Hunton Employment & Labor Perspectives

In prior posts, we reported on the U.S. Department of Labor’s attempt to narrow the “advice exception” to the reporting requirements under Section 203 of the Labor-Management Reporting and Disclosure Act.  Most recently, the DOL had indicated its intent to issue a final rule in March of 2014 that would narrow the well-known “advice exception” to the reporting requirement to require reporting of any consulting relationships where the consultant engages in actions or communications that would indirectly or directly persuade employees regarding organizing.  Since it was first proposed in 2011, the anticipated final rule has drawn criticism from employers and the attorneys who provide valuable legal advice to employers in the context of union organizing.  If adopted, the rule would have a significant impact on employers because they would no longer be able to avoid reporting third-party consulting arrangements by isolating consultants from direct employee interaction.  The rule could also interfere with an employer’s ability to obtain legal advice from their attorneys due to the concern that both the employer and the attorneys may incur reporting obligations as well.

Section 203 of the Labor-Management Reporting and Disclosure Act requires employers to annually report via Form LM-10 any agreement or arrangement with a third-party consultant to persuade employees as to 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 statutory exception in section 203(c) provides that no report need be filed when the consultant gives “advice” to the employer.

The Obama Administration has addressed labor and employment issues aggressively over the past two years.  The Department of Labor, under President Obama’s direction, has articulated its “Plan/Prevent/Protect” agenda and its focus on openness and transparency in labor practices.  As a result of the steps taken by the Obama Administration in 2010, the new Republican-dominated Congress may have to decide a number of regulatory and legislative measures that will directly affect labor and employment law in 2011. The following is a list of proposed regulations and legislation that employers and their attorneys should watch this year:

On May 21st, we reported on the newly-announced Department of Labor (“DOL”) proposal to narrow the “advice exception” to the reporting requirements of section 203 of the Labor-Management Reporting and Disclosure Act (“LMRDA”).  In a nutshell, section 203 requires employers to annually report any arrangement with a third-party consultant to persuade employees as to their rights to organize and bargain collectively or to obtain certain information concerning the activities of employees or a labor organization involved in a labor dispute with the employer.  The “advice exception” of section 203(c) provides that no annual report need be filed when a consultant gives “advice” to the employer.  DOL’s current policy is to construe this exception broadly to exclude arrangements where the consultant has no direct contact with employees, but DOL now views this policy as overbroad and seeks to narrow it through rulemaking, as outlined in its Spring 2010 Regulatory Agenda.

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.