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The “Persuader Rule,” Historical Underenforcement, U.S. Decline of Unions, and an International Prism

The “Persuader Rule,” Historical Underenforcement, U.S. Decline of Unions, And An International Prism.

Publication of the Final “Persuader Rule ‘Advice’ Exemption and Instantaneous Litigation

On March 24, 2016 the Office of Labor-Management Standards (OLMS) of the Department of Labor (DOL) published its very long-awaited,[1] updated Interpretation of the so-called “Advice” exemption contained in Section 203(c) of the 1959 Labor-Management Reporting & Disclosure Act (LMRDA) (29 U.S.C. Sections 401 et seq.). Upon publication, nearly instantaneously, litigation by management attorneys and/or business associations was initiated in three venues federal district courts in Little Rock, Arkansas, Minneapolis, Minnesota, and the Northern District of Texas at Lubbock.

Purpose of Persuader Rule

The general purpose of the LMRDA is to protect employees’ rights to organize and bargain collectively and, to that end the LMRDA imposes certain disclosure and reporting obligations on unions and employers, as well as “on persons who are retained by employers to engage in ‘persuader activities’” concerning employee exercise of collective bargaining rights, typically attorneys or labor relations consultants. Pursuant to LMRDA Section 203(b), within 30 days of entering into a “persuader agreement”, the employer and the persuader must file reports with the Secretary of Labor and a persuader also must file an annual report for any year in which payments are received pursuant to a persuader agreement which annual report must identify all receipts from any employers on account of labor relations advice or services, whether or not pursuant to a persuader agreement.

Pursuant to Section 203(c), however, the mere “giving of ‘advice’” does not trigger a reporting obligation. As set forth at length in the DOL’s March 24, 2016 Final Rule contained at vol. 81 Federal Register No. 57, 15924 et seq., under DOL’s original 1960 Interpretation of the “advice” exemption, labor relations consultants were required to report arrangements to draft speeches or other written materials to be delivered or disseminated to employees for the purpose of persuading them as to their right to organize and bargain. Two years later, however, DOL revised its position to say that reporting was not required if the employer retained the “right to accept or reject” the materials proffered. Subsequently, in the 1980s, DOL again reduced the reporting obligation of contractors by providing that no reporting was required absent direct contact with employees. As set forth in the Executive Summary to the Final Rule,

“Under this interpretation, labor relations consultants to employers avoided reporting a broad category of activities undertaken with a clear object to persuade employees regarding their rights to organize or bargain collectively.”

In the Final Rule, the DOL explains that, based upon its “consideration of contemporary practices under the federal labor-management relations system,” it is revising its interpretation, “consistent with the Department’s original interpretation,” to better effectuate Section 203’s requirement that consultants report persuader activities. The DOL also cites data showing that employers hire consultants to direct formulaic, anti-union campaigns in over 70% of representational elections,[2] while the Department receives only a very small number of direct persuader reports. DOL cites a number of peer-reviewed academic articles substantiating that “as the size and sophistication of the consultant industry has grown, the effectiveness of the law on consultant disclosure and reporting has diminished.”

Additionally, DOL cites Congressional subcommittee reports, including a 1980 report characterizing the extent and effectiveness of employer and consultant reporting under the LMRDA as a “virtual dead letter, ignored by employers and consultants and unenforced by the DOL,” and the subcommittee’s admonishment of the DOL in 1984 for failing to respond to such report.[3]

DOL’s stated rationale for the Persuader Rule is that by knowing that a third party is hired by their employer and is the source of disseminated information, employees “will be better able to assess the merits of the arguments directed at them and make an informed choice about how to exercise their rights.”[4] The Department emphasizes Congress’s intent to direct such disclosures to “workers, the public and the Government” and contends that such reporting is integral to its statutory mission to “foster, promote and develop the welfare of wage earners, to improve their working conditions and advance their opportunities for profitable employment” and to assist in “ensuring ‘industrial peace.’” DOL concludes in its Executive Summary that the resultant “underreporting of persuader agreements results in loss of the transparency intended by Congress and is…to the detriment of an informed workforce, collective bargaining rights and stable labor relations.”[5]

DOL Response to —–Management Objections

The bulk of discussion in the Final Rule is devoted to addressing comments received pursuant to the NPRM and the principal objection from management attorneys and business associations, that the revised Interpretation is a “’catch-all,’ sweeping in all activities that are ‘related’ to persuasion, including advice, thus conflating ‘advice’ and ‘persuasion.’” DOL rejoins that lacking in such opposition

“is any persuasive argument that the ‘soup to nuts’ persuader services offered by attorneys should be shielded from employees and the public while the very same activities would be reported by their non-attorney colleagues in the union avoidance industry.”

DOL further cites judicial precedent rejecting what DOL characterizes as “speculative” and “anecdotal” opposing arguments, that the persuader rule as presently interpreted would impinge upon employers’ First Amendment rights, attorney-client privileges, or ability to secure legal representation.[6]

Opposing Judicial Actions on Business’s Applications for Injunctive Relief

The first court to rule was the U.S. District Court for the District of Minnesota in Labnet Inc. v. Perez. Therein, on June 22, 2016, District Judge Patrick J. Schiltz issued order denying the plaintiffs’ motion for temporary restraining order or for preliminary injunction. Labnet is an association of law firms representing management in labor and employment matters and the additional plaintiffs in that action are members of Labnet. While concluding that plaintiffs were likely to succeed in their claim that portions of the new rule conflict with terms of the LMRDA,[7] the court, weighing the relevant four factors on application for stay of enforcement of regulation,[8] determined that plaintiffs had failed to establish threat of irreparable harm and concluded it was “preferable to let the regulation take effect and leave plaintiffs to raise their arguments in the context of actual enforcement actions.”[9] As to plaintiff’s First Amendment challenge, the court held that an “exacting” (vs. a “strict”) scrutiny standard applied and, deeming political election cases analogous, held that DOL had established the requisite substantial relation between the disclosure requirement and an important governmental interest. With explanation the court also found the plaintiffs had failed to establish the Final Rule as interpreted was “vague” or “arbitrary and capricious.”

Only five days later, Senior District Judge Sam Cummings of the Northern District of Texas issued an 86-page Preliminary Injunction Order containing “111 Findings of Fact” and “190 Conclusions of Law,” the content and phraseology of which causes one to wonder (pending confirmation by review of plaintiffs proposed order for reasons unknown not accessible on PACER) if such order were predominantly drafted by the plaintiffs, inasmuch as such Findings and Conclusions are frequently worded inaccurately and overbroadly (from the plaintiffs’ perspective) (Finding number 19), adopt as Findings of Fact merely speculative assertions ( Findings numbers 37, 159, 167) and omit—and even deny the existence of – policy justifications and supporting evidence set forth in the Final Rule (Findings numbers 72, 74, 96-98, 107) and in the defendants’ brief in opposition.[10]

Judge Cummings quotes from Diana Furchtgott-Roth’s May 8, 2013 “white paper” for the Capital Research Center, titled “Unfriendly Persuasion: Will the Labor Department Disarm Employers in their Struggle with the Unions?” While Ms. Furchtgott-Roth’s estimated astronomical costs associated with implementation of what she calls the “gag rule” may be the focal point of her article, she also rings warning bells that the rule “opens the way” for union campaigns not only against individual companies, but also against law firms that help them and the firms’ other clients[11] and that consequent lawyer shortages and constraints on companies’ ability to obtain advice will result in company errors and poor decisions.

