    [House Hearing, 114 Congress]
    [From the U.S. Government Publishing Office]

                    THE PERSUADER RULE: THE ADMINISTRATION'S
                     LATEST ATTACK ON EMPLOYER FREE SPEECH
                             AND WORKER FREE CHOICE

    =======================================================================

                                    HEARING

                                   before the

                            SUBCOMMITTEE ON HEALTH,
                        EMPLOYMENT, LABOR, AND PENSIONS

                             COMMITTEE ON EDUCATION
                               AND THE WORKFORCE

                         U.S. House of Representatives

                        ONE HUNDRED FOURTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                 HEARING HELD IN WASHINGTON, DC, APRIL 27, 2016

                                   __________

                               Serial No. 114-47

                                   __________

      Printed for the use of the Committee on Education and the Workforce

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

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                    COMMITTEE ON EDUCATION AND THE WORKFORCE

                        JOHN KLINE, Minnesota, Chairman

    Joe Wilson, South Carolina           Robert C. ``Bobby'' Scott,
    Virginia Foxx, North Carolina            Virginia
    Duncan Hunter, California              Ranking Member
    David P. Roe, Tennessee              Ruben Hinojosa, Texas
    Glenn Thompson, Pennsylvania         Susan A. Davis, California
    Tim Walberg, Michigan                Raul M. Grijalva, Arizona
    Matt Salmon, Arizona                 Joe Courtney, Connecticut
    Brett Guthrie, Kentucky              Marcia L. Fudge, Ohio
    Todd Rokita, Indiana                 Jared Polis, Colorado
    Lou Barletta, Pennsylvania           Gregorio Kilili Camacho Sablan,
    Joseph J. Heck, Nevada                 Northern Mariana Islands
    Luke Messer, Indiana                 Frederica S. Wilson, Florida
    Bradley Byrne, Alabama               Suzanne Bonamici, Oregon
    David Brat, Virginia                 Mark Pocan, Wisconsin
    Buddy Carter, Georgia                Mark Takano, California
    Michael D. Bishop, Michigan          Hakeem S. Jeffries, New York
    Glenn Grothman, Wisconsin            Katherine M. Clark, Massachusetts
    Steve Russell, Oklahoma              Alma S. Adams, North Carolina
    Carlos Curbelo, Florida              Mark DeSaulnier, California
    Elise Stefanik, New York
    Rick Allen, Georgia

                        Juliane Sullivan, Staff Director
                     Denise Forte, Minority Staff Director
                                     ------

            SUBCOMMITTEE ON HEALTH, EMPLOYMENT, LABOR, AND PENSIONS

                       DAVID P. ROE, Tennessee, Chairman

    Joe Wilson, South Carolina           Jared Polis, Colorado,
    Virginia Foxx, North Carolina          Ranking Member
    Tim Walberg, Michigan                Joe Courtney, Connecticut
    Matt Salmon, Arizona                 Mark Pocan, Wisconsin
    Brett Guthrie, Kentucky              Ruben Hinojosa, Texas
    Lou Barletta, Pennsylvania           Gregorio Kilili Camacho Sablan,
    Joseph J. Heck, Nevada                 Northern Mariana Islands
    Luke Messer, Indiana                 Frederica S. Wilson, Florida
    Bradley Byrne, Alabama               Suzanne Bonamici, Oregon
    Buddy Carter, Georgia                Mark Takano, California
    Glenn Grothman, Wisconsin            Hakeem S. Jeffries, New York
    Rick Allen, Georgia

                                C O N T E N T S

                                  ----------
                                                                       Page

    Hearing held on April 27, 2016...................................     1

    Statement of Members:
        Polis, Hon. Jared, Ranking Member, Subcommittee on Health,
          Employment, Labor, and Pensions............................     4
            Prepared statement of....................................     5
        Roe, Hon. David P., Chairman, Subcommittee on Health,
          Employment, Labor, and Pensions............................     1
            Prepared statement of....................................     3

    Statement of Witnesses:
        Baumgarten, Mr. Joseph, Partner, Proskauer Rose, LLP, New
          York, NY...................................................    39
            Prepared statement of....................................    42
        Sellers, Ms. Sharon, President, SLS Consulting, LLC, Santee,
          SC.........................................................    56
            Prepared statement of....................................    58
        Newman, Mr. Jonathan, Partner, Sherman, Dunn, Cohen, Leifer &
          Yellig, P.C., Washington, DC...............................    66
            Prepared statement of....................................    68
        Robinson III, Mr. Wm. T., Member, Frost Brown Todd LLC,
          Florence, KY...............................................    91
            Prepared statement of....................................    93

    Additional Submissions:
        Byrne, Hon. Bradley, a Representative in Congress from the
          State of Alabama:
            Letter dated April 25, 2016, from National Association of
              Home Builders (NAHB)...................................   132
            Letter dated April 26, 2016, from National Federation of
              Independent Business (NFIB)............................   130
            Letter dated April 26, 2016, from Retail Industry Leaders
              Association (RILA).....................................   131
            Letter dated April 26, 2016, from Chamber of Commerce of
              the United States of America...........................   152
        Jeffries, Hon. Hakeem S., a Representative in Congress from
          the State of New York:
            Poverty Rankings by State (2009).........................   125
            State Right to Work Timeline.............................   127
            Unionization By State - Direct Union Membership..........   154
            Unionization By State - People Represented by Unions.....   156
        Mr. Newman:
            Appendix.................................................   159
        Mr. Polis:
            Letter from ABA Model Rules of Professional Conduct......   143
            Letter from Attorneys....................................   145
        Dr. Roe:
            Prepared statement of Ms. Paulette Brown, President,
              American Bar Association...............................     7
            Letter dated April 22, 2015, from Ms. Leslie Rultledge,
              Arkansas Attorney General, State of Arkansas...........    20
            Letter dated April 26, 2015, from Ms. Kristen Swearingen,
              Vice President of Legislative and Political Affairs,
              American Builders and Contractors, Inc. (ABC)..........    38

                            THE PERSUADER RULE: THE
                         ADMINISTRATION'S LATEST ATTACK
                          ON EMPLOYER FREE SPEECH AND
                               WORKER FREE CHOICE

                                  ----------

                           Wednesday, April 27, 2016

                         U.S. House of Representatives

                    Committee on Education and the Workforce

            Subcommittee on Health, Employment, Labor, and Pensions

                                Washington, D.C.

