The Labor Department’s effort to fight what it sees as union-busting by businesses is turning into a battle over the limits of one of the fundamental concepts of the U.S. legal system: attorney-client confidentiality.
A new regulation by the department, dubbed the “persuader rule,” which takes effect later this month, would force labor lawyers that advise businesses to disclose previously private details.
The top business trade groups are fighting the rule in court, and their legal arguments rely heavily on the argument that the rule would force lawyers to betray clients’ confidences or face federal prosecution. Legal groups are alarmed, too. The American Bar Association has not joined in the lawsuits, but a source there said it was closely watching them and may join in if one reaches the appellate level, since the principle of lawyer-client confidentiality is “very important to the ABA.”
Steve Bernstein, an attorney with the management-side Florida-based firm Fisher and Phillips, said lawyers who try to abide by the department’s rule could find themselves facing professional sanction from their state bar associations. “From a lawyer’s perspective, the principle of confidentiality is deeply embedded in what they do. It doesn’t lend itself to the fine distinctions that the Labor Department would impose,” he said.
The persuader rule is an expansion of a long-standing requirement under the Labor Management Reporting and Disclosure Act that lawyers hired by businesses to try to convince employees not to join a union must publicly disclose those contracts, including the financial details. Originally the rule was triggered only if the lawyers talked to or otherwise interacted with the employees. Merely advising management on labor law remained private.
The new version expands the disclosure requirement to include any “indirect persuasion” including advising clients on developing “policies, practices or actions” if the object is to persuade employees.
“Workers should know who is behind an anti-union message. It’s a matter of basic fairness. This new rule will allow workers to know whether the messages they’re hearing are coming directly from their employer or from a paid, third-party consultant … As in all elections, more information means better decisions,” Labor Secretary Tom Perez said in a March 23 statement announcing the final rule.
The rule change was initially announced in 2011, and the bar association blasted the proposal at the time. The rule was subsequently delayed for several years, apparently in an effort to narrowly tailor it to avoid challenges. Because it is technically a reinterpretation of an existing rule and not a new policy it does not require congressional approval.
The department argues in a fact sheet that the rule doesn’t require any violation of confidentiality. “It only requires the disclosure of the identity of the client, the fee arrangement, and scope and nature of the persuader agreement in cases where the consultant has agreed to provide services other than legal services — specifically, to take action with the intent to persuade employees regarding union representation or collective bargaining.”
Joshua Parkhurst, a New York attorney who represents labor unions, said he understood the critics’ concerns, but added that many management-side law firms explicitly advertise their skills in “union avoidance” campaigns. “Their work goes well beyond giving legal advice or ensuring legal compliance. When they hold themselves out as providing such services, they should not be surprised if they fall within the definition of persuaders,” he said.
The new rule prompted three major court challenges filed late last month. One was by a coalition group lead by the Chamber of Commerce. A second was filed by a coalition group lead by the National Association of Manufacturers and the Associated Builders and Contractors. A third was filed by the Worklaw Network, an association of labor lawyers.
All three make the confidentiality issue a major part of their case, noting that several state bar association rules appear to explicitly forbid what the department requires. The Worklaw Network lawsuit said the change “replaces a bright line test with a vague and subjective distinction” that could make most advice reportable.
“As an example of vagueness, the interpretation states that reporting is required if one ‘conducts a seminar for supervisors’ or ‘develops … personnel policies’ ‘with an object to persuade employees.’ In practice, every policy and procedure designed to ensure that employees are treated fairly also reduces an employer’s vulnerability to union organizing,” the lawsuit noted.
The lawsuit by the coalition led by the National Association of Manufacturers argues that the rule misstates the meaning of the word “advice” even according to the Merriam-Webster’s Collegiate Dictionary definition that the department cited in the rule.
“The reasons given by the [Labor Department] for its action are so inadequate as to give rise to an inference of pretext, indicating that the [department’s] true intent is to chill employers’ exercise of their rights to obtain expert advice necessary to communicate effectively with their employees on the subject of unions,” the lawsuit argued.