It remains unknown as of this date whether or not the Department will appeal Judge Cummings’ decision.

Controversy in U.S. Political Context

A June 29, 2016 Wall Street Journal editorial piece remarked that the “real goal” of the amended interpretative advice is “to muzzle employers and help union organizers,” wholly subscribing, as did Judge Cummings, to management’s speculation of “chilling effect on employers who will be discouraged from engaging their services.” See, Terrance B. McGann, “Persuader Rules: Requiring the Middlemen to come out from the Shadows” (ABA Section of Labor and Employment Law 2014 Midwinter Meeting). Indeed, Republicans have also proposed a Congressional Resolution (H.J. Res. 87) to block the persuader rule which, if passed, would prevent the DOL from implementing the rule without express Congressional authorization.

Yet, “the authors of the LMRDA [did, in fact, believe that inasmuch as union-busting was] disruptive of harmonious labor relations,” such activities “should be exposed to public view.” Ibid., citing 76 Fed Reg. at 36179. Indeed, as the Fifth Circuit found in Price v. Wirtz (5th Cir. 1969) 412 F2d 647, the “sanction of goldfish bowl publicity” for the lawyer who wanted not only to serve clients in labor relations matters encompassed within Section 203(c) but who wanted also to wander into the legislatively suspect field of a persuader” was the principal method of the LMRDA to “neutralize the evil of persuaders,” whose practices the Congress determined to be “detrimental to good labor relations and the continued public interest.” And as any logician must, this labor relations attorney-practitioner, from her vantage point as arbitrator and mediator, does, recognize merit to DOL’s elementary position, that “the shift from consultants directly handing out leaflets to having supervisors distribute them does not change the leaflet’s message from persuasive activity to that of advice.” Ibid., 6.

As Gwen Thayer Handelman wrote in “Tears and Fears: The Illusory Ethical Issues Raised by Strengthening Enforcement of the LMRDA Persuader Reporting Rules, presented at the ABA Section of Labor and Employment Law 2012 Midwinter Meeting, a fair distinction may be drawn between “legal advice that enjoys the attorney/client privilege,” on the one hand, and “attorney communication related to obtaining and providing business consulting services which is the subject of public interest,” on the other. Additionally, McGann wrote, further quoting Handelman, “when an attorney’s scope of legal advice or representation facilitates the employer’s desire to influence the decisions of its employees, its protection from disclosure may be jeopardized by an overriding government interest:” “the obligation of confidentiality is counterbalanced by public interest in disclosures enshrined in law such as the LMRDA.”

Handelman submits that “engaging in persuading activity is stepping away from the role of legal advisor” and that “the DOL proposes to draw the line between ‘advice’ and “persuader activity’ precisely where the line is drawn between ‘legal’ advice and ‘business’ advice under the attorney-client privilege. As far as any “muddy waters,” she says, “the waters already were muddied by labor lawyers who waded into the persuader business.”

Notably, as argued by McGann, ABA Model Rule of Professional Conduct Rule 1.6(b)(6) allows that a lawyer may reveal information relating to representation of a client to the extent necessary to comply with other law, which includes the LMRDA. The mere facts of legal consultation, client identities, attorneys fees, and the scope and nature of the engagement, are not deemed privileged information pursuant to the Restatement of Law Governing Lawyers, as affirmed by the 6th Circuit in Humphreys, Hutcheson and Mosley v. Donovan (6th Cir. 1985) 755 F2d 1211, 1219.[12]

In terms of the precipitous decline in union organization since Eisenhower signed the LMRDA (such decline not mentioned in Judge Cummings’ 86-page opinion), academia has widely indicated such decline that “one important factor is the ability of employers to engage in union-busting almost without restriction,” since the LMRDA forced financial disclosures from unions and their officials without balancing regulations of management consultants.

“The tremendous growth in the size, scope and sophistication of the union avoidance industry since the 1970s…is a recent development- and one that has contributed significantly to the current crisis of organized labor in the United States.”

John Logan, The Union Avoidance Industry in the United States, British Journal of Industrial Relations December 2006 at 652.

International Prism on The Persuader Rule and U.S. Union Decline

What is evident from review of the public debate regarding the persuader rule is the truth of another of Logan’s remarks in his 2006 journal article: “…[O]nly in the US[[13]] do employers, policy makers and (to a lesser extent) the general public consider the activities of union avoidance experts a legitimate part of mainstream industrial relations.” Ibid. [14] The uniqueness of the U.S. adversarial labor relations system also is manifest in the fact that, despite holding a permanent seat on the International Labor Organization (ILO) Governing Body, the U.S. is a party to only 14 of ILO’s 189 labor conventions and only two of the eight core conventions of the ILO.   Weissbrodt, D. and Mason, M., Compliance of the United States with International Labor Law, 98 Minnesota Law Review 1842-1843. Among others, the U.S. is not party to the ILO core labor conventions on the right to organize, the right to bargain collectively, or the right to strike.[15] See, e.g., United States Council for International Business, Issue Analysis: U.S. Ratification of ILO Core Labor Standards (April 2007) (noting its legal analysis concluded that U.S. ratification of ILO Convention 87 on freedom of association and protection of the right to organize would entail alteration of “a fundamental principle of U.S. labor law that makes union rights derivative from those of employees ….while ILO conventions are directed at establishing institutional rights and privileges for organizations….ILO conventions 87 and 98 do not create express protections for the individual employee, but instead give paramount importance to organizational rights and individual rights are derivative of the rights of the organization.”) Ibid., Appendix 1.

“Due to the amount of employer interference allowable under U.S. law, U.S. employers enjoy significantly more opportunities to communicate with workers about the consequences of unionization as compared with unions campaigning about the benefits of collective representation. [footnote omitted] The U.S. communication imbalance violates ILO standards and provides U.S. employers with an advantage throughout the organization process. [footnote omitted]

Anti-union campaigns during an organization effort are the most visible example of interference allowed by the NLRA. [Footnote omitted.] By permitting anti-union campaigns, U.S. law does not comply with ILO freedom of association and non-interference principles. [Footnote omitted]. The United States is exceptional among ILO member states in permitting anti-union campaigns. [footnote omitted].”

Ibid., at 1852. See e.g., Compra, Lance A., “Free Speech and Freedom of Association: Finding the Balance”, Cornell Univ. ILR School, Digital Commons @ILR 6-2013. Brussels: International Trade Union Confederation (challenging the recent contention of the International Organization of Employers (IOE) as to an international right to wage anti-union campaigns worldwide.)

 

[1] Pursuant to the DOL’s June 21, 2011 Notice of Proposed Rulemaking (NPRM)

[2] DOL notes that the use of consultants by employers to resist union representation has become the norm and that the consultants’ script demonstrates antipathy towards union representation and collective bargaining. DOL further notes that many lawyers have expanded their activities beyond “traditional legal services” to also “advise employers and orchestrate the same strategies as non-lawyer consultants for union ‘prevention,’ union representation election campaigns and union decertification and deauthorization.” DOL notes employers’ utilization of consultants as well during the negotiation of a first contract.