                                  ----------

        The Subcommittee met, pursuant to call, at 10:00 a.m., in
    room 2175, Rayburn House Office Building. Hon. David P. Roe
    [chairman of the subcommittee] presiding.
        Present: Representatives Roe, Foxx, Walberg, Guthrie,
    Byrne, Carter, Grothman, Allen, Polis, Pocan, Wilson, Bonamici,
    Takano, Jeffries, and Scott.
        Staff Present: Bethany Aronhalt, Press Secretary; Andrew
    Banducci, Workforce Policy Counsel; Janelle Belland, Coalitions
    and Members Services Coordinator; Ed Gilroy, Director of
    Workforce Policy; Jessica Goodman, Legislative Assistant;
    Callie Harman, Legislative Assistant; Christie Herman,
    Professional Staff Member; Tyler Hernandez, Deputy
    Communications Director; Nancy Locke, Chief Clerk; John Martin,
    Professional Staff Member; Geoffrey MacLeay, Professional Staff
    Member; Dominique McKay, Deputy Press Secretary; Brian Newell,
    Communications Director; Krisann Pearce, General Counsel;
    Alissa Strawcutter, Deputy Clerk; Olivia Voslow, Staff
    Assistant; Joseph Wheeler, Professional Staff Member; Tylease
    Alli, Minority Clerk/Intern and Fellow Coordinator; Pierce
    Blue, Minority Labor Detailee; Christine Godinez, Minority
    Staff Assistant; Carolyn Hughes, Minority Senior Labor Policy
    Advisor; Brian Kennedy, Minority General Counsel; Richard
    Miller, Minority Senior Labor Policy Advisor; and Marni von
    Wilpert, Minority Labor Detailee.
        Chairman Roe. A quorum being present, the Subcommittee on
    Health, Employment, Labor, and Pensions will come to order.
    Good morning, and I want to thank our witnesses for joining us
    today.
        We are here today to examine a new rule finalized by the
    Department of Labor and its impact on American workers and
    employees.
        I would like to start by saying now we are in the seventh
    year of the economic recovery, the slowest recovery in our
    Nation's history. Although we have made progress over the
    years, we have a long way to go for the economy to reach its
    full potential.
        Millions of Americans are still stuck in part-time jobs and
    what they really want and need is full-time work. Too many
    working families are struggling with stagnant wages, and the
    workforce participation rate is at its lowest point since the
    1970s.
        These are very real challenges facing middle-class families
    and advancing responsible solutions to address them should be
    the top priority of this administration. Unfortunately, this
    administration spent more time advancing the interests of big
    labor at the expense of American workers and employers, and the
    Department of Labor's ``persuader rule'' is the latest example.
    This new regulatory scheme may boost union dues, but it will do
    absolutely nothing to boost our economy or expand opportunities
    for the middle class.
        Under the guise of promoting fair and democratic union
    elections, the persuader rule upends over half a century of
    labor policy by changing the interpretation of the well-
    established ``advice exemption'' of the Labor-Management
    Reporting and Disclosure Act.
        When enacting the law in 1959, Congress wanted to ensure
    employers were able to receive basic legal advice on union-
    related matters in order to protect the ability of workers to
    hear from both sides of the debate. Now, over 50 years later,
    the administration is attempting to rewrite the law through
    executive fiat.
        There are far-reaching consequences for this dramatic
    change in longstanding labor policy. First, this extreme and
    partisan rule will chill employer free speech. Union elections
    are complex matters with a host of legal issues to navigate and
    understand. Many employers acting in good faith seek outside
    advice to ensure they are in compliance with the law when
    communicating with their employees about union elections.
        Under the persuader rule, they will face onerous, costly,
    and invasive new requirements that will force them to report
    virtually all contact with advisors, and undermine their
    ability to communicate with workers during union organizing
    campaigns. Adding insult to injury, union bosses remain exempt
    from the same requirements.
        As the American Bar Association has expressed, this is an
    attack on the fundamental right of employers to seek legal
    counsel. We are fortunate to have Bill Robinson, former
    president of the American Bar Association, with us today to
    discuss this concern in more detail.
        It is a concern shared by the State attorney generals
    across the country. As is often the case with this
    administration's flawed policies, small businesses will bear
    the brunt of the burden. Large businesses have teams of in-
    house attorneys to make sense of the confusing and complex set
    of labor rules, but small businesses do not.
        With far fewer resources, small businesses will struggle to
    navigate the maze of Federal labor rules and requirements. Some
    will become tied up in bureaucratic red tape and mistakenly run
    afoul of the law while trying to do what is best for their
    employees.
        But let me be clear, America's workers will be hurt the
    most. Union elections are not just complex legal matters. They
    are personal matters. The decision to join or not join a union
    is an important one that has a direct impact on the livelihood
    of millions of American families, their paychecks, their
    benefits, and their work schedules.
        It is critical that workers are able to hear from both
    sides and receive all the information they need to make a fully
    informed decision. They have that right. This rule will stifle
    debate and restrict worker free choice, with the sole purpose
    of stacking the deck in favor of organized labor.
        As I alluded to earlier, the real shame in all of this is
    the administration's priorities are completely out of step with
    the needs of the American people. It is time for the
    administration to focus on creating jobs and growing the
    economy instead of playing politics with policies that shape
    our Nation's workforce.
        With that, I recognize Ranking Member Polis for his opening
    remarks.
        [The information follows:]

      Prepared Statement of Hon. David P. Roe, Chairman, Subcommittee on
                    Health, Employment, Labor, and Pensions

        We are here today to examine a new rule finalized by the Department
    of Labor and its impact on America's workers and employers.
        I'd like to start by saying that we are now in the seventh year of
    the economic recovery--the slowest recovery in our nation's history.
    Although we've made progress over the years, we have a long way to go
    for the economy to reach its full potential. Millions of Americans are
    still stuck in part-time jobs when what they really need is full-time
    work. Too many working families are struggling with stagnant wages, and
    the workforce participation rate is at its lowest point since the
    1970s.
        These are very real challenges facing middle-class families, and
    advancing responsible solutions to address them should be the top
    priority of this administration. Unfortunately, this administration has
    spent more time advancing the interests of Big Labor at the expense of
    American workers and employers, and the Department of Labor's
    ``persuader'' rule is the latest example. This new regulatory scheme
    may boost union dues, but it will do absolutely nothing to boost our
    economy or expand opportunities for the middle-class.
        Under the guise of promoting fair and democratic union elections,
    the persuader rule upends over half a century of labor policy by
    changing the interpretation of the well-established ``advice
    exemption'' of the Labor-Management Reporting and Disclosure Act. When
    it enacted the law in 1959, Congress wanted to ensure employers were
    able to receive basic legal advice on union-related matters in order to
    protect the ability of workers to hear from both sides of the debate.
    Now, over fifty years later, the administration is attempting to
    rewrite the law through executive fiat.
        There are far-reaching consequences for this dramatic change in
    long-standing labor policy. First, this extreme and partisan rule will
    chill employer free speech. Union elections are complex matters, with a
    host of legal issues to navigate and understand. Many employers, acting
    in good faith, seek outside advice to ensure they're in compliance with
    the law when communicating with their employees about union elections.
    But under the ``persuader'' rule, they'll face onerous, costly, and
    invasive new requirements that will force them to report virtually all
    contact with advisors and undermine their ability to communicate with
    workers during union organizing campaigns. Adding insult to injury,
    union bosses remain exempt from the same requirements.
        As the American Bar Association has expressed, this is an attack on
    the fundamental right of employers to seek legal counsel. We are
    fortunate to have Bill Robinson, former president of the American Bar
    Association, with us today to discuss this concern in more detail. It's
    a concern shared by State Attorneys General across the country.
        As is often the case with this administration's flawed policies,
    small businesses will bear the brunt of the burden. Large businesses
    have teams of in-house attorneys to make sense of a confusing and
    complex set of labor rules. But small businesses don't. With far fewer
    resources, small businesses will struggle to navigate the maze of
    federal labor rules and requirements. Some will become tied up in
    bureaucratic red tape and mistakenly run afoul of the law while trying
    to do what's best for their employees.
        But let me be clear. America's workers will be hurt the most. Union
    elections aren't just complex legal matters, they're personal matters.
    The decision to join or not join a union is an important one that has a
    direct impact on the livelihood of millions of families--their
    paychecks, their benefits, and their work schedules. It's critical that
    workers are able to hear from both sides and receive all the
    information they need to make a fully informed decision. But this rule
    will stifle debate and restrict worker free choice--with the sole
    purpose of stacking the deck in favor of organized labor.
        As I alluded to earlier, the real shame in all of this is that the
    administration's priorities are completely out of step with the needs
    of the American people. It's time for the administration to focus on
    creating jobs and growing the economy instead of playing politics with
    the policies that shape our nation's workforce. And with that, I yield
    to Ranking Member Polis for his opening remarks.
                                     ______

        Mr. Polis. Thank you, Mr. Chairman. Unfortunately, instead
    of holding a hearing today on supporting rules and legislation
    that lift our workers, like raising the minimum wage or giving
    workers the overtime pay that they have deserved, we are
    spending time attacking a very important disclosure rule,
    namely the persuader rule, that helps level the playing field
    between union organizing campaigns and companies with regard to
    disclosure requirements.
        When workers seek to organize and bargain collectively,
    employers often enlist the assistance of outside labor
    relations consultants known as ``persuaders,'' and that is who
    we are talking about here today. These are union avoidance
    consultants, perfectly legal, perfectly fine. What we are
    talking about today is the disclosure requirements around that.
        In fact, studies show this is a common practice. Employers
    hire union avoidance persuaders in as many as 87 percent of
    union organizing campaigns.
        Now, since its inception in 1959, the Labor-Management
    Reporting and Disclosure Act has required disclosure of both
    direct and indirect persuader activity. Starting in 1962, there
    was a loophole that was carved in the DOL's interpretation of
    the law, resulting in employers and their hired consultants
    only reporting direct persuader activity like when a persuader
    communicates directly with employees, not the more common
    behind the scenes effort, which includes things like scripting
    the employer's talking points, preparing videos, and organizing
    anti-union campaign plans, which is the lion's share, the
    largest bulk, of indirect persuader activity has essentially
    gone unreported.
        For too long, union avoidance persuaders have been able to
    operate in the shadows due to this loophole. Workers have been
    kept in the dark about the activities of anti-union
    consultants, the costs of those anti-union campaigns, some of
    which could have even gone to raises for the employees.
        Working men and women deserve to know who their employer is
    hiring and how much the employer is spending to discourage them
    from forming a union. That is all the DOL persuader rule does.
        Essentially, it means the consultants and attorneys who are
    engaged in persuader activities and the employers who hire them
    must disclose their persuader agreements, a description of the
    services to be performed, including the amount the employer has
    paid for their services.
        This is really about leveling the playing field. As a
    general matter, unions already disclose far more information
    than is being required of employers.
        This is an example of union reports filed with the
    Department of Labor, which are often hundreds of pages long,
    regarding exactly how their union organizing campaigns are run,
    compared to the two pages under this persuader rule for the
    companies to disclose to the unions what they are doing with
    regard to indirect persuasion.
        I think we can have similar disclosure requirements on both
    sides. Transparency is not a union value, it is not a corporate
    value, it is an American value, and this rule furthers the
    cause of transparency in a labor organizing process.
        There are hardworking families in my district and in every
    district across our country that are working harder and harder
    and are struggling to make ends meet. What is happening is
    workers are having a harder time sharing in the growth of our
    economy, and income and wealth inequality is one of the
    greatest problems facing our Nation.
        This rule is a small step towards transparency, to make
    sure that workers and other stakeholders, like shareholders and
    others, are aware of indirect expenditures to fight off union
    organizing campaigns.
        I hope that this committee can make it possible for workers
    to come together and negotiate their fair share of economic
    growth because when we do and when working people organize,
    families do better, our economy does better, and our Nation
    does better.
        I yield back the balance of my time.
        [The information follows:]

