Industry Market Trends

Will New Labor Regulations Unfairly Burden Employers?

Sep 03, 2013

The Obama administration recently released its agenda for regulatory rule changes, sparking controversy about rules that could place new burdens on employers. The Spring 2013 rule list outlines the rules federal agencies expect to propose or issue over the next six months. 

The Workplace Policy Institute, operated by labor law firm Littler Mendelson, says the new agenda "reveals that the Obama administration plans to further its aggressive rulemaking plans over the coming months" and urges employers to "prepare for significant developments ahead."

The most controversial regulation expected to come down from the U.S. Dept. of Labor's (DOL) Office of Labor-Management Standards (OLMS) has to do with "persuader" activity. It refers to employers' practice of hiring attorneys and consultants to "directly or indirectly persuade workers concerning their rights to organize and bargain collectively," according to the DOL. The revised rule is scheduled to go into effect in November.

Richard B. Hankins, partner at labor relations law firm McKenna Long & Aldridge LLP, told IMT that he feels the regulation is deeply flawed.

"The most troubling aspect of the proposed regulations is the intrusion into privileged and confidential attorney-client communications," he said. "The proposed regulations attempt to redefine what constitutes legal advice in a way that is unprecedented."

Nick Tindall, direct of government affairs for the Association of Equipment Manufacturers (AEM), echoed Hankins's sentiments. AEM believes that "the proposed expansion of the persuader rule... would move the rule far beyond its original intent," he told IMT. Furthermore, the rule could place a special burden on mid-size and smaller companies, he said.

"This dramatic shift in policy would harm small and medium-size businesses that typically cannot afford in-house labor law experts on staff," he said. The action "would restrict employers' access to sound legal advice as they navigate existing U.S. labor law, and leave them at a disadvantage against larger companies and organized labor, who would not be affected by the change."

The new persuader rules could even result in "IRS-style investigations into all attorney-client communications on the subject of unions in an effort to deem those communications 'reportable,'" Hankins said. Such unprecedented changes to labor regulations go way too far, he said, adding, "We believe the regulations will ultimately be struck down by the courts."

Richard Trumka, president of the AFL-CIO, has called the persuader rule change "a modest step" and "a common sense approach to clean up an outdated system and help ensure that working women and men can make their own choice about whether to form a union." He said the 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."

The persuader issue arises from the Labor Management Reporting and Disclosure Act of 1959 (LMRDA). The law doesn't specifically regulate the activity of persuaders but does establish reporting requirements for it. Section 203 of that law exempts employers from reporting the activity of consultants if all they do is give advice. But the rules being promulgated by the DOL define advice as "the plain meaning" of the word -- "an oral or written recommendation regarding a decision or course of conduct."

Under the agency's definition, an employer would have to report such activities as planning or orchestrating a campaign or program in opposition to union organizing or a collective bargaining effort, even if the consultant had no direct contact with employees. The DOL contends that the existing, broader definition has resulted in "significant under-reporting" of persuader agreements  between employer and consultant. "Better disclosure is critical to helping workers make informed decisions about their right to organize and bargain collectively," the agency says.

The revisions to the persuader rule drew the most fire from industry groups, but the spring agenda included other rules that could affect employers, according to the Workplace Policy Institute.

The Occupational Safety and Health Administration (OSHA) plans to issue nine proposed rules and nine final rules. In addition, eight items are in pre-rule status. The Office of Federal Contract Compliance Programs (OFCCP) is proposing new obligations for government contractors, including regulations pertaining to affirmative action and sex discrimination. Also affecting government contractors is a new set of rules from the Equal Employment Opportunity Commission (EEOC) having to do with procedures for filing complaints of disability-related employment discrimination.

A number of new rules coming out of the Internal Revenue Service (IRS) will stipulate employer requirements under the Affordable Care Act (ACA), such as the shared responsibility payment that would be imposed on employers who don't provide minimal essential healthcare coverage.

The Workplace Policy Institute stressed that employers "should not lose sight of the fact that significant new obligations could come from the regulators if not Congress," and that "employers' understanding of and preparation for these developments is more important than ever."