[3] DOL also notes the reference to employer substantial reliance on consultants to defeat unions in organizing campaigns and related “confrontational and conflictual activity” in the 1993 Dunlop Commission Report on the Future of Worker-Management Relations.

[4] DOL observes that detailed information concerning unions, on the other hand, is routinely required and reported and utilized by employers, consultants and the public.

[5] DOL cites to Justice Louis Brandeis’s 1913 comment: “Publicity is justly commended as a remedy for social and industrial diseases. Sunlight is said to be the best of disinfectants.” Louis Brandeis, What Can Publicity Do? Harper’s Weekly, Dec. 20, 1913. DOL analogizes to the context of “public elections where the identity of those who paid for political advertisements must be disclosed.” DOL also notes “congruent purposes served by the LMRDA and federal statutes regulating campaign financing and lobbying activities.

[6] On April 27, 2016 the House Subcommittee on Health, Employment, Labor and Pensions held a hearing entitled, “The Persuader Rule: The Administration’s Latest Attack on Employer Free Speech and Worker Free Choice”; one witness found the title of the hearing “particularly Orwellian” in view of the Rule’s goal of transparency to enable more informed choice. On the same date a consortium of law professors wrote the Committee to opine that the Final Rule comported with the Model Rules of Professional Conduct, that many laws require attorney disclosures when they engage in certain activities on behalf of clients (such as the Lobbying Disclosure Act), and that, notwithstanding the existence of such “similar reporting regimes,” there has been “little evidence that attorneys are being chilled from fulfilling their duties to clients.”

[7]While concurring with DOL that “its previous interpretation …was underinclusive”, citing from the transcript of Qs and As at hearing with the DOL counsel, the Court found “difficult to understand” DOL’s position that an activity by a consultant cannot comprise both persuader activity and also advice.

[8] Likelihood of success on merits; threat of irreparable harm if injunction not granted; balance between that harm and injury that granting the injunction will inflict on other parties; public interest.

[9] The court noted that “the rule plainly has multiple valid applications,” remarking that DOL has identified “13 types of conduct to which the rule applies, only some of which seem to require the reporting of advice that is exempt under Section 203(c). An order staying enforcement of the entire rule would therefore prevent DOL from requiring disclosure of information that it has the right (indeed, a statutory mandate) to obtain.”

[10] The court accorded dispositive weight to plaintiffs’ self-serving and speculative witness testimonies and evidence, even notwithstanding lack of fair notice and other evidentiary and rule violations prejudicing the DOL.

[11] As the Retail Industry Leaders Association, a trade lobby for large retailers put it, the Department “is putting employers in a no-win situation where seeking the guidance they need will almost certainly be used against them by organizers.”

[12] McGann also notes concurring authority from the 8th and 10th Circuits. McGann, supra, 11 note 51.

[13] “While there are complex historic and cultural reasons why American employers are more hostile to unions than are employers in other developed nations [citations omitted], union avoidance experts have contributed to the intensely adversarial nature of industrial relations in the United States.” Ibid., 669.

[14] See, e.g., Godard, John, The Exceptional Decline of the American Labor Movement, 63 Industrial and Labor Relations Review 82 (October 2009) (“…the exceptional decline of the U.S. labor movement and the various explanations advanced for it primarily reflect national founding conditions and the dominant institutional norms (and forms) to which they gave rise….[T]hese conditions and norms have engendered anti-labor mobilization biases that have been more severe than in perhaps any other developed nation;” Godard noting that, although the NLRA invested collective bargaining rights with “some level of moral legitimacy,” such rights were “doomed…because they did not conform sufficiently to U.S. institutional (including judicial) norms and values.” Ibid., 90. Godard concludes that “continuing management antipathy toward unions lies at the heart of the [unions’] decline.” Ibid., 92. Particularly illuminating is to view the “persuader rule” controversy through the lens of Godard’s cogent analysis that “the NLRA as initially passed has been viewed by many as at odds with U.S. legal precedents and constitutional traditions, representing an unprecedented increase in the power of the state to intrude into economic affairs. [citation omitted].” Ibid., 98. U.S. institutional norms and governmental policy fail to recognize union representation as a democratic right. Ibid., 99-100. See also, Befort, Stephen F., “Labor and Employment Law at the Millennium: A Historical Review and Critical Assessment” (“…[U]nion membership is symbolic of opting out of the American dream.”) The successful “hue and cry” in opposition to the NLRB’s Notice-Posting requirement is emblematic of the unique “unfitting” of the NLRA into the general panoply of U.S. employment regulation. Contrast routine notice-posting requirements of employee rights under the FLSA, OSHA, Title VII, etc.

[15] The U.S. has ratified only the core conventions on the abolition of forced labor and “the worst forms of child labor.” The U.S. has not adopted the 2014 Protocol to Convention 29, since, in connection with state subcontracting of the operation of prison facilities to the private sector in the U.S., “the private sector may profit from prison labor.” Ibid., Appendix 3.

The “Persuader Rule,” Historical Underenforcement, U.S. Decline of Unions, And An International Prism.

Publication of the Final “Persuader Rule ‘Advice’ Exemption and Instantaneous Litigation

On March 24, 2016 the Office of Labor-Management Standards (OLMS) of the Department of Labor (DOL) published its very long-awaited,[1] updated Interpretation of the so-called “Advice” exemption contained in Section 203(c) of the 1959 Labor-Management Reporting & Disclosure Act (LMRDA) (29 U.S.C. Sections 401 et seq.). Upon publication, nearly instantaneously, litigation by management attorneys and/or business associations was initiated in three venues federal district courts in Little Rock, Arkansas, Minneapolis, Minnesota, and the Northern District of Texas at Lubbock.

Purpose of Persuader Rule

The general purpose of the LMRDA is to protect employees’ rights to organize and bargain collectively and, to that end the LMRDA imposes certain disclosure and reporting obligations on unions and employers, as well as “on persons who are retained by employers to engage in ‘persuader activities’” concerning employee exercise of collective bargaining rights, typically attorneys or labor relations consultants. Pursuant to LMRDA Section 203(b), within 30 days of entering into a “persuader agreement”, the employer and the persuader must file reports with the Secretary of Labor and a persuader also must file an annual report for any year in which payments are received pursuant to a persuader agreement which annual report must identify all receipts from any employers on account of labor relations advice or services, whether or not pursuant to a persuader agreement.

Pursuant to Section 203(c), however, the mere “giving of ‘advice’” does not trigger a reporting obligation. As set forth at length in the DOL’s March 24, 2016 Final Rule contained at vol. 81 Federal Register No. 57, 15924 et seq., under DOL’s original 1960 Interpretation of the “advice” exemption, labor relations consultants were required to report arrangements to draft speeches or other written materials to be delivered or disseminated to employees for the purpose of persuading them as to their right to organize and bargain. Two years later, however, DOL revised its position to say that reporting was not required if the employer retained the “right to accept or reject” the materials proffered. Subsequently, in the 1980s, DOL again reduced the reporting obligation of contractors by providing that no reporting was required absent direct contact with employees. As set forth in the Executive Summary to the Final Rule,

“Under this interpretation, labor relations consultants to employers avoided reporting a broad category of activities undertaken with a clear object to persuade employees regarding their rights to organize or bargain collectively.”

