Earlier this spring, the Department of Labor issued final rules drastically changing more than fifty years of interpretation of the Labor Management Reporting and Disclosure Act of 1959, as amended. These new rules will require detailed disclosure of arrangements that employers have with attorneys and consultants for such things as advice on the content of communications with employees about unions; training of supervisors on how to talk to their employees about unions without violating the law; and even drafting handbooks and personnel manuals that contain statements that might cause employees to think they don’t need unions. The rules became effective officially at the end of April, but the date provided in the rules for enforcement is July 1.
Predictably, these rules have generated legal challenges, alleging that they violate fundamental First Amendment rights to communicate; impair the right to counsel; and exceed the authority of the DOL. In the meantime, the DOL has taken the position that the new rules will not apply to agreements entered into before July 1, or to activities after July 1 that result from agreements entered into before July 1. The following is from a filing by the DOL in one of the many pending cases:
On March 24, 2016, the Department of Labor’s (“the Department”) Office of Labor-Management Standards published a rule entitled “Interpretation of the ‘Advice’ Exemption in Section 203(c) of the Labor-Management Reporting and Disclosure Act,” 81 Fed. Reg. 15924 (“the Rule”). While the effective date of the Rule is April 25, 2016, the rule is only applicable to arrangements and agreements made on or after July 1, 2016, and to payments made pursuant to arrangements and agreements entered into on or after July 1, 2016. 81 Fed Reg. 15924. The Rule revises the reporting requirements, and related record keeping requirements, for certain agreements and arrangements entered into between employers and labor relations consultants or other independent contractors, and payments made pursuant to those agreements and arrangements. The Department will not apply the Rule to arrangements or agreements entered into prior to July 1, 2016, or payments made pursuant to such arrangements or agreements. Consequently, under the Rule no employer, labor relations consultant, or other independent contractor will have to report or keep records on any activities engaged in prior to July 1 that are not presently subject to reporting, or file the new Forms LM-10 or LM-20 (revised pursuant to the Rule) for any purpose prior to July 1.
Accordingly, employers have a Limited Time Window of Opportunity to enter into agreements with their employment law advisors. If they enter into agreements on or before June 30, 2016, they will be spared the cost and trouble of these oppressive filing obligations, even if the services are performed far into the future. Most labor firms, including Frantz Ward, are prepared with drafts ready to turn around on short notice to protect clients in this way. Regardless of how the pending challenges to the new rules turn out, this opportunity to use the DOL’s own interpretation to avoid the worst effects of the rules should not be missed.