But in June 2011 the DOL said it believed companies had been “underreporting” those relationships. It then proposed changing the definition of persuader to extend far beyond anyone who communicates directly with employees to include attorneys who work with companies on a number of issues that affect the workplace.
The proposed rule is clearly aimed at companies that could be involved in a union-organizing campaign, but it would ultimately muzzle an employer’s proactive efforts to foster a positive workplace environment. For instance, a company might ask its legal counsel to evaluate its vulnerabilities and make recommendations for improvement. As a client, a company would expect this work to be done confidentially. But under the proposed rule, it could no longer conduct such evaluations in private. If a company were to hire a law firm, a union would likely pay close attention and could gain access to previously confidential information.
The proposed rule is so broad that it could entrap companies that have no union-related issues at all. The change would make public an astonishing number of the day-to-day private actions of running a business. “Virtually nothing involving labor relations will be exempt,” stated the Society for Human Resource Management, which represents human resource professionals, in comments written to the DOL.
Does your company have a policy regarding how your employees use Facebook, Twitter and the like? The proposed rule effectively says that if your company hires outside counsel to get advice on a labor issue, including a social media policy, you would have to disclose the relationship in a report detailing whom you hired, why, and how much you paid. That report would be available to unions, your competitors and your customers.
Do you share a lawyer with a company that has unionization issues? The DOL’s proposed rule also affects you. Once a law firm or consultant is labeled a persuader, all labor-related work it does for any client has to be disclosed at the risk of criminal penalties. What will many organizations do as a result? Call no one—which is exactly what proponents of the rule hope will take place.
The proposed change would fundamentally alter the confidential attorney-client relationship that has existed since this nation was formed. The American Bar Association, careful to take the side of neither unions nor management, has come out against the proposal, calling it “an unjustified and intrusive burden on lawyers and law firms and their clients.” The Association of Corporate Counsel says it runs “directly contrary to an attorney’s ethical obligations in maintaining client confidences” and, citing the 50 years of precedent, requests that the DOL “explain why its predecessors for over a half-century have been ‘wrong.’”
Beyond the enormous privacy implications, this rule would have a big economic cost. In a July 19 report, the U.S. House Committee on Oversight and Government Reform describes a flood of federal regulation that is holding back economic growth. This rule was one of 18 problematic new regulations it cited, and its estimated annual cost was $100 million.
The fear is that partisan politics will push this change through, perhaps after the presidential election, when there is less concern about alienating voters. To prevent that, it is imperative that employers take on this issue directly. Employers successfully defeated another union-related proposal put forth last year by the National Labor Relations Board that would have expedited the union election process, making it easier and faster for unions to win a union campaign. The rule was finalized, but the U.S. Chamber of Commerce sued, and the U.S. District Court for the District of Columbia ultimately found it invalid.
Employers need to step up and heed this example to prevent this rule change from becoming law. The sanctity of your relationship with one of your most trusted advisors—your counsel—and the fundamental right to attorney-client confidentiality are at stake.
Lotito is an employment and labor law attorney representing the labor interests of numerous Fortune 100 companies and has testified repeatedly before Congress and the Equal Employment Opportunity Commission on regulatory and legislative matters.