In the Final Rule, the DOL explains that, based upon its “consideration of contemporary practices under the federal labor-management relations system,” it is revising its interpretation, “consistent with the Department’s original interpretation,” to better effectuate Section 203’s requirement that consultants report persuader activities. The DOL also cites data showing that employers hire consultants to direct formulaic, anti-union campaigns in over 70% of representational elections,[2] while the Department receives only a very small number of direct persuader reports. DOL cites a number of peer-reviewed academic articles substantiating that “as the size and sophistication of the consultant industry has grown, the effectiveness of the law on consultant disclosure and reporting has diminished.”

Additionally, DOL cites Congressional subcommittee reports, including a 1980 report characterizing the extent and effectiveness of employer and consultant reporting under the LMRDA as a “virtual dead letter, ignored by employers and consultants and unenforced by the DOL,” and the subcommittee’s admonishment of the DOL in 1984 for failing to respond to such report.[3]

DOL’s stated rationale for the Persuader Rule is that by knowing that a third party is hired by their employer and is the source of disseminated information, employees “will be better able to assess the merits of the arguments directed at them and make an informed choice about how to exercise their rights.”[4] The Department emphasizes Congress’s intent to direct such disclosures to “workers, the public and the Government” and contends that such reporting is integral to its statutory mission to “foster, promote and develop the welfare of wage earners, to improve their working conditions and advance their opportunities for profitable employment” and to assist in “ensuring ‘industrial peace.’” DOL concludes in its Executive Summary that the resultant “underreporting of persuader agreements results in loss of the transparency intended by Congress and is…to the detriment of an informed workforce, collective bargaining rights and stable labor relations.”[5]

DOL Response to —–Management Objections

The bulk of discussion in the Final Rule is devoted to addressing comments received pursuant to the NPRM and the principal objection from management attorneys and business associations, that the revised Interpretation is a “’catch-all,’ sweeping in all activities that are ‘related’ to persuasion, including advice, thus conflating ‘advice’ and ‘persuasion.’” DOL rejoins that lacking in such opposition

“is any persuasive argument that the ‘soup to nuts’ persuader services offered by attorneys should be shielded from employees and the public while the very same activities would be reported by their non-attorney colleagues in the union avoidance industry.”

DOL further cites judicial precedent rejecting what DOL characterizes as “speculative” and “anecdotal” opposing arguments, that the persuader rule as presently interpreted would impinge upon employers’ First Amendment rights, attorney-client privileges, or ability to secure legal representation.[6]

Opposing Judicial Actions on Business’s Applications for Injunctive Relief

The first court to rule was the U.S. District Court for the District of Minnesota in Labnet Inc. v. Perez. Therein, on June 22, 2016, District Judge Patrick J. Schiltz issued order denying the plaintiffs’ motion for temporary restraining order or for preliminary injunction. Labnet is an association of law firms representing management in labor and employment matters and the additional plaintiffs in that action are members of Labnet. While concluding that plaintiffs were likely to succeed in their claim that portions of the new rule conflict with terms of the LMRDA,[7] the court, weighing the relevant four factors on application for stay of enforcement of regulation,[8] determined that plaintiffs had failed to establish threat of irreparable harm and concluded it was “preferable to let the regulation take effect and leave plaintiffs to raise their arguments in the context of actual enforcement actions.”[9] As to plaintiff’s First Amendment challenge, the court held that an “exacting” (vs. a “strict”) scrutiny standard applied and, deeming political election cases analogous, held that DOL had established the requisite substantial relation between the disclosure requirement and an important governmental interest. With explanation the court also found the plaintiffs had failed to establish the Final Rule as interpreted was “vague” or “arbitrary and capricious.”

Only five days later, Senior District Judge Sam Cummings of the Northern District of Texas issued an 86-page Preliminary Injunction Order containing “111 Findings of Fact” and “190 Conclusions of Law,” the content and phraseology of which causes one to wonder (pending confirmation by review of plaintiffs proposed order for reasons unknown not accessible on PACER) if such order were predominantly drafted by the plaintiffs, inasmuch as such Findings and Conclusions are frequently worded inaccurately and overbroadly (from the plaintiffs’ perspective) (Finding number 19), adopt as Findings of Fact merely speculative assertions ( Findings numbers 37, 159, 167) and omit—and even deny the existence of – policy justifications and supporting evidence set forth in the Final Rule (Findings numbers 72, 74, 96-98, 107) and in the defendants’ brief in opposition.[10]

Judge Cummings quotes from Diana Furchtgott-Roth’s May 8, 2013 “white paper” for the Capital Research Center, titled “Unfriendly Persuasion: Will the Labor Department Disarm Employers in their Struggle with the Unions?” While Ms. Furchtgott-Roth’s estimated astronomical costs associated with implementation of what she calls the “gag rule” may be the focal point of her article, she also rings warning bells that the rule “opens the way” for union campaigns not only against individual companies, but also against law firms that help them and the firms’ other clients[11] and that consequent lawyer shortages and constraints on companies’ ability to obtain advice will result in company errors and poor decisions.

It remains unknown as of this date whether or not the Department will appeal Judge Cummings’ decision.

Controversy in U.S. Political Context

A June 29, 2016 Wall Street Journal editorial piece remarked that the “real goal” of the amended interpretative advice is “to muzzle employers and help union organizers,” wholly subscribing, as did Judge Cummings, to management’s speculation of “chilling effect on employers who will be discouraged from engaging their services.” See, Terrance B. McGann, “Persuader Rules: Requiring the Middlemen to come out from the Shadows” (ABA Section of Labor and Employment Law 2014 Midwinter Meeting). Indeed, Republicans have also proposed a Congressional Resolution (H.J. Res. 87) to block the persuader rule which, if passed, would prevent the DOL from implementing the rule without express Congressional authorization.

Yet, “the authors of the LMRDA [did, in fact, believe that inasmuch as union-busting was] disruptive of harmonious labor relations,” such activities “should be exposed to public view.” Ibid., citing 76 Fed Reg. at 36179. Indeed, as the Fifth Circuit found in Price v. Wirtz (5th Cir. 1969) 412 F2d 647, the “sanction of goldfish bowl publicity” for the lawyer who wanted not only to serve clients in labor relations matters encompassed within Section 203(c) but who wanted also to wander into the legislatively suspect field of a persuader” was the principal method of the LMRDA to “neutralize the evil of persuaders,” whose practices the Congress determined to be “detrimental to good labor relations and the continued public interest.” And as any logician must, this labor relations attorney-practitioner, from her vantage point as arbitrator and mediator, does, recognize merit to DOL’s elementary position, that “the shift from consultants directly handing out leaflets to having supervisors distribute them does not change the leaflet’s message from persuasive activity to that of advice.” Ibid., 6.

As Gwen Thayer Handelman wrote in “Tears and Fears: The Illusory Ethical Issues Raised by Strengthening Enforcement of the LMRDA Persuader Reporting Rules, presented at the ABA Section of Labor and Employment Law 2012 Midwinter Meeting, a fair distinction may be drawn between “legal advice that enjoys the attorney/client privilege,” on the one hand, and “attorney communication related to obtaining and providing business consulting services which is the subject of public interest,” on the other. Additionally, McGann wrote, further quoting Handelman, “when an attorney’s scope of legal advice or representation facilitates the employer’s desire to influence the decisions of its employees, its protection from disclosure may be jeopardized by an overriding government interest:” “the obligation of confidentiality is counterbalanced by public interest in disclosures enshrined in law such as the LMRDA.”