        Prepared Statement of Hon. Jared Polis, Subcommittee on Health,
                        Employment, Labor, and Pensions

        Today, we're holding yet another hearing that shows the backwards
    priorities of the Majority. Instead of supporting rules and legislation
    that lift up workers, like raising the minimum wage or giving workers
    the overtime pay they deserve, Republicans are spending time attacking
    the Obama Administration's persuader rule.
        When workers seek to organize and bargain collectively, employers
    often enlist the assistance of outside labor relations consultants -
    known as ``persuaders'' or ``union avoidance'' consultants - to
    orchestrate and roll out professionally managed anti-union campaigns.
    Studies show that employers hire union-avoidance persuaders in as many
    as 87% of union organizing campaigns.
        Since its inception in 1959, the Labor-Management Reporting and
    Disclosure Act (LMRDA) has required disclosure of both direct and
    indirect persuader activity. Yet, starting in 1962, a loophole was
    carved into DOL's interpretation of the law, resulting in employers and
    their hired consultants only reporting direct persuader activity - such
    as when a persuader communicates directly with employees. Since most
    persuaders operate behind the scenes - such as by scripting the
    employer's talking points, preparing videos and organizing the
    antiunion campaign plan - the lion's share of indirect persuader
    activity has gone unreported.
        For too long, union-avoidance consultants have been able to operate
    in the shadows due to this large loophole in the reporting
    requirements. Workers have been kept in the dark about the activities
    of anti-union consultants, whose words and tactics are being used to
    influence their decisions about union representation. Working men and
    women deserve to know who their employer is hiring and exactly how much
    the employer is spending to discourage them from forming a union.
        Under the DOL's persuader rule, consultants and attorneys who
    engage in these persuader activities, the indirect activities - and the
    employers who hire them - must disclose their persuader agreements and
    a description of the services to be performed, including the amount
    employers paid for these services.
        Basic fairness dictates that workers should be able to know who is
    responsible for the information that is being shared with them during
    union organizing efforts. The DOL's revised disclosure requirement
    means that working people will know who has crafted the message when
    there is a counter-union organizing effort in their workplace. Workers
    who are told that the company has no money to raise wages may be
    interested in knowing how much money their employer is spending on
    these outside union-avoidance consultants.
        Moreover, the Persuader Rule evens the playing field. As a general
    matter, most unions already must disclose far more information than is
    being required of employers and consultants under this Rule. Union
    reports filed with the Department of Labor can be hundreds of pages
    long. For example, this report, filed by AFL-CIO, is 187 pages long
    (point to report), compared to two pages that are required under the
    new persuader rule.
        Disclosures required under DOL's final rule do not breach an
    attorney's responsibility to maintain confidentiality regarding a
    client relationship. Under the ABA's Model Rule of Professional
    Conduct, the Model Rules contain an exception that allows disclosures
    that are required by statute (e.g., LMRDA).
        There are hardworking American families in my district - and every
    one of our districts - that continue to work harder and harder, but are
    struggling to make ends meet. Workers no longer share in the growth of
    our economy, and income and wealth inequality is one of the greatest
    problems facing our nation.
        I applaud the Department's final rule, and I will continue to call
    on my colleagues in Congress to once again make it possible for more
    workers to come together to organize and form a union - because we
    know, when working people do better, families do better, our economy
    does better, and our nation does better.
                                     ______

        Chairman Roe. I thank the gentleman for yielding, and I ask
    unanimous consent to insert a statement from the American Bar
    Association president, Paulette Brown, a letter from the State
    of Arkansas attorney general attaching an amicus brief filed by
    10 State attorney generals, and a letter from the Associated
    Builders and Contractors, all opposing the final persuader
    rule. Hearing no objection, so ruled.
        [The information follows:]

     [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Chairman Roe. Pursuant to Committee Rule 7(c), all
    subcommittee members will be permitted to submit written
    statements to be included in the permanent hearing record and,
    without objection, the hearing record will remain open for 14
    days to allow statements, questions for the record, and other
    extraneous material referenced during the hearing to be
    submitted in the official hearing record.
        It is now my pleasure to introduce our distinguished panel
    of witnesses. First, Mr. Joseph Baumgarten, partner, Proskauer
    Rose, in New York. Mr. Baumgarten is the co-chair of the firm's
    Labor and Employment Law Department. Mr. Baumgarten represents
    publicly held and privately owned employers in virtually all
    areas of labor and employment law. Welcome.
        Ms. Sharon Sellers is President of SLS Consulting in
    Santee, South Carolina. As an HR executive, Ms. Sellers has
    directed HR functions for corporations covering the medical,
    manufacturing, government contracting, and services industries.
    She will testify on behalf of SHRM.
        Mr. Jonathan Newman is a partner in Sherman, Dunn, Cohen,
    Leifer & Yellig, P.C., here in Washington, D.C. Mr. Newman
    litigates regularly in U.S. District Courts, the U.S. Court of
    Appeals, State courts, and before the NLRB and other government
    agencies. Welcome, Mr. Newman.
        Mr. William ``Bill'' Robinson III, is a member of Frost
    Brown Todd in Florence, Kentucky. Mr. Robinson is a former
    president of the American Bar Association, and he signed the
    2011 ABA letter objecting to the then-proposed persuader rule
    due to its threat to the attorney-client confidentiality. He
    will testify on his own behalf.
        Welcome to each of you. I will now ask our witnesses to
    stand and raise your right hand.
        [Witnesses sworn.]
        Chairman Roe. Let the record reflect the witnesses answered
    in the affirmative. You may take your seats.
        Before I recognize you to provide your testimony, let me
    briefly explain our lighting system. You have five minutes to
    present your testimony. When you begin, the light in front of
    you will turn green. With one minute left, the light will turn
    yellow. When your time is expired, the light will turn red. At
    that point, I will ask you to wrap up your remarks as best you
    can. Members each will have five minutes to ask questions.
        Mr. Baumgarten, you are recognized for five minutes.

