultants who engage in activities designed to persuade employees not to unionize (commonly referred to as “persuader activities”).  Similarly, any labor consultant who engages in persuader activities also must file an annual report indicating the amount and source of any compensation received for such activities.  The DOL has interpreted these reporting obligations to apply to persuader activities of attorneys as well as labor consultants.

The LMRDA’s reporting requirements have long been of concern to consultants, attorneys, and employers insofar as they require disclosure of otherwise confidential professional relationships and use of private funds for such activities.

Section 433(c) of the LMRDA provides an exception for advice work.  To the extent the work performed by a management attorney or a labor consultant is limited to advice directed to the employer and its supervisors, as opposed to persuader activities directed to employees, the advice exception is a “safe harbor” from LMRDA reporting requirements.

In its December 7 announcement, the DOL indicated that its new proposed rule will narrow the scope of the advice exception.  According to the DOL, “a narrower construction would better allow for the employer and consultant reporting intended by the LMRDA.”  Although currently the DOL has provided no further details as to how exactly it intends to narrow the advice exception, there is little doubt that the new proposed rule will require employers and labor consultants to report information about relationships and expenditures that currently would be deemed confidential.

If the new proposed regulation proceeds in the direction indicated by the DOL, it should draw strong criticism from employers, labor consultants, and attorneys.  This would be yet another step in the rapid march toward increased oversight and regulation of employers in order to create a more favorable climate for unions.  The DOL acknowledged that it expects a negative response from employers and stated that it plans to hold a public meeting to discuss the new regulations.  Once published in the Federal Register, the new rule will be subject to a mandatory public review and comment period, in which all those concerned about the DOL’s actions will have an opportunity to express their thoughts.