Handelman submits that “engaging in persuading activity is stepping away from the role of legal advisor” and that “the DOL proposes to draw the line between ‘advice’ and “persuader activity’ precisely where the line is drawn between ‘legal’ advice and ‘business’ advice under the attorney-client privilege. As far as any “muddy waters,” she says, “the waters already were muddied by labor lawyers who waded into the persuader business.”

Notably, as argued by McGann, ABA Model Rule of Professional Conduct Rule 1.6(b)(6) allows that a lawyer may reveal information relating to representation of a client to the extent necessary to comply with other law, which includes the LMRDA. The mere facts of legal consultation, client identities, attorneys fees, and the scope and nature of the engagement, are not deemed privileged information pursuant to the Restatement of Law Governing Lawyers, as affirmed by the 6th Circuit in Humphreys, Hutcheson and Mosley v. Donovan (6th Cir. 1985) 755 F2d 1211, 1219.[12]

In terms of the precipitous decline in union organization since Eisenhower signed the LMRDA (such decline not mentioned in Judge Cummings’ 86-page opinion), academia has widely indicated such decline that “one important factor is the ability of employers to engage in union-busting almost without restriction,” since the LMRDA forced financial disclosures from unions and their officials without balancing regulations of management consultants.

“The tremendous growth in the size, scope and sophistication of the union avoidance industry since the 1970s…is a recent development- and one that has contributed significantly to the current crisis of organized labor in the United States.”

John Logan, The Union Avoidance Industry in the United States, British Journal of Industrial Relations December 2006 at 652.

International Prism on The Persuader Rule and U.S. Union Decline

What is evident from review of the public debate regarding the persuader rule is the truth of another of Logan’s remarks in his 2006 journal article: “…[O]nly in the US[[13]] do employers, policy makers and (to a lesser extent) the general public consider the activities of union avoidance experts a legitimate part of mainstream industrial relations.” Ibid. [14] The uniqueness of the U.S. adversarial labor relations system also is manifest in the fact that, despite holding a permanent seat on the International Labor Organization (ILO) Governing Body, the U.S. is a party to only 14 of ILO’s 189 labor conventions and only two of the eight core conventions of the ILO.   Weissbrodt, D. and Mason, M., Compliance of the United States with International Labor Law, 98 Minnesota Law Review 1842-1843. Among others, the U.S. is not party to the ILO core labor conventions on the right to organize, the right to bargain collectively, or the right to strike.[15] See, e.g., United States Council for International Business, Issue Analysis: U.S. Ratification of ILO Core Labor Standards (April 2007) (noting its legal analysis concluded that U.S. ratification of ILO Convention 87 on freedom of association and protection of the right to organize would entail alteration of “a fundamental principle of U.S. labor law that makes union rights derivative from those of employees ….while ILO conventions are directed at establishing institutional rights and privileges for organizations….ILO conventions 87 and 98 do not create express protections for the individual employee, but instead give paramount importance to organizational rights and individual rights are derivative of the rights of the organization.”) Ibid., Appendix 1.

“Due to the amount of employer interference allowable under U.S. law, U.S. employers enjoy significantly more opportunities to communicate with workers about the consequences of unionization as compared with unions campaigning about the benefits of collective representation. [footnote omitted] The U.S. communication imbalance violates ILO standards and provides U.S. employers with an advantage throughout the organization process. [footnote omitted]

Anti-union campaigns during an organization effort are the most visible example of interference allowed by the NLRA. [Footnote omitted.] By permitting anti-union campaigns, U.S. law does not comply with ILO freedom of association and non-interference principles. [Footnote omitted]. The United States is exceptional among ILO member states in permitting anti-union campaigns. [footnote omitted].”

Ibid., at 1852. See e.g., Compra, Lance A., “Free Speech and Freedom of Association: Finding the Balance”, Cornell Univ. ILR School, Digital Commons @ILR 6-2013. Brussels: International Trade Union Confederation (challenging the recent contention of the International Organization of Employers (IOE) as to an international right to wage anti-union campaigns worldwide.)

 

[1] Pursuant to the DOL’s June 21, 2011 Notice of Proposed Rulemaking (NPRM)

[2] DOL notes that the use of consultants by employers to resist union representation has become the norm and that the consultants’ script demonstrates antipathy towards union representation and collective bargaining. DOL further notes that many lawyers have expanded their activities beyond “traditional legal services” to also “advise employers and orchestrate the same strategies as non-lawyer consultants for union ‘prevention,’ union representation election campaigns and union decertification and deauthorization.” DOL notes employers’ utilization of consultants as well during the negotiation of a first contract.

[3] DOL also notes the reference to employer substantial reliance on consultants to defeat unions in organizing campaigns and related “confrontational and conflictual activity” in the 1993 Dunlop Commission Report on the Future of Worker-Management Relations.

[4] DOL observes that detailed information concerning unions, on the other hand, is routinely required and reported and utilized by employers, consultants and the public.

[5] DOL cites to Justice Louis Brandeis’s 1913 comment: “Publicity is justly commended as a remedy for social and industrial diseases. Sunlight is said to be the best of disinfectants.” Louis Brandeis, What Can Publicity Do? Harper’s Weekly, Dec. 20, 1913. DOL analogizes to the context of “public elections where the identity of those who paid for political advertisements must be disclosed.” DOL also notes “congruent purposes served by the LMRDA and federal statutes regulating campaign financing and lobbying activities.

[6] On April 27, 2016 the House Subcommittee on Health, Employment, Labor and Pensions held a hearing entitled, “The Persuader Rule: The Administration’s Latest Attack on Employer Free Speech and Worker Free Choice”; one witness found the title of the hearing “particularly Orwellian” in view of the Rule’s goal of transparency to enable more informed choice. On the same date a consortium of law professors wrote the Committee to opine that the Final Rule comported with the Model Rules of Professional Conduct, that many laws require attorney disclosures when they engage in certain activities on behalf of clients (such as the Lobbying Disclosure Act), and that, notwithstanding the existence of such “similar reporting regimes,” there has been “little evidence that attorneys are being chilled from fulfilling their duties to clients.”

[7]While concurring with DOL that “its previous interpretation …was underinclusive”, citing from the transcript of Qs and As at hearing with the DOL counsel, the Court found “difficult to understand” DOL’s position that an activity by a consultant cannot comprise both persuader activity and also advice.

[8] Likelihood of success on merits; threat of irreparable harm if injunction not granted; balance between that harm and injury that granting the injunction will inflict on other parties; public interest.

[9] The court noted that “the rule plainly has multiple valid applications,” remarking that DOL has identified “13 types of conduct to which the rule applies, only some of which seem to require the reporting of advice that is exempt under Section 203(c). An order staying enforcement of the entire rule would therefore prevent DOL from requiring disclosure of information that it has the right (indeed, a statutory mandate) to obtain.”

[10] The court accorded dispositive weight to plaintiffs’ self-serving and speculative witness testimonies and evidence, even notwithstanding lack of fair notice and other evidentiary and rule violations prejudicing the DOL.