     TESTIMONY OF JOSEPH BAUMGARTEN, PARTNER, PROSKAUER ROSE, NEW
                                YORK, NY

        Mr. Baumgarten. Good morning, Chairman Roe, Ranking Member
    Polis, and members of the subcommittee. My name is Joseph
    Baumgarten, and I am a partner with the law firm of Proskauer
    Rose and co-chair of Proskauer's Labor and Employment Law
    Department.
        My firm has been practicing labor and employment law for
    more than 75 years, representing hundreds of employers in
    collective bargaining unionization and other matters.
        Thank you for the opportunity to participate in today's
    panel on the Department of Labor's persuader rule.
        For more than 50 years, labor relations practitioners
    functioned under clearly defined rules that were consistent
    with the statutory mandate of the Landrum-Griffin Act, and
    were, in fact, upheld by the courts.
        Advice to employer clients was not reportable. Direct
    communications with a client's employees were reportable. This
    longstanding approach harmonized the various provisions in
    Sections 203 and 204 of the statute. It permitted employers to
    obtain expert labor relations advice. It preserved the
    attorney-client privilege, allowed attorneys to satisfy their
    ethical obligations.
        The Department's new rule represents a dramatic and radical
    change. The rule now requires reporting in circumstances where
    lawyers are merely giving advice to employers about personnel
    policies, preparing or revising material for an employer to
    distribute to its employees, or advising employers and their
    supervisors about how to communicate effectively about matters
    that are important, indeed, essential to employees.
        The inevitable result of this rule will be a chilling
    effect on speech. The loss of services will impact most acutely
    the small businesses with little or no in-house experience to
    guide them in what they can and cannot say to their employees.
        Those employers may refrain from saying anything at all,
    leaving unrebutted whatever message is being disseminated by
    the union. Employees will be deprived of an important voice
    expressing facts, views, and opinions.
        It is important to point out that there is considerably
    more at stake here than simply what happens in a union
    organizing campaign, although that surely is important. In
    fact, very little attention has been paid to the effect on
    unionized employers in collective bargaining.
        Let me briefly explain. Section 203(c) of the Landrum-
    Griffin Act could hardly be clearer that giving advice or
    engaging in collective bargaining on behalf of an employer is
    not persuader activity. Thus, communications in support of the
    employer's bargaining proposals that are prepared for delivery
    at the bargaining table are and will continue to be exempt from
    reporting.
        Under the Department's new rule, the same communications
    delivered to the employees in the bargaining unit at large in
    the form of a letter, a bulletin from management, would subject
    both the lawyer and the employer to an obligation to report.
        If that seems not to make sense, it is because the
    Department's new rule takes a unitary process, that is
    collective bargaining, and artificially parses it into its
    component parts. At its core, everything that goes on in
    collective bargaining involves the art of persuasion.
        The art is practiced not just at the bargaining table but
    in every communication made by the employer and the union, from
    the first exchange of proposals to the final ratification of an
    agreement.
        The 2nd Circuit Court of Appeals made this point in a
    decision 30 years ago: ``Labor negotiations do not occur in a
    vacuum. The employees are naturally interested parties. During
    a labor dispute, the employees are like voters who both sides
    seek to persuade. Granting an employer the opportunity to
    communicate with its employees does more than affirm its right
    to freedom of speech, it also aids the workers by allowing them
    to make informed decisions while also permitting them a
    reasoned critique of their union's performance.''
        Note the court's language. This is not just about
    protecting employer rights. It is about ensuring that workers
    can make informed decisions.
        Under the Department's new rule, a lawyer can say to a
    client I can help you develop bargaining proposals, I can
    deliver those proposals for you at the bargaining table, I can
    explain them at the table, I can help draft the agreement
    itself. However, I cannot then also help you even write a
    letter to your employees explaining the basis for the proposals
    or urging ratification, or talking about what happens in the
    event of a work stoppage without becoming a persuader that
    requires us both to report.
        That is completely inconsistent with the statute. In fact,
    I submit to you it is nonsensical.
        For all of these reasons and others, I support H.J. Res.
    87, Congressman Byrne's effort to prevent this rule from taking
    effect. Thank you.
        [The statement of Mr. Baumgarten follows:]

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        Chairman Roe. Thank you. Ms. Sellers, you are recognized
    for five minutes.

     TESTIMONY OF SHARON SELLERS, PRESIDENT, SLS CONSULTING, LLC,
                               SANTEE, SC

        Ms. Sellers. Good morning, Chairman Roe and Ranking Member
    Polis. I am Sharon Sellers with SLS Consulting, headquartered
    in South Carolina. I am appearing today on behalf of the
    Society for Human Resource Management, or SHRM. Thank you for
    the opportunity to testify on the persuader rule that will
    impact both employers and employees.
        Mr. Chairman, let me paint the picture of a perfect storm.
    With the recent implementation of the National Labor Relations
    Board's ambush elections rule, combined with changes to the
    joint employer standard, a new definition of a bargaining unit
    with new micro units, and now the persuader rule, the timing
    could not be worse for our Nation's employers.
        Now more than ever it is critical for employers and
    employees to understand their rights and obligations under the
    Nation's labor laws and regulations, especially our small
    employers.
        My organization, SLS Consulting, a human resources services
    and training firm, seeks to help these employers.
        I serve clients in all major industries with half of my
    clients in smaller organizations. As an HR consultant, I am
    brought in as an expert to assist managers with employee
    management issues, leverage effective practices, and assist in
    the compliance of laws and regulations.
        While I do not consider myself a persuader, the definitions
    in the new rule could very well affect my work, a perfect
    example of the unintended consequences of the rule.
        Consider this, in my supervisory training, a segment on
    union organizing is included to help educate supervisors on the
    signs of organizing activity as envisioned by the National
    Labor Relations Act. It is critical for supervisors in today's
    workplace to recognize signs of union organizing and avoid any
    behaviors that could be considered unfair labor practices.
        For example, during supervisor training, employers are
    taught what I call ``TIPS,'' which define what supervisors can
    and cannot communicate to their employees under the NLRA.
        Herein lies the unintended consequences created by this
    rule, namely that stringent reporting requirements may deter
    many employers from seeking out labor compliance information
    training like mine. This is a serious concern for SHRM and its
    275,000 members. That is why we support H.J. Res. 87.
        Some employers will likely object to potentially showing up
    on a report and refuse to work with a consultant who provides
    labor consulting services. Consultants will be placed in a
    challenging position to either abandon all indirect persuasion
    work for all clients or lose valuable clients.
        The stakes are high for noncompliance with the persuader
    rule, leading to criminal penalties. It is not just HR
    consultants who will be impacted. This rule negatively impacts
    all employers, including small employers, and their employees
    who do not have in-house counsel or an HR department to advise
    them at a time when unions are increasingly targeting small
    employers.
        Mr. Chairman, one must not overlook how this rule will
    impact employees. SHRM believes that all employees and
    organizations benefit when supervisors are highly trained. If
    employers remove labor-related training, it is increasingly
    likely that more supervisors will be unprepared for the
    appropriate way to address union organizing activity, resulting
    in more complaints of unfair labor practices, which is harmful
    to both employers and employees.
        In addition, SHRM believes that the DOL has underestimated
    the cost and time burden placed on employers by this rule.
    Hundreds of thousands of organizations will be impacted or at
    least potentially impacted because even if an employer does not
    have to report, employers and consultants will still have to
    determine whether, in fact, they do need to report.
        In closing, our main concern is the clients I serve may
    avoid seeking my training if the services are now reportable
    under the rule. I believe training strong supervisors helps the
    entire organization succeed. The rule can only lead to further
    confusion and perhaps even more violations of the law, which
    not only conflicts with the objectives of the National Labor
    Relations Act, but also my underlying mission and my business
    to train strong supervisors for successful organizations.
        Thank you, Mr. Chairman. I look forward to your questions.
        [The statement of Ms. Sellers follows:]

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        Chairman Roe. Thank you, Ms. Sellers. Mr. Newman, you are
    recognized for five minutes.

