Labor Relations Insight by Phil Wilson

Persuader: The Good, The Bad, and the Ugly

The persuader rule went final today. I’ve read the rule. All 446 pages (I don’t have a life so you can have one). Okay, I may have skimmed a few pages. Here is what you need to know about the new rule.

The Good

Here’s the good news: This rule is much improved over the proposed rule from 2011.

The Department of Labor deserves some credit for listening to its regulated community. They rolled back a number of proposals from the original rule. People who provide employee surveys or draft handbooks are (mostly) off the hook. You’re not going to have to report your association dues or conference fees. I’m just cynical enough to believe that many of these items were originally proposed just so they could be removed. But they didn’t make it into the final rule. That’s good.

Nevertheless, the final rule still creates a giant administrative burden, interferes with a lot of attorney-client relationships, and leaves open a huge number of questions. I believe the Department did a thorough job of dealing with the comments they received (a number of ours were quoted directly – most were promptly ignored). Unfortunately, they left in a lot of very troubling new rules.

The Bad: Indirect Persuasion – The One Thing You Need To Know 

The main change relates to indirect persuasion. Indirect persuasion now triggers the reporting obligation and includes the following categories:

• Planning, directing or coordinating supervisors or managers (interviewing managers, coaching communicators, drafting campaign calendar, planning meetings, etc.);
• Providing persuader materials (anything other than off-the-shelf communications drafted or developed for communication to employees including written, online, video, etc.);
• Providing a seminar for supervisors or other employer representatives (most supervisory training related to how to communicate to employees during a campaign);
• Developing or implementing personnel policies or actions (policies intended to change how someone feels about a union, or targeting individual employees to change how they feel about a union);

These activities are performed by most law firms or consulting firms during union campaigns today. Any of them trigger a reporting obligation from the attorney or consultant and the client. The first report is due within 30 days of entering the agreement to provide the indirect persuasion service. The second report, outlining the disbursements from the client and the receipts to the attorney or consultant are due within 90 days of the close of each entity’s fiscal year. The new rule applies to any consulting agreement entered into on or after July 1, 2016. Other highlights:

• As mentioned above, the vast majority of employee surveys, vulnerability assessment, handbook and policy changes will not trigger a reporting requirement;
• Most open enrollment union avoidance seminars and employee relations conferences are safe from reporting;
• Associations that do not provide persuasion services to members will not trigger the rule (they can provide off-the-shelf products to members);
• The rule does not target “protected concerted activity” and applies only to union organizing activity or collective bargaining –the lines between these areas are blurry, but protected concerted activity is virtually limitless under current NLRB interpretation and the DOL really appears focused on situations where a labor union is engaged in visible organizing activity;
• Off-the-shelf product purchases (written, video, websites, etc.) do not trigger a reporting requirement, but customizing those materials does;
• The Department is requiring all reports to be filed electronically;
• In some cases attorneys or consultants may have to report on seminars where they teach persuasion tactics and strategies for use by the employers’ supervisors, even though those employers will not have to report (this is a confusing new addition)
• Legal advice is not reportable – the DOL distinguishes between the drafting of a communication and a review (even if that includes editing or redrafting sections) where the purpose of the changes is to keep them legal.

The entire rule is over 440 pages, so there are a lot of details I’m not covering. But these are the main changes you’ll be hearing about over the next few months. 

  

There are still a LOT of open questions. The most important relates to exactly what law firms will have to report if they trigger the reporting requirement. The DOL punted on the most important reporting issue: do firms only have to report on actual indirect persuasion work, or do they also have to report on other labor relations advice for clients who they have done no persuasion work for during the year? 

 

Historically the DOL has taken the position that attorneys must report all persuasion and advice activities for all clients (even clients who received no persuader services during the year). The 8th Circuit stated in the 1985 Rose Law Firm decision (ironically this was Hillary Clinton’s old firm) that this interpretation could not have been what Congress intended. Unfortunately this is the only Circuit to rule this way. 

