New Rules Outrage Employers

Proposals from the National Labor Relations Board and the Department of Labor to streamline union elections and require more disclosures about employers' usage of labor consultants have the business community hopping mad.

Wednesday, July 6, 2011
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Union activists are calling several proposed federal rules long-overdue changes while opponents are calling them pre-election gifts from the Obama administration to its organized-labor supporters.

The new rules by both the Department of Labor and the National Labor Relations Board are designed to make union elections fairer to workers and allow them to make more-informed decisions regarding whether or not to unionize.

Management attorneys, however, charge that the new rules are unnecessary, will curtail the rights of employers, and will impose unreasonable burdens on them and the consultants they use.

The NLRB will hold an open meeting at its Washington headquarters on July 18 to give the public the opportunity to comment on the proposed rules -- which are designed to streamline union elections, speeding up the time between when a petition is filed and when a union election is held.

The Board also wants to allow for the electronic filing of petitions, defer litigation of most voter-eligibility issues until after an election is held and require employers to provide a final voter list in electronic form soon after the scheduling of an election, including -- when possible -- worker email addresses and phone numbers.

It also proposes to consolidate all election-related appeals into a single post-election appeals process and make the NLRB's review of post-election decisions discretionary, rather than mandatory.

Meanwhile, the DOL's Office of Labor-Management Services' proposal entails narrowing the advice exemption of Section 203 of the Labor-Management Reporting and Disclosure Act, which requires companies to disclose information about consultants (including attorneys), who speak to employees about unions.

The new rule would require employers to disclose information about the consultants they hire to advise them on union matters regardless of whether or not the consultants speak directly to employees.

Contending that the current interpretation of "advice" has resulted in "significant underreporting" of employer and consultant persuader agreements, the OLMS says the new rule would make it easier for employees to "make informed decisions about their right to organize and bargain collectively."

Seth Borden, a partner in the labor and employment practice at McKenna, Long and Aldridge in New York, says the DOL's new rule on consultant disclosure will impose significant new burdens on employers and could possibly dissuade consultants from offering their services in this area.

"The DOL is proposing to drastically widen the net it's casting ... ; this new rule will drag in an almost endless variety of business advisers, forcing them to disclose information about their finances, their contractual relationships and make the reporting requirements so onerous that employers are going to have to think twice about whether to avail themselves of these consultants' services," says Borden.

"On the flip side," he says, "consultants and attorneys are going to have to decide whether or not to continue in the line of business they're in -- whether this level of disclosure, and the paperwork it entails, is worth it."

Ronald Meisburg, a Washington-based attorney with Proskauer who served as the NLRB's general counsel from 2006 to 2010 and as a board member under President George W. Bush, says the OLMS proposal could require employers to disclose "sensitive" and perhaps privileged financial information not just about themselves and their consultants, but about the consultants' other clients.

"I don't think this is proper," says Meisburg. "[This proposal] is going to potentially sweep in what attorneys have long done for clients, which includes training, documentation and so forth. I think that's why Congress put in an advice exception [to the LMRDA] in the first place, to prevent this kind of problem from coming up."

Borden says the rule, if it takes effect, will have a "chilling effect" on employers and labor consultants, as both sides will need to determine whether or not each consultation they have must be disclosed under the new rule. 

However, the OLMS says the new rule is needed to combat what it says is abuse of the existing rules that prevents employees from making informed choices regarding unionization. The rule will help it enforce the LMRDA, as it was originally intended, says OLMS director John Lund, who notes it will not require employers to disclose "any privileged information." 

"This proposed rule represents our ongoing efforts to effectively administer the LMRDA," he says. The rule does not require employers to disclose consulting arrangements when the advice given involves counseling managers on what they may lawfully say to employees, ensuring the employer complies with the law or providing guidance on NLRB practice or precedent, he adds.

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Not surprisingly, union leaders are cheering the new proposals, particularly the NLRB's. They assert that, under the current rules, employers have too much leeway to dissuade workers from joining unions and to challenge election results.

The NLRB's proposed rules are, according to AFL-CIO president Richard Trumka, a "modest step" that will "reduce costly and unnecessary litigation" and make it easier for workers to decide for themselves whether they wish to be represented by a union. 

"The proposed rule does not address many of the fundamental problems with our labor laws, but it will help bring critically needed fairness and balance to this part of the process," Trumka said after the proposal was announced.   

The new rules are needed because companies today "have an enormous advantage" over unions in terms of influencing employees, says Peter Colavito, director of government relations for the Service Employees International Union.

"They are the boss, they have incredible access to workers on the job, they control the purse strings," he says. "The new rules are about eliminating ways for employers to arbitrarily slow down the process when workers have indicated they want a voice in the workplace."

However, Meisburg says, the changes are "a solution in search of a problem." The current rules work just fine for employers and employees alike, he says.

"Unions last year won about 65 percent of these elections," he says. "Ninety-five percent of the elections are held within 56 days and, frankly, to the extent to which there are outlying cases in which challenges to election results go on for a year or more, I'm not sure whether these new rules will address those cases."

The real purpose of the new rules, says Meisburg, may be to undermine efforts by companies to argue against unionization.

"I suspect one of the purposes of the proposed rules may be to shorten the timeframe before elections so that employers will have less time to communicate with employees," he says.

The NLRB's decision to implement the new rules was not a unanimous one. The sole Republican member, Brian Hayes, dissented, releasing a statement saying the new process is one that "tilts heavily against employers' rights to engage in legitimate free speech and to petition the government for redress."

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