     TESTIMONY OF JONATHAN NEWMAN, PARTNER, SHERMAN, DUNN, COHEN,
                 LEIFER & YELLIG, P.C., WASHINGTON, DC

        Mr. Newman. Thank you, Chairman Roe, Ranking Member Polis,
    members of the subcommittee. My name is Jonathan Newman, and I
    am a shareholder in the Washington, D.C., law firm of Sherman,
    Dunn, Cohen, Leifer & Yellig. I appreciate the opportunity to
    appear before the Subcommittee today, and I do so in my
    individual capacity.
        My law firm represents all types of labor unions, including
    the International Brotherhood of Electrical Workers, North
    America's Building Trades Unions, and the Major League Soccer
    Players Union, among others. I have been a member of the Bar
    since 1994, and I have also been a member of the American Bar
    Association since that time.
        Justice Brandeis famously said, ``Sunlight is said to be
    the best of disinfectants; electric light, the most efficient
    policeman.'' The persuader rule is a rule of transparency; it
    sheds light through disclosure, closing a massive loophole that
    has kept workers in the dark about hidden efforts to deny them
    union representation.
        The LMRDA requires that when a labor relations consultant
    is retained by an employer to undertake activities or an object
    thereof, directly or indirectly, to persuade workers regarding
    their vote in a union election, that relationship and its terms
    must be disclosed.
        That requirement, however, is, as the Education and Labor
    Subcommittee found in 1980, a virtual dead letter because no
    reports had to be filed where consultants operate behind the
    scenes without dealing with employees face-to-face. Anti-union
    consultants are well aware of this loophole.
        Former consultant, Martin Jay Levitt, in his book,
    ``Confessions of a Union Buster,'' said, ``As long as the
    consultant deals directly only with supervisors and management,
    the consultant can easily slide out from under the scrutiny of
    the Department of Labor.''
        In a typical consultant-run campaign, the consultant
    prepares written scripts, written materials for supervisors to
    hand out, produces anti-union videos, and prepares speeches for
    management to deliver in closed-door captive audience meetings
    that employees are required to attend or they will be
    disciplined.
        Consultants create a campaign and assert that the union is
    a third party outsider that will drive up the employer's costs.
    That is not advice, Mr. Chairman. That is drafting the game
    plan, that is choosing the plays to call, and that is directing
    management to carry them out. These anti-union campaigns are a
    product sold by a large anti-union consulting industry in the
    U.S.
        Attached to my written testimony are examples of
    consultants' advertisements. One firm even promises a money
    back guarantee claiming, ``IF YOU DON'T WIN, YOU DON'T PAY.''
        The persuader rule will make transparent the consultant's
    relationship so that workers may learn that the employer has
    itself, for example, retained a third party outsider to
    orchestrate its campaign. In short, the persuader rule will
    ensure that workers are no longer kept in the dark, making the
    title of today's hearing, ``The Administration's Attack on
    Worker Free Choice,'' seem particularly Orwellian.
        Critics of the rule claim it is unfair because it requires
    employers and consultants to disclose but not unions, but
    unions have their own broad transparency obligations under the
    LMRDA. They must disclose, for example, the identity of the law
    firms and consultants they retain and report disbursements to
    those firms, no matter what the firms do, including if all they
    do is provide legal advice.
        Mr. Chairman, this is a four-page report that must be filed
    under the persuader rule by employers. This is the two-page
    report that persuaders would be required to file under the
    persuader rule. This is one of our clients', the IBEW's most
    recent LM-2 annual report. It is 150 pages long. This is the
    AFL-CIO's most recent report required to be filed with the
    Department of Labor. It is hundreds of pages long.
        The ABA claims that the persuader rule interferes with the
    attorney-client privilege and conflicts with model rules of
    professional conduct. The ABA made those same arguments in 1959
    when Congress enacted the LMRDA. Congress rejected them then
    and it should do so now.
        In addition, numerous courts have held that disclosing the
    information required by the persuader rule does not breach the
    attorney-client privilege. The rule is also consistent with
    State Bar ethics rules. The LMRDA is a Federal rule that trumps
    any conflicting State law governing any attorney conduct, and
    more importantly, ABA's Model Rule 1.6 on which they rely does
    not apply to disclosures that are mandated by law.
        Finally, the persuader rule does not violate the employer's
    or consultant's right to free speech. The rule does not
    restrict any speech. In Federal election law cases, the Supreme
    Court has rejected First Amendment challenges to disclosure,
    finding that, ``Transparency enables the electorate to make
    informed decisions and give proper weight to different speakers
    and messages.'' That, by the way, is from the Citizens United
    case.
        The persuader rule enables the electorate, in this case,
    workers, to decide whether to choose union representation, and
    allows them to make informed decisions and give proper weight
    to messages from their employers.
        Thank you, Mr. Chairman.
        [The statement of Mr. Newman follows:]

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        Chairman Roe. Thank you, Mr. Newman. Mr. Robinson, you are
    recognized for five minutes.

     TESTIMONY OF WILLIAM ROBINSON, MEMBER, FROST BROWN TODD LLC,
                              FLORENCE, KY

        Mr. Robinson. Thank you, Mr. Chairman, Ranking Member
    Polis, and distinguished members of this subcommittee. Thank
    you for this opportunity to testify before you.
        I am here to express my intense concerns over the
    Department of Labor's new so-called ``persuader rule.'' The new
    rule rejects the protection of confidentiality for attorney-
    client communications embodied in the advice exemption of the
    Labor-Management Reporting and Disclosure Act, as recognized by
    President John F. Kennedy's administration in 1962, and
    consistently followed for more than 50 years, until now.
        When the Department of Labor first proposed this new rule
    in 2011, I wrote to the Department as president of the American
    Bar Association expressing the ABA's concerns. That letter
    expresses ABA policy then and now. It is Attachment B to my
    written statement.
        Today, however, I speak only for myself, and I want to
    emphasize that. As Chairman Roe indicated, Paulette Brown, the
    current distinguished president of the American Bar
    Association, has submitted to this committee a written
    statement on behalf of the ABA expressing the ABA's continued
    concerns about the new administrative rule.
        Many Bar associations have also spoken out against the new
    rule, and some of them are listed in Attachment A to my written
    statement.
        The overriding concern here is the best interest of
    clients, not the best interest of lawyers. In Upjohn Co. v.
    United States, decided in 1981, the Supreme Court taught us
    that the purpose of the attorney-client confidentiality is,
    ``To encourage full and frank communications between attorneys
    and their clients and thereby promote broader public interests
    in the observance of law and administration of justice.''
        Client confidences are protected by the ethical rules
    applicable to lawyers. Model Rule 1.6 prohibits lawyers from
    revealing any information relating to the representation of a
    client, unless the client gives informed consent or certain
    narrow exceptions exist.
        For over 50 years, the Department of Labor has consistently
    followed the Kennedy administration's interpretation of the
    advice exemption. The Kennedy Administration's exemption--
    interpretation rather--excludes from regulation and reporting
    all advice of attorneys to their employer clients. On the other
    hand, the act does not protect and does require reporting when
    an attorney communicates directly with a third party, namely
    the client's employees.
        The new law abandons the Kennedy Administration's bright
    line test. Instead, the new law substitutes a subjective
    arbitrary standard. This new standard administratively allows
    the Department of Labor to investigate any confidential
    communication to determine if that communication has the object
    to persuade the employees, even directly, to support the
    client's position.
        From what my labor partners tell me, few workplace
    decisions or communications are made in a vacuum without some
    concern for how employees may respond.
        For employers without a union, the employer may be pursuing
    the lawful objective of avoiding the union. For employers with
    a union, the employer's lawful objective may be to maintain
    harmony in its relationship with the union and its members. In
    either case, the interaction between the law and the employer
    client's goals are the labor lawyer's responsibility to
    navigate in order to ensure legal compliance.
        Especially troubling here is the ethical dilemma created by
    enforcement of the new rule. How can labor lawyers defend
    against accusations that they have violated the new rule? There
    really is only one answer. Disclosure will be required as to
    the purpose and content of the otherwise confidential
    communications.
        The new administrative rule must not be allowed to, in
    effect, wipe out the statutory advice exemption that Congress
    expressly, purposely, and explicitly included in Section 203 of
    the Act. The rule of law in America has been built on the
    cornerstone of the client-attorney confidentiality, and unless
    defeated, the new administrative rule will undermine in the
    context of labor relations the confidentiality so essential to
    effective attorney-client communications.
        Your support and vote for Congressman Byrne's House Joint
    Resolution 87 and for all other legislative efforts to defeat
    this rule are respectfully requested. Your leadership is
    needed. The labor law in labor law matters hangs in the
    balance.
        Thank you again for this special opportunity to address
    this subcommittee.
        [The statement of Mr. Robinson follows:]