DOL for its part decided not to decide the issue. Instead they stated that this question relates to the LM-21 form (a form they say they will propose changes to in September of 2016). This was a really disappointing section of the rule (see pages 324-325). Law firms and the ABA strongly objected that this interpretation requires attorneys to violate attorney-client confidentiality. This is no small issue. In many states following the DOL interpretation forces attorneys to violate their state bar’s ethics rules. This will certainly be the subject of new litigation.

  

What’s Next? 

There will be a number of lawsuits attempting to stop the rule. My guess is that DOL rolled back enough to avoid getting the rule blocked. I think they would have really helped themselves by following the Rose Law Firm case on reporting advice work for other clients but they obviously aren’t listening to me. We will see. 

In the meantime you need to plan on a future where you have to report indirect persuasion. Most companies have been sitting on the sideline waiting to see what the playing field was going to look like. Now we know. It’s time to get in the game. 

We will host a webinar to go over the new rule and your next actions on next Thursday, March 31, 2016. You can sign up here. Talk to you then. Link & Comments

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Union Bailout Update

The NLRB finally opened their joint employer case with McDonald’s as their target. One of the first NLRB gambits was to shut down McDonald’s attempt to subpoena SEIU and its PR firm, BerlinRosen. McDonald’s had planned to defend itself by arguing it was allowed to protect its brand during the SEIU-sponsored 2012 fast food strikes that created the underlying ULPs in the case. While Board law generally allows franchisors to impose greater control over franchisees if they do so in the name of brand integrity, the board disingenuously (with board member Miscimarra dissenting) discounted the motives of SEIU in the action. The case is speculated to hit the Supreme Court, and could hinge on who fills that court’s vacancy. The Department of Labor has already been ramping up efforts to make joint employer an enforcement priority in FLSA and FMLA issues.

Employer handbooks continue to become a tool in the hands of the NLRB to bend employers to its will. In two recent cases, an election won by the company by a three-to-one margin was overturned because, according to the board, the handbook contained “overbroad” rules (read the article for the details). In the Dish Network decision, the solicitation policy took another hit on the chin when the NLRB narrowed the definition further, shifting the discussion from “working areas” to “working time.”

In case you were hoping that the Speciality Healthcare decision might fall to legal challenges, the Eighth Circuit appeals court recently upheld the ruling. Micro-units are not going away anytime soon.

The NLRB has had a few stumbles of its own.  An administrative law judge ruled that the board committed an unfair labor practice by not bargaining with its own union in relation to an office relocation. Although the relocation cannot be “undone,” the judge ordered the board back to the bargaining table for all other issues, and ordered the board to post a notice, signed by the board chairman and its general counsel, at all of its locations nationwide and online, stating that it will not unilaterally change working conditions of its employees without negotiating with the union.

And last but not least, the NLRB apparently has a budget problem. In a recent operations memo distributed to all of the regional offices, austerity measures were recommended to cover for the budget shortfall. It appears the litigious-happy NLRB is suffering from self-inflicted wounds.

Link & Comments

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Union Pension Woes Continue

In July 2015 the New Jersey Supreme Court upheld a move by Governor Chris Christie to allow partial contributions to public employee pension funds. The unions representing these employees took the matter to the US Supreme Court, and in February that court declined to hear the appeal, leaving New Jersey’s pension problems as is.

In a play on the “March Madness” theme, retired Teamsters organized pickets in Detroit, Kansas City, St. Paul, Columbus, and Dunn, North Carolina. The demonstrations are part of what labor pundits are calling a “wave of organized wrath” over the slashing of Teamster pension benefits. We’ve been highlighting the declining stability of union pension funds for some time, and this momentum will only accelerate. It remains to be seen whether the retirees and currently represented employees reactions and demonstrations will escalate as well.

Link & Comments

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SEIU Watch

In the continuing saga of the legal dispute between the California Hospital Association (CHA) and SEIU-UHW (Dave Regan’s organization), the judge in the case recently handed a victory to the CHA, ordering Regan’s UHW to submit to binding arbitration. The legal squabble continues to highlight the fact that the union focuses on what is best for the union organization and its staff (collection of dues) versus what is best for union members and/or consumers, which is what unions purport to do. As examples, the “sweetheart deal” under contention states that the SEIU-UHW would not “sponsor or support legislation, initiatives, or regulatory action adverse to the California hospital industry,” nor would the SEIU-UHW make any comments “raising concern about… executive compensation in health care.” In other words, as long as the CHA agreed to allow SEIU-UHW free hand to collect union dues from hospital employees, the SEIU-UHW would NOT act like it represented the “little guy” employees against the “corporate giant employer and it’s high-paid executives.”  Doesn’t sound much like a labor union, does it?