[11] As the Retail Industry Leaders Association, a trade lobby for large retailers put it, the Department “is putting employers in a no-win situation where seeking the guidance they need will almost certainly be used against them by organizers.”

[12] McGann also notes concurring authority from the 8th and 10th Circuits. McGann, supra, 11 note 51.

[13] “While there are complex historic and cultural reasons why American employers are more hostile to unions than are employers in other developed nations [citations omitted], union avoidance experts have contributed to the intensely adversarial nature of industrial relations in the United States.” Ibid., 669.

[14] See, e.g., Godard, John, The Exceptional Decline of the American Labor Movement, 63 Industrial and Labor Relations Review 82 (October 2009) (“…the exceptional decline of the U.S. labor movement and the various explanations advanced for it primarily reflect national founding conditions and the dominant institutional norms (and forms) to which they gave rise….[T]hese conditions and norms have engendered anti-labor mobilization biases that have been more severe than in perhaps any other developed nation;” Godard noting that, although the NLRA invested collective bargaining rights with “some level of moral legitimacy,” such rights were “doomed…because they did not conform sufficiently to U.S. institutional (including judicial) norms and values.” Ibid., 90. Godard concludes that “continuing management antipathy toward unions lies at the heart of the [unions’] decline.” Ibid., 92. Particularly illuminating is to view the “persuader rule” controversy through the lens of Godard’s cogent analysis that “the NLRA as initially passed has been viewed by many as at odds with U.S. legal precedents and constitutional traditions, representing an unprecedented increase in the power of the state to intrude into economic affairs. [citation omitted].” Ibid., 98. U.S. institutional norms and governmental policy fail to recognize union representation as a democratic right. Ibid., 99-100. See also, Befort, Stephen F., “Labor and Employment Law at the Millennium: A Historical Review and Critical Assessment” (“…[U]nion membership is symbolic of opting out of the American dream.”) The successful “hue and cry” in opposition to the NLRB’s Notice-Posting requirement is emblematic of the unique “unfitting” of the NLRA into the general panoply of U.S. employment regulation. Contrast routine notice-posting requirements of employee rights under the FLSA, OSHA, Title VII, etc.

[15] The U.S. has ratified only the core conventions on the abolition of forced labor and “the worst forms of child labor.” The U.S. has not adopted the 2014 Protocol to Convention 29, since, in connection with state subcontracting of the operation of prison facilities to the private sector in the U.S., “the private sector may profit from prison labor.” Ibid., Appendix 3.

The “Persuader Rule,” Historical Underenforcement, U.S. Decline of Unions, And An International Prism.

Publication of the Final “Persuader Rule ‘Advice’ Exemption and Instantaneous Litigation

On March 24, 2016 the Office of Labor-Management Standards (OLMS) of the Department of Labor (DOL) published its very long-awaited,[1] updated Interpretation of the so-called “Advice” exemption contained in Section 203(c) of the 1959 Labor-Management Reporting & Disclosure Act (LMRDA) (29 U.S.C. Sections 401 et seq.). Upon publication, nearly instantaneously, litigation by management attorneys and/or business associations was initiated in three venues federal district courts in Little Rock, Arkansas, Minneapolis, Minnesota, and the Northern District of Texas at Lubbock.

Purpose of Persuader Rule

The general purpose of the LMRDA is to protect employees’ rights to organize and bargain collectively and, to that end the LMRDA imposes certain disclosure and reporting obligations on unions and employers, as well as “on persons who are retained by employers to engage in ‘persuader activities’” concerning employee exercise of collective bargaining rights, typically attorneys or labor relations consultants. Pursuant to LMRDA Section 203(b), within 30 days of entering into a “persuader agreement”, the employer and the persuader must file reports with the Secretary of Labor and a persuader also must file an annual report for any year in which payments are received pursuant to a persuader agreement which annual report must identify all receipts from any employers on account of labor relations advice or services, whether or not pursuant to a persuader agreement.

Pursuant to Section 203(c), however, the mere “giving of ‘advice’” does not trigger a reporting obligation. As set forth at length in the DOL’s March 24, 2016 Final Rule contained at vol. 81 Federal Register No. 57, 15924 et seq., under DOL’s original 1960 Interpretation of the “advice” exemption, labor relations consultants were required to report arrangements to draft speeches or other written materials to be delivered or disseminated to employees for the purpose of persuading them as to their right to organize and bargain. Two years later, however, DOL revised its position to say that reporting was not required if the employer retained the “right to accept or reject” the materials proffered. Subsequently, in the 1980s, DOL again reduced the reporting obligation of contractors by providing that no reporting was required absent direct contact with employees. As set forth in the Executive Summary to the Final Rule,

“Under this interpretation, labor relations consultants to employers avoided reporting a broad category of activities undertaken with a clear object to persuade employees regarding their rights to organize or bargain collectively.”

In the Final Rule, the DOL explains that, based upon its “consideration of contemporary practices under the federal labor-management relations system,” it is revising its interpretation, “consistent with the Department’s original interpretation,” to better effectuate Section 203’s requirement that consultants report persuader activities. The DOL also cites data showing that employers hire consultants to direct formulaic, anti-union campaigns in over 70% of representational elections,[2] while the Department receives only a very small number of direct persuader reports. DOL cites a number of peer-reviewed academic articles substantiating that “as the size and sophistication of the consultant industry has grown, the effectiveness of the law on consultant disclosure and reporting has diminished.”

Additionally, DOL cites Congressional subcommittee reports, including a 1980 report characterizing the extent and effectiveness of employer and consultant reporting under the LMRDA as a “virtual dead letter, ignored by employers and consultants and unenforced by the DOL,” and the subcommittee’s admonishment of the DOL in 1984 for failing to respond to such report.[3]

DOL’s stated rationale for the Persuader Rule is that by knowing that a third party is hired by their employer and is the source of disseminated information, employees “will be better able to assess the merits of the arguments directed at them and make an informed choice about how to exercise their rights.”[4] The Department emphasizes Congress’s intent to direct such disclosures to “workers, the public and the Government” and contends that such reporting is integral to its statutory mission to “foster, promote and develop the welfare of wage earners, to improve their working conditions and advance their opportunities for profitable employment” and to assist in “ensuring ‘industrial peace.’” DOL concludes in its Executive Summary that the resultant “underreporting of persuader agreements results in loss of the transparency intended by Congress and is…to the detriment of an informed workforce, collective bargaining rights and stable labor relations.”[5]

DOL Response to —–Management Objections

The bulk of discussion in the Final Rule is devoted to addressing comments received pursuant to the NPRM and the principal objection from management attorneys and business associations, that the revised Interpretation is a “’catch-all,’ sweeping in all activities that are ‘related’ to persuasion, including advice, thus conflating ‘advice’ and ‘persuasion.’” DOL rejoins that lacking in such opposition

“is any persuasive argument that the ‘soup to nuts’ persuader services offered by attorneys should be shielded from employees and the public while the very same activities would be reported by their non-attorney colleagues in the union avoidance industry.”