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        Chairman Roe. Thank you, Mr. Robinson. I thank all the
    witnesses. I will now yield myself five minutes.
        Mr. Robinson, I want to start with you. In your long career
    as an attorney and certainly as president of the American Bar
    Association, have you ever had to disclose publicly information
    about your clients as will be required by this new rule?
        Mr. Robinson. Mr. Chairman, attorney-client confidentiality
    is the cornerstone of the rule of law. It has been so for 50
    years in labor relations matters and beyond. The rule of law
    goes back to the 16th century. The rule of law is the key to
    ensuring good client advice so the client is enabled to comply
    with the law. That requires closed door, confidential,
    trustworthy advice to consider what is and what is not lawful.
        That is compromised and jeopardized with any rule that
    requires disclosure of this information. Lawyers are bound by
    these ethical rules. They go back, as I say, centuries. They
    are the cornerstone of the rule of law in this country.
        Chairman Roe. And have been upheld by the courts.
        Mr. Robinson. Over and over and over, as recently as a case
    in California, which has looked at this issue and has
    recognized how sacrosanct this attorney-client confidentiality
    really is in implementing and ensuring the rule of law.
        Chairman Roe. My concern is not labor law. My concern is
    the law in general. If we start down this slippery slope, where
    are we going to end if we dissolve attorney-client privilege?
        If you are my attorney, I feel like I can bear my soul with
    you in a closed door, and I can get good information back from
    you about what is in the best interest of my business, myself,
    and my employees, so I do not do something wrong. Am I right
    about that or wrong about that?
        Mr. Robinson. Let's say you were accused of a crime or
    being investigated for a crime, and you came to me as a lawyer
    and wanted to discuss that with me, and I had to say to you at
    the outset, look, there is a new rule at work here and it may
    require that I disclose everything you are going to tell me.
    How much do you think you would tell me? Probably not very
    much. My ability to advise you on your legal rights, the best
    course for you to take, would be severely compromised.
        I think it is really clear if one appreciates and respects
    the significance and importance of client confidentiality to
    the rule of law that this is really a key issue. This is not
    about transparency. This is about ensuring that adequate advice
    is given to those who want to comply with the law, need to
    comply with the law, and need to be able to think out loud and
    explore options and opportunities to get the advice that
    assures they comply with the law.
        Chairman Roe. I think this is a frightening rule when you
    begin to think that 50 years from now, you could take this as
    precedent and take this slippery slope anywhere. I think this
    needs to be stopped now.
        It should be bipartisan because we are going to vote on a
    bill today on the House about the Internet, and the government
    being able to look at your emails over 180 days. It is
    bipartisan because this should affect and does affect all
    Americans.
        Another question to any of the witnesses, why would an
    employer hire a consultant or an attorney during a union
    organizing campaign if this is the case? What benefit would it
    be? Ms. Sellers? Anyone?
        Mr. Newman. Ask the union, to do what they do--
        Chairman Roe. I am asking Ms. Sellers.
        Mr. Newman. I thought you said anyone. My apology.
        Ms. Sellers. I believe with this rule employers will be
    less likely to contact labor attorneys or consultants, even
    when they are asking for advice. In my line of work, 50 percent
    of my clients are employers with less than 100 employees. Many
    of these people are not experts in union organizations. They
    are trying to run a business, many times wearing various hats,
    and they do not know this information, but still they certainly
    do not want to turn out on a form and get on the radar, they
    would be worried about having their name made public any time
    they ask any questions.
        So, I think they would refrain from asking the questions,
    which would really put them at a disadvantage, not only in the
    union organization for themselves but for the whole process,
    because they will not have the information. There could be
    inadvertent unfair labor practices, which could jeopardize the
    whole election process.
        Chairman Roe. Mr. Baumgarten, you said with 203(c)
    expanding this rule would have a chilling effect on free
    speech.
        Mr. Baumgarten. Yes, that is right, Mr. Chairman, it would
    have a chilling effect. Let me say that in any policy situation
    where we are evaluating an agency rule, we must start with the
    language of the statute, and 203(c) is a broad exemption for
    advice, any kind of advice that is given.
        The reality of this situation is the LM-10 and the LM-20
    obligations cannot be thought about without thinking about the
    LM-21 as well, which is the roll-up report, and in the
    Department of Labor's view that report requires disclosure of
    receipts received from any client--any client--who receives
    labor relations advice or services of any kind, even if not
    persuader advice.
        No client will want to be on that list, and no consultant
    or law firm will want to have that disclosure.
        Chairman Roe. My time has expired. I am going to yield to
    Mr. Polis.
        Mr. Polis. Thank you, Mr. Chair. Mr. Newman, are you an
    attorney, a member of the Bar?
        Mr. Newman. Yes, I am.
        Mr. Polis. As such, do you have any concerns at all with
    regard to any conflict this rule has with the long and
    important tradition of attorney-client confidentiality?
        Mr. Newman. I do not. What the rule requires is the
    identification of a client, fee arrangement with a client, the
    nature and scope of that client representation. That has been
    upheld by the 4th Circuit Court of Appeals, the 5th Circuit
    Court of Appeals, certainly no pro-union sentiment on that
    court, as well as the 6th Circuit Court of Appeals, and is not
    violating the attorney-client privilege.
        Mr. Polis. It seems to me another precedent outside of the
    direct organizing realm is the additional disclosure
    requirements that attorneys who function as lobbyists have as
    well with regard to how much they are paid and for whom they
    lobbied.
        Do you see that as an analogous requirement that also is no
    threat to attorney-client confidentiality, but is consistent
    with the rules of public policy just as this is?
        Mr. Newman. I do. I also cited another statute in my
    written testimony that applies where an attorney is paid in
    cash, they have to disclose their client and the amount, et
    cetera.
        Mr. Polis. So, as was briefly mentioned, the Labor-
    Management Reporting Disclosure Act does mandate a reporting
    obligation for labor consultants and employers, including those
    who work indirectly to persuade workers, and the Labor
    Department says there are zero reports from union avoidance
    consultants who indirectly persuade people not to organize.
        It has been alluded to there is a loophole.
        Mr. Newman, I wanted to ask you what exactly is this
    loophole that has allowed this to go on, contrary to
    legislative intent, contrary to the words of the legislation
    and the law, for the past 54 years? How is the Department of
    Labor's new rule more consistent with the actual law than the
    previous policy?
        Mr. Newman. Sure. The statute applies to persuasion that is
    not only direct but indirect. The advice exemption has been
    interpreted from 1962 until 2000, and I will get to that,
    saying so long as the union buster or the persuader is behind
    the scenes and does not show his face and speak directly to
    employees, he does not have to report. In other words, he only
    has to report if he engages in direct persuader activity,
    leaving the word ``indirect'' out of the statute.
        In 2000, the Department of Labor took a different
    interpretation, similar to what they are taking now in the
    persuader rule. There was an election, obviously, in 2000, and
    the Department of Labor overturned that interpretation in 2001
    and went back to that which existed from 1962.
        Mr. Polis. So, before this rule, essentially the previous
    Secretaries of Labor and Departments of Labor have chosen to
    ignore a word that is in the statute, that is ``indirect''
    consultants, is that your opinion?
        Mr. Newman. Yes. They have ignored the statutory language
    and they have ignored the legislative history.
        Mr. Polis. Now, let us get to the topic of why this can be
    important. Your testimony included an advertisement from a
    union avoidance firm where they actually talked about a money
    back guarantee if they do not successfully defeat the
    organizing effort.
        What are some reasons it might be important for workers to
    know about that kind of persuader arrangement or other kinds of
    examples of ways the consultants try to dissuade employees from
    joining unions?
        Mr. Newman. In my experience, one thing that a consultant
    always does is script messages where the employer says to its
    employees we are one big, happy family, the union is a third
    party outsider that has no business coming into this workplace.
    They will also proclaim that this outsider union is going to
    drive up the employer's costs and impede their ability to
    compete.
        When you have a money back guarantee, the consultant has
    skin in the game. So, it seems to me perfectly reasonable for
    the voters, the employees, to know, number one, their employer
    has hired a third party outsider to script their messages;
    number two, what they are paying that consultant when they are
    saying at the same time they cannot afford a union; and, number
    three, the words from the supervisors are not the supervisors'
    words, they are the words of the consultant that has skin in
    the game, that has guaranteed to the employer we will bust your
    union, we will defeat the union.
        Mr. Polis. If, in fact, the fee was entirely contingent on
    success, which I understand is the case some of the time in
    these agreements, let us say arbitrarily it is $500,000, would
    the employees also know that were they to succeed and the
    company not to pay that $500,000, there would, therefore, be an
    additional $500,000 available on an operating basis that the
    employees might be able to share in, in the form of raises and
    promotions?
        Mr. Newman. Yes, they would.
        Mr. Polis. A very tangible identification if a company is
    otherwise saying there are no resources available, it is clear
    in that case they would have saved X-dollars by losing the
    campaign, a great way for companies to save money by losing
    organizing campaigns.
        I yield back the balance of my time.
        Chairman Roe. I thank the gentleman for yielding. Dr. Foxx,
    you are recognized.
        Ms. FOXX. Thank you, Mr. Chairman, and I thank our
    witnesses for being here today. Mr. Baumgarten, with the new
    NLRB rules that shorten the time between union petitions and
    elections, do you feel employers are likely to require any more
    assistance in legally and effectively communicating with