Link & Comments

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Right to Work

Right-To-Work momentum continues to build as the Colorado Senate approved a bill designed to bring Right-To-Work to that state. This is the first time such a move has gotten this far in this bellwether state, but the chances of success seem slim, in light of Colorado’s already unique labor law which requires two elections and the approval of 75% of the workforce before they can be represented by a union.

Link & Comments

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SCORE BOARD

Who are the winners (and losers) of the labor movement? Don't guess, just check the LRI Scoreboard

View this month's scoreboard (archives also located here).

Download a PDF of this month's scoreboard

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Only The Names Have Changed…

...since the Teamsters union was forced in 1988 to submit to oversight by the Independent Review Board, a Federal agency, for being in bed with the mob. The Justice Department agreed last year to phase out this oversight, but in the meanwhile, corruption continues to operate unabated in several quarters of the IBT. The IRB recently charged Rome Aloise, arguably the most powerful Teamster in Northern California, with a whole host of offenses, including racketeering and influence-peddling. The Teamsters General Executive Board must now respond to the IRB charges.

In Michigan, where right-to-work recently passed, employees who decide to exercise their right not to join the union are finding out just how rooted in old-school intimidation tactics unions still are. Their names are posted on public lists so their fellow employees can pressure and/or shun them, and union appointed safety representatives hound and harass them.

Link & Comments

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Alt-Labor

Fast food restaurants aren’t the only businesses suffering from the assault of alt-labor organizations, as Tufts University discovered recently. The Boston area school is one of the few in that region that have not signed a union-only labor agreement for construction projects. And even though not all of their projects are handled by non-union labor, a group calling itself the Tufts Labor Coalition organized a rally of 40 students, who spent an afternoon chanting and submitted a list of demands to the university.

In the era of smartphone apps, another alt-labor tool recently emerged for use by the ranks of day laborers. The app allows laborers to rate employers, log hours and wages, take pictures of job sites, and identify (down to the color and make of car) employers with “a history of withholding wages.” It will also allow the users to send instant alerts to other workers. After testing in the New York City day laborer shops, the hope is to roll the app out to all kinds of workers across the country.

Link & Comments

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Fighting Back

A number of top private universities signed a legal appeal arguing against an attempt by the United Auto Workers to overturn the Brown University case that has prevented graduate students from forming unions. The group (including Harvard, Yale and Stanford) claims that a union for such students would undermine private education by impinging on the nature of student/teacher interaction.

The U.S. Chamber of Commerce has filed a suit to block the recent Seattle ordinance allowing Uber and other for-hire drivers to unionize. Both the U.S. Chamber and several of the companies involved, including Uber and Lyft, claim the ordinance violates federal law, including the Sherman Antitrust Act and the National Labor Relations Act, arguing the ordinance would allow independent contractors to fix prices and control the market.

Link & Comments

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Labor Around the World

According to the Hans Böckler Foundation's Institute of Economic and Social Research, employees in Germany lost over 2 million work days last year to strikes or lock outs, the highest amount of time lost to labor action since the mid-1990’s.

In China, labor unrest continues to escalate as January continued to see a rise in strikes, particularly in the Guangdong province. As China struggles with economic issues similar to those faced by the rest of the world, Chinese unions mostly remain impotent and strikes are generally organized by employees themselves.

Link & Comments

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Sticky Fingers

Current charges or sentences of embezzling union officials:

• Anne Susan - LIUNA:  $18,056
• Lawrence Moyer - APWU:  $2,599
• Raymond Fujii - IUPAT:  $1,500,000
• Lowell Wreh - AFSCME:  $7,642
• John McCain - NALC:  $30,948
• Clinton Humphrey - IBEW:  $51,812
• Herbert White Jr. - USW:  $24,287

http://nlpc.org/index.php?q=union-corruption-update