DOL further cites judicial precedent rejecting what DOL characterizes as “speculative” and “anecdotal” opposing arguments, that the persuader rule as presently interpreted would impinge upon employers’ First Amendment rights, attorney-client privileges, or ability to secure legal representation.[6]

Opposing Judicial Actions on Business’s Applications for Injunctive Relief

The first court to rule was the U.S. District Court for the District of Minnesota in Labnet Inc. v. Perez. Therein, on June 22, 2016, District Judge Patrick J. Schiltz issued order denying the plaintiffs’ motion for temporary restraining order or for preliminary injunction. Labnet is an association of law firms representing management in labor and employment matters and the additional plaintiffs in that action are members of Labnet. While concluding that plaintiffs were likely to succeed in their claim that portions of the new rule conflict with terms of the LMRDA,[7] the court, weighing the relevant four factors on application for stay of enforcement of regulation,[8] determined that plaintiffs had failed to establish threat of irreparable harm and concluded it was “preferable to let the regulation take effect and leave plaintiffs to raise their arguments in the context of actual enforcement actions.”[9] As to plaintiff’s First Amendment challenge, the court held that an “exacting” (vs. a “strict”) scrutiny standard applied and, deeming political election cases analogous, held that DOL had established the requisite substantial relation between the disclosure requirement and an important governmental interest. With explanation the court also found the plaintiffs had failed to establish the Final Rule as interpreted was “vague” or “arbitrary and capricious.”

Only five days later, Senior District Judge Sam Cummings of the Northern District of Texas issued an 86-page Preliminary Injunction Order containing “111 Findings of Fact” and “190 Conclusions of Law,” the content and phraseology of which causes one to wonder (pending confirmation by review of plaintiffs proposed order for reasons unknown not accessible on PACER) if such order were predominantly drafted by the plaintiffs, inasmuch as such Findings and Conclusions are frequently worded inaccurately and overbroadly (from the plaintiffs’ perspective) (Finding number 19), adopt as Findings of Fact merely speculative assertions ( Findings numbers 37, 159, 167) and omit—and even deny the existence of – policy justifications and supporting evidence set forth in the Final Rule (Findings numbers 72, 74, 96-98, 107) and in the defendants’ brief in opposition.[10]

Judge Cummings quotes from Diana Furchtgott-Roth’s May 8, 2013 “white paper” for the Capital Research Center, titled “Unfriendly Persuasion: Will the Labor Department Disarm Employers in their Struggle with the Unions?” While Ms. Furchtgott-Roth’s estimated astronomical costs associated with implementation of what she calls the “gag rule” may be the focal point of her article, she also rings warning bells that the rule “opens the way” for union campaigns not only against individual companies, but also against law firms that help them and the firms’ other clients[11] and that consequent lawyer shortages and constraints on companies’ ability to obtain advice will result in company errors and poor decisions.

It remains unknown as of this date whether or not the Department will appeal Judge Cummings’ decision.

Controversy in U.S. Political Context

A June 29, 2016 Wall Street Journal editorial piece remarked that the “real goal” of the amended interpretative advice is “to muzzle employers and help union organizers,” wholly subscribing, as did Judge Cummings, to management’s speculation of “chilling effect on employers who will be discouraged from engaging their services.” See, Terrance B. McGann, “Persuader Rules: Requiring the Middlemen to come out from the Shadows” (ABA Section of Labor and Employment Law 2014 Midwinter Meeting). Indeed, Republicans have also proposed a Congressional Resolution (H.J. Res. 87) to block the persuader rule which, if passed, would prevent the DOL from implementing the rule without express Congressional authorization.

Yet, “the authors of the LMRDA [did, in fact, believe that inasmuch as union-busting was] disruptive of harmonious labor relations,” such activities “should be exposed to public view.” Ibid., citing 76 Fed Reg. at 36179. Indeed, as the Fifth Circuit found in Price v. Wirtz (5th Cir. 1969) 412 F2d 647, the “sanction of goldfish bowl publicity” for the lawyer who wanted not only to serve clients in labor relations matters encompassed within Section 203(c) but who wanted also to wander into the legislatively suspect field of a persuader” was the principal method of the LMRDA to “neutralize the evil of persuaders,” whose practices the Congress determined to be “detrimental to good labor relations and the continued public interest.” And as any logician must, this labor relations attorney-practitioner, from her vantage point as arbitrator and mediator, does, recognize merit to DOL’s elementary position, that “the shift from consultants directly handing out leaflets to having supervisors distribute them does not change the leaflet’s message from persuasive activity to that of advice.” Ibid., 6.

As Gwen Thayer Handelman wrote in “Tears and Fears: The Illusory Ethical Issues Raised by Strengthening Enforcement of the LMRDA Persuader Reporting Rules, presented at the ABA Section of Labor and Employment Law 2012 Midwinter Meeting, a fair distinction may be drawn between “legal advice that enjoys the attorney/client privilege,” on the one hand, and “attorney communication related to obtaining and providing business consulting services which is the subject of public interest,” on the other. Additionally, McGann wrote, further quoting Handelman, “when an attorney’s scope of legal advice or representation facilitates the employer’s desire to influence the decisions of its employees, its protection from disclosure may be jeopardized by an overriding government interest:” “the obligation of confidentiality is counterbalanced by public interest in disclosures enshrined in law such as the LMRDA.”

Handelman submits that “engaging in persuading activity is stepping away from the role of legal advisor” and that “the DOL proposes to draw the line between ‘advice’ and “persuader activity’ precisely where the line is drawn between ‘legal’ advice and ‘business’ advice under the attorney-client privilege. As far as any “muddy waters,” she says, “the waters already were muddied by labor lawyers who waded into the persuader business.”

Notably, as argued by McGann, ABA Model Rule of Professional Conduct Rule 1.6(b)(6) allows that a lawyer may reveal information relating to representation of a client to the extent necessary to comply with other law, which includes the LMRDA. The mere facts of legal consultation, client identities, attorneys fees, and the scope and nature of the engagement, are not deemed privileged information pursuant to the Restatement of Law Governing Lawyers, as affirmed by the 6th Circuit in Humphreys, Hutcheson and Mosley v. Donovan (6th Cir. 1985) 755 F2d 1211, 1219.[12]

In terms of the precipitous decline in union organization since Eisenhower signed the LMRDA (such decline not mentioned in Judge Cummings’ 86-page opinion), academia has widely indicated such decline that “one important factor is the ability of employers to engage in union-busting almost without restriction,” since the LMRDA forced financial disclosures from unions and their officials without balancing regulations of management consultants.

“The tremendous growth in the size, scope and sophistication of the union avoidance industry since the 1970s…is a recent development- and one that has contributed significantly to the current crisis of organized labor in the United States.”

John Logan, The Union Avoidance Industry in the United States, British Journal of Industrial Relations December 2006 at 652.