    employees about both sides of the decision to unionize?
        Mr. Baumgarten. Yes. One of the great myths that has been
    created is that employers lie in wait and plan and practice and
    hire consultants and hone their message months in advance of a
    petition filed with the NLRB.
        My experience and the experience of many of my colleagues
    has been just the opposite, that very often employers are very
    surprised to receive a representation petition, and that is
    particularly true for smaller employers who do not have the
    sophistication to really understand what may be going on in the
    workplace.
        We now have a regime which has already been alluded to that
    the NLRB has created an environment that makes it more and more
    difficult to effectively respond to a representation petition
    by virtue of the rules that preclude pre-election hearings, by
    virtue of the micro unit rules, and by virtue of the ambush
    election rules.
        An election can be held now in as little as 11 days from
    filing of the petition to the election. In general, I think the
    latest statistics show that it takes about 20 days or so down
    from 38 days prior to the ambush election rules last year.
        Employers are already behind the eight ball, so to speak,
    in respect of their ability to understand what is going on, to
    develop the message, to understand what is legal, to understand
    what is going to be effective, to understand what should be
    communicated, what is the message employees want to hear.
        There is, I think, a fundamental misunderstanding of what
    this rule will provide. When a company that does not have in-
    house experience and does not have prior experience with a
    representation campaign receives a petition, what do they do?
        They call their lawyer and they say what is this? They find
    out what it is. The very first question, if not the first
    question then the second question, is what should I say to the
    employees? What should I say?
        The answer to that under this rule will be I cannot tell
    you because if I tell you, we will both become persuaders, and
    pending resolution of what goes on with the LM-21, which the
    Department has played hide-and-seek with, I, as a lawyer, may
    then have to disclose information, privileged information,
    about the identity of all of my other labor relations clients.
    That is an unworkable system.
        Ms. FOXX. Thank you very much. Ms. Sellers, I would like to
    go a little farther on the comments Mr. Baumgarten talked
    about. Let us talk a little bit about the impact on employees.
    Tell us about how an employer being better prepared and
    informed about labor issues benefits the employees. What are
    some of the unintended consequences of the new rule for
    employees?
        Ms. Sellers. Thank you for the question. It is a very good
    question because my heart is in education of supervisors, and I
    know you have a wonderful background, also, in employee
    education.
        Supervisors that I normally deal with my small employers
    are not people that came from colleges with MBA degrees. As a
    matter of fact, most small employers cannot afford to hire the
    best and brightest with the biggest degrees. A lot of them grow
    their own and they have to hire them from within and, in many
    cases, they want to hire them from within. They have good
    people who are technical people, and now they have placed them
    in a supervisory role. They have no other knowledge.
        So, with my training, I work very hard to give them basic
    information, including the labor information, such as making
    sure they do not say the wrong thing that could eventually
    result in an unfair labor practice.
        Proper education of supervisors will result in an engaged
    workplace, where you will really have the sense--this sounds
    very naive--the truth is you will have much happier employees
    if you have well-trained supervisors, and as a result, you will
    have more successful organizations that will then create more
    jobs.
        Ms. FOXX. Thank you, Mr. Chairman. I yield back.
        Chairman Roe. The gentlelady's time is expired. Mr. Pocan,
    you are recognized for five minutes.
        Mr. Pocan. Thank you, Mr. Chairman. Thank you to the
    witnesses. So, I guess I come to this from a little bit of an
    interesting perspective because I have a small union printing
    business, and about weekly, I get one of these mailers. I will
    be honest, I have not looked at them all that closely on the
    way to the recycling bin as I have got them.
        Clearly, there is a very big business in union busting, and
    I think maybe my perspective is slightly different in that
    while you are talking about these rules that are going to be so
    terrible for employers versus workers, you know, I come from
    Wisconsin, where recently we passed a law that made it harder
    for people to collectively bargain. We just passed a right to
    work law.
        I would say quite the opposite, this has been much more
    onerous on workers than it has been on employers. I guess I do
    not quite understand the concern at some level when it gets to
    the persuading level versus the regular legal information
    level.
        I know you are all familiar with ``Confessions of a Union
    Buster.'' I am sure you all have a copy. Just the first line in
    the prologue, ``Union busting is a field populated by bullies
    and built on deceit.''
        Now, there is a big difference from just providing simple
    advice and then when you get to the steps of--are you all
    familiar with Cruz & Associates? This is just one firm that
    does this sort of work and does it with some of the big hotels.
        If you look at the things that have happened in some of
    these campaigns, whether it would be the firing and
    intimidation of employees, whether it be a cartoon--here is a
    cartoon management put out at the Miramar Sheraton, and it
    shows a cartoon of Hitler with an arm band showing ``814,''
    which is the number of the Local.
        I do not know if that is really legal advice or if that
    falls maybe a little more to the persuading, but I do not know
    if you need a well-paid attorney to tell you that Adolf Hitler
    cartoons may or may not help persuade, but this business seems
    to go much farther than what people are talking about.
        Mr. Newman, specifically, what is listed--under this rule,
    what will you be listing? People are talking about bearing
    their soul and confidential information. What is going to be
    disclosed on this form?
        Mr. Newman. The identity of the employer that has retained
    the union buster, the amount the employer is paying to the
    union buster, the scope of the union buster's representation, a
    copy, if there is one, of the agreement or arrangement between
    the union buster and the employer.
        Mr. Pocan. By ``scope,'' how many words are we talking
    about? Pages and pages? Are we talking sentences and sentences?
        Mr. Newman. I think we are talking about a sentence or two,
    and I think what is important to understand is that information
    has always been required on the LM-10 filed by the employer,
    the LM-20 filed by the consultant.
        The scope of the information that is being sought in this
    rule is no different than what the Department of Labor has
    always sought when the union buster deals directly face-to-face
    with employees.
        Numerous courts have said that it is not protected by the
    attorney-client privilege, numerous courts have said it is
    completely consistent with State ethics obligations.
        Mr. Pocan. In these firms, often the work does go way
    beyond. We are hearing the nice of it. We just give a little
    advice on what they are doing. A lot of these firms are doing
    things like this. This is the advice they give. That definitely
    goes to a different level of what I think was intended, and
    that is why we want the disclosure.
        It has been said people will not hire these firms. I do not
    know why, if that is all the disclosure is, why that is so
    chilling to an employer, because if they are going through
    this, and I have that mailing and I decide I want to bust my
    union for whatever reason, to have to disclose that little bit
    is not exactly the bearing of one's soul and the conflict that
    people are asking for.
        Why would someone be afraid to be listed on there?
        Mr. Newman. Because they like to have these consultants
    operating in the shadows. And consultants in the book that you
    referenced, Mr. Levitt's book, not only does that allow the
    consultant not to report, but I think the industry has found
    they are more persuasive when they operate in the shadows
    because employees do not know that.
        When the employer comes out and says, hey, we are one big,
    happy family, do not listen to this third party outsider, I
    always have an open-door policy, and by the way, here is your
    paycheck. I mean, that is going to resonate with employees. And
    at the same time, they do not know that the message that is
    being delivered is by someone like Cruz & Associates and others
    who are not providing legal advice.
        Legal advice is not reportable under the rule, period,
    done. What they are doing is drafting the game plan, running
    the plays, directing supervisors on how to do it.
        Mr. Pocan. Persuading?
        Mr. Newman. Persuading, absolutely.
        Mr. Pocan. Thank you. I yield back.
        Chairman Roe. I thank the gentleman for yielding. Mr.
    Walberg, you are recognized for five minutes.
        Mr. Walberg. Thank you, Mr. Chairman. I was just sitting
    here thinking in listening to all of this of what it would be
    like to have this same persuader rule for political campaigns,
    all of us at the dais here, what impact it would have. It
    certainly would change the presidential campaign going on right
    now, would it not? Well, that is another issue.
        Mr. Robinson, what other areas of law could the reporting
    requirements like those in the new rule be applied to, if this
    precedent is allowed to stand?
        Mr. Robinson. I suspect various Federal agencies, whether
    involved in consumer matters--all kinds, everything should be
    transparent. If everything should be outside the protection of
    attorney-client privilege, if clients are not to be able to
    turn to lawyers without cautioning them that whatever they are
    discussing may have a persuader impact on the employees, and,
    therefore, not be confidential, I really do not know what is
    foreseeable and really unforeseeable.
        The scope of this carries over in unlimited ways, and it
    gives us great concern.
        Mr. Walberg. Most likely a chilling effect on the issue of
    seeking good counsel in almost any area.
        Mr. Robinson. What was mentioned about the LM-20 form being
    so harmless and really not being of any consequence, let me say
    that under the new rule, the rule going into effect, otherwise
    legal advice in compliance--I say this in my written
    statement--under the new rule, otherwise legal advice in
    compliance with the statute itself will now actually trigger
    administrative disclosure under the LMRDA.
        One needs to look at the new form and see all the different
    boxes that have to be checked off disclosing what the legal
    advisor, the lawyer, has done with respect to that client if
    the advice could even be indirectly identified/called
    ``persuader advice.''
        Even though that advice is offered only to the client, in