International Prism on The Persuader Rule and U.S. Union Decline

What is evident from review of the public debate regarding the persuader rule is the truth of another of Logan’s remarks in his 2006 journal article: “…[O]nly in the US[[13]] do employers, policy makers and (to a lesser extent) the general public consider the activities of union avoidance experts a legitimate part of mainstream industrial relations.” Ibid. [14] The uniqueness of the U.S. adversarial labor relations system also is manifest in the fact that, despite holding a permanent seat on the International Labor Organization (ILO) Governing Body, the U.S. is a party to only 14 of ILO’s 189 labor conventions and only two of the eight core conventions of the ILO.   Weissbrodt, D. and Mason, M., Compliance of the United States with International Labor Law, 98 Minnesota Law Review 1842-1843. Among others, the U.S. is not party to the ILO core labor conventions on the right to organize, the right to bargain collectively, or the right to strike.[15] See, e.g., United States Council for International Business, Issue Analysis: U.S. Ratification of ILO Core Labor Standards (April 2007) (noting its legal analysis concluded that U.S. ratification of ILO Convention 87 on freedom of association and protection of the right to organize would entail alteration of “a fundamental principle of U.S. labor law that makes union rights derivative from those of employees ….while ILO conventions are directed at establishing institutional rights and privileges for organizations….ILO conventions 87 and 98 do not create express protections for the individual employee, but instead give paramount importance to organizational rights and individual rights are derivative of the rights of the organization.”) Ibid., Appendix 1.

“Due to the amount of employer interference allowable under U.S. law, U.S. employers enjoy significantly more opportunities to communicate with workers about the consequences of unionization as compared with unions campaigning about the benefits of collective representation. [footnote omitted] The U.S. communication imbalance violates ILO standards and provides U.S. employers with an advantage throughout the organization process. [footnote omitted]

Anti-union campaigns during an organization effort are the most visible example of interference allowed by the NLRA. [Footnote omitted.] By permitting anti-union campaigns, U.S. law does not comply with ILO freedom of association and non-interference principles. [Footnote omitted]. The United States is exceptional among ILO member states in permitting anti-union campaigns. [footnote omitted].”

Ibid., at 1852. See e.g., Compra, Lance A., “Free Speech and Freedom of Association: Finding the Balance”, Cornell Univ. ILR School, Digital Commons @ILR 6-2013. Brussels: International Trade Union Confederation (challenging the recent contention of the International Organization of Employers (IOE) as to an international right to wage anti-union campaigns worldwide.)

 

[1] Pursuant to the DOL’s June 21, 2011 Notice of Proposed Rulemaking (NPRM)

[2] DOL notes that the use of consultants by employers to resist union representation has become the norm and that the consultants’ script demonstrates antipathy towards union representation and collective bargaining. DOL further notes that many lawyers have expanded their activities beyond “traditional legal services” to also “advise employers and orchestrate the same strategies as non-lawyer consultants for union ‘prevention,’ union representation election campaigns and union decertification and deauthorization.” DOL notes employers’ utilization of consultants as well during the negotiation of a first contract.

[3] DOL also notes the reference to employer substantial reliance on consultants to defeat unions in organizing campaigns and related “confrontational and conflictual activity” in the 1993 Dunlop Commission Report on the Future of Worker-Management Relations.

[4] DOL observes that detailed information concerning unions, on the other hand, is routinely required and reported and utilized by employers, consultants and the public.

[5] DOL cites to Justice Louis Brandeis’s 1913 comment: “Publicity is justly commended as a remedy for social and industrial diseases. Sunlight is said to be the best of disinfectants.” Louis Brandeis, What Can Publicity Do? Harper’s Weekly, Dec. 20, 1913. DOL analogizes to the context of “public elections where the identity of those who paid for political advertisements must be disclosed.” DOL also notes “congruent purposes served by the LMRDA and federal statutes regulating campaign financing and lobbying activities.

[6] On April 27, 2016 the House Subcommittee on Health, Employment, Labor and Pensions held a hearing entitled, “The Persuader Rule: The Administration’s Latest Attack on Employer Free Speech and Worker Free Choice”; one witness found the title of the hearing “particularly Orwellian” in view of the Rule’s goal of transparency to enable more informed choice. On the same date a consortium of law professors wrote the Committee to opine that the Final Rule comported with the Model Rules of Professional Conduct, that many laws require attorney disclosures when they engage in certain activities on behalf of clients (such as the Lobbying Disclosure Act), and that, notwithstanding the existence of such “similar reporting regimes,” there has been “little evidence that attorneys are being chilled from fulfilling their duties to clients.”

[7]While concurring with DOL that “its previous interpretation …was underinclusive”, citing from the transcript of Qs and As at hearing with the DOL counsel, the Court found “difficult to understand” DOL’s position that an activity by a consultant cannot comprise both persuader activity and also advice.

[8] Likelihood of success on merits; threat of irreparable harm if injunction not granted; balance between that harm and injury that granting the injunction will inflict on other parties; public interest.

[9] The court noted that “the rule plainly has multiple valid applications,” remarking that DOL has identified “13 types of conduct to which the rule applies, only some of which seem to require the reporting of advice that is exempt under Section 203(c). An order staying enforcement of the entire rule would therefore prevent DOL from requiring disclosure of information that it has the right (indeed, a statutory mandate) to obtain.”

[10] The court accorded dispositive weight to plaintiffs’ self-serving and speculative witness testimonies and evidence, even notwithstanding lack of fair notice and other evidentiary and rule violations prejudicing the DOL.

[11] As the Retail Industry Leaders Association, a trade lobby for large retailers put it, the Department “is putting employers in a no-win situation where seeking the guidance they need will almost certainly be used against them by organizers.”

[12] McGann also notes concurring authority from the 8th and 10th Circuits. McGann, supra, 11 note 51.

[13] “While there are complex historic and cultural reasons why American employers are more hostile to unions than are employers in other developed nations [citations omitted], union avoidance experts have contributed to the intensely adversarial nature of industrial relations in the United States.” Ibid., 669.

[14] See, e.g., Godard, John, The Exceptional Decline of the American Labor Movement, 63 Industrial and Labor Relations Review 82 (October 2009) (“…the exceptional decline of the U.S. labor movement and the various explanations advanced for it primarily reflect national founding conditions and the dominant institutional norms (and forms) to which they gave rise….[T]hese conditions and norms have engendered anti-labor mobilization biases that have been more severe than in perhaps any other developed nation;” Godard noting that, although the NLRA invested collective bargaining rights with “some level of moral legitimacy,” such rights were “doomed…because they did not conform sufficiently to U.S. institutional (including judicial) norms and values.” Ibid., 90. Godard concludes that “continuing management antipathy toward unions lies at the heart of the [unions’] decline.” Ibid., 92. Particularly illuminating is to view the “persuader rule” controversy through the lens of Godard’s cogent analysis that “the NLRA as initially passed has been viewed by many as at odds with U.S. legal precedents and constitutional traditions, representing an unprecedented increase in the power of the state to intrude into economic affairs. [citation omitted].” Ibid., 98. U.S. institutional norms and governmental policy fail to recognize union representation as a democratic right. Ibid., 99-100. See also, Befort, Stephen F., “Labor and Employment Law at the Millennium: A Historical Review and Critical Assessment” (“…[U]nion membership is symbolic of opting out of the American dream.”) The successful “hue and cry” in opposition to the NLRB’s Notice-Posting requirement is emblematic of the unique “unfitting” of the NLRA into the general panoply of U.S. employment regulation. Contrast routine notice-posting requirements of employee rights under the FLSA, OSHA, Title VII, etc.

[15] The U.S. has ratified only the core conventions on the abolition of forced labor and “the worst forms of child labor.” The U.S. has not adopted the 2014 Protocol to Convention 29, since, in connection with state subcontracting of the operation of prison facilities to the private sector in the U.S., “the private sector may profit from prison labor.” Ibid., Appendix 3.