    all instances where the advice of the lawyer furthers the
    employer client's object explicitly or implicitly--I am quoting
    now from the instructions to Form LM-20 that was referred to--
    ``Explicitly or implicitly, directly or indirectly, the object
    to affect an employee's decision concerning his or her
    representation or collective bargaining rights.'' That is
    persuader advice.
        Mr. Walberg. Pretty broad.
        Mr. Robinson. Pretty broad, and if we want good advice at
    all levels on both sides, imagine the position of the advisor,
    the legal advisor, when a complaint is filed with the
    Department of Labor alleging that persuader activity was taken
    and no report was filed, and there is a dispute over whether it
    was persuader activity, even indirectly, what is going to be
    the defense to that allegation or charge?
        At that point, the defense is going to require that counsel
    and the client do what? Tell everything they talked about,
    explain that it was not persuader activity, but they have to
    disclose the confidential conversation, the advice, the various
    considerations that went into that conference that was
    otherwise confidential.
        Mr. Walberg. Thank you.
        Mr. Robinson. That is what they are going to be facing, so
    the lawyer today with this new rule has to say to the employer
    client at the outset, look, I cannot assure you that somebody
    is not going to say our discussion--
        Mr. Walberg. I appreciate that. I think we get the message
    there. I want to go to the consultant, Ms. Sellers. As a
    general HR consultant, you are likely not the intended target
    for the persuader rule, but you would clearly be impacted by
    the rule.
        Ms. Sellers. Correct.
        Mr. Walberg. Clearly, that is why you are here. How will
    SLS Consulting respond to the persuader rule, and what
    consequences does it create for your clients, in particular
    small businesses?
        Ms. Sellers. I am very concerned about the rule, obviously.
    I am still trying to determine what I am going to do. I have
    basically two choices. I can continue as I am doing and risk or
    jeopardize the fact that I may trigger filing that form. I know
    a lot of my employer clients will not want me to be on that
    form, and they will not want their names on the form.
        So, the other opportunity would be for me to basically stop
    doing any discussion when I train employers and train
    supervisors regarding the union organization or what people
    should and should not say. In that case, I feel like I am doing
    a disservice to those employers and those supervisors by
    withholding information.
        Mr. Walberg. Mr. Chairman, I think it is clear that
    employees and employers could be hurt by taking away this type
    of--
        Chairman Roe. The gentleman's time has expired.
        Mr. Walberg. Thank you.
        Chairman Roe. I now yield five minutes to the full
    committee ranking member, Mr. Scott.
        Mr. Scott. Thank you. Mr. Newman, can you tell me how this
    rule differs or conforms with the actual statute?
        Mr. Newman. Yes, sir. Yes, Representative Scott. The rule,
    unlike previous interpretations, conforms with the language in
    the statute because it will require persuaders to report not
    only their direct persuader activities but also their indirect
    persuader activities.
        Mr. Scott. And what does the statute require?
        Mr. Newman. Both direct and indirect to be reported.
        Mr. Scott. And so the statute just recites--the rule just
    recites the statute?
        Mr. Newman. Correct, and supported by the legislative
    history as well.
        Mr. Scott. I would like to ask a question of Mr. Robinson,
    I guess. You indicated there would be a disclosure of
    privileged information if this rule went through. You would
    have the same problem you articulated under the present rule,
    is that right?
        Mr. Robinson. No, we would not because there is
    specifically in the statute an advice exemption which by the
    Department of Labor for 50 years, over 50 years, has been
    interpreted as not applying to a lawyer's advice to an employer
    client as long as they do not communicate directly with the
    employees.
        Mr. Scott. The client-lawyer relationship, under Rule 1.6
    of the ABA rule--you are a former president of the ABA, is that
    right?
        Mr. Robinson. Yes, sir.
        Mr. Scott. Rule 1.6, confidentiality of information, says
    the lawyer may reveal information relating to the
    representation of a client to the extent the lawyer reasonably
    believes it is necessary, and Subsection (6) is to comply with
    other law. If the law requires the disclosure, where is the
    problem with the representation?
        Mr. Robinson. So, the new rule is not a law. It is an
    administrative regulation which we are arguing and pointing out
    is in direct conflict with the Department of Labor's
    interpretation of the advice exemption in the statute which is
    the law and, therefore--
        Mr. Scott. How do you interpret the statute? How do you
    read the statute? Does it not say ``direct or indirect?''
        Mr. Robinson. I am sorry.
        Mr. Scott. Does not the statute say ``direct or indirect?''
        Mr. Robinson. I am not addressing the point of whether it
    is direct or indirect. I am directing to the fact that either
    way, it is an administrative regulation and cannot overrule 1.6
    as adopted by the various States around this country, because
    it is not the law, it is an administrative regulation.
        The statute itself says there is an advice exemption, and
    that advice exemption, as it has been implemented for over 50
    years, beginning with the administration of President Kennedy,
    has protected confidential attorney-client communications.
        Mr. Scott. It is protected under the indirect, also?
        Mr. Robinson. Indirect and direct, yes.
        Mr. Scott. Right. We would not expect to have a problem
    with forced revelation of privileged information? You are
    suggesting that the rule would require the revelation of
    privileged information, actual communication, when, in fact,
    all that is revealed is the fact of representation.
        Mr. Robinson. It would be revealed in the face of
    investigation by DOL and accusations and challenges as to
    whether or not the advice was persuader advice. The only way to
    defend against that would be to say what the advice was, to
    disclose the advice, to lay it all on the table, which
    effectively would erase the client confidentiality of the
    conversation.
        Mr. Scott. How is that different from present law?
        Mr. Robinson. I am sorry, I could not hear.
        Mr. Scott. How is that different from present law? Why do
    you not have the same problem--
        Mr. Robinson. Under present law, it is not to be disclosed
    as long as the lawyer advisor of the employer client does not
    communicate directly with the employer client's employees.
        Mr. Scott. They do not--right now, they do not ask for that
    information. If there is a question, they use what is objective
    evidence. They do not ask for the privileged conversations, is
    that right?
        Mr. Robinson. Well, they could ask, but--
        Mr. Scott. They can ask now?
        Mr. Robinson. It would not be required to be disclosed.
        Mr. Scott. They can ask now and they do not?
        Mr. Robinson. They can ask. With all due respect, they can
    ask anything, but it would not need to be disclosed if the
    advisor has not spoken directly to the employees.
        Mr. Scott. And the rule could be implemented in such a way
    that the confidentiality is not--
        Chairman Roe. The gentleman's time has expired. Mr.
    Guthrie, you are recognized for five minutes.
        Mr. Guthrie. Thank you. Thank you, Mr. Robinson, for coming
    up from the Commonwealth of Kentucky. I know a lot of people
    have pointed out certain situations, and a good friend of both
    of ours, our former Senate president, David Williams, one time
    when I was in the State Senate told me that there are bad
    situations, and sometimes bad situations result in bad law.
        I know your reputation. I know who you are. I know when
    people hire you, you are walking in to tell them how to comply
    and how to follow. I think probably 99 percent of the cases are
    that way. It is just going to tie up people who are trying to
    do things the right way and trying to do things correctly and
    getting the correct advice.
        My understanding of where you were going with the last
    point is once you speak to the employees, then it triggers the
    persuader, so there is no need to know what you told the
    employees, all they have to do is know you spoke to the
    employees. When you speak to the employer, then they have to
    figure out what you said to say whether or not it triggered the
    advice. That was where you were going, right? Did I make that
    clear, Mr. Robinson?
        The current persuader rule, they do not really need to know
    the content, the way it is previously applied, they do not need
    to know the content of the conversation, they just need to know
    you talked to the employees?
        Mr. Robinson. Correct, it is a bright line. It is clearly
    enforceable. A lawyer on behalf of the employer client who
    talks directly to the employees knows the lawyer is engaged in
    persuader activities and discloses that, files the appropriate
    forms and so on, and the client knows that.
        But now the advice given in private could be subject to
    investigation if the inference or accusation is made or the
    allegation is made that had the object of persuading the
    employees indirectly, implicitly. If that accusation is made,
    and I do not want to be redundant--
        Mr. Guthrie. Yes, I know.
        Mr. Robinson.--then we are back to disclosing what should
    have been confidential.
        Mr. Guthrie. I will ask the question. Some other people
    have kind of talked similarly, but I will ask it again. You can
    elaborate again as well, Mr. Robinson. This change that the
    Department of Labor is moving towards or putting in place, do
    you think that is authorized by the statute?
        Mr. Robinson. It is a dramatic change. It is erasing or
    attempting to erase over 50 years of respect and recognition of
    attorney-client privilege as an essential component of the rule
    of law. And that is why I am here today as an individual to
    make that point, so that it is understood how catastrophic this
    will be for the rule of law if it is allowed to go forward.
        Mr. Guthrie. What are your biggest concerns with the way
    the Department would enforce this rule? Well, I would say,
    getting into the content of your conversation, to be able to
    enforce the rule.
        Mr. Robinson. I guess in that regard I would defer to Mr.
    Baumgarten since he practices this law every day. I do not. It
    is not my area. I have expressed my thoughts and concerns. I
    will defer to him, if I may.
        Mr. Guthrie. Absolutely.
        Mr. Baumgarten. Let me address a couple of things that are
    embedded in the last few questions. First, the suggestion has
    been made that the change of the rule is necessary in order to
    give effect to the statutory mandate that reporting is required
    if somebody indirectly persuades, and I would submit to you
    that the Department has misconstrued what the word ``indirect''
    was intended to capture.
        The abuses detailed in the McClellan hearings focused on
    so-called ``middlemen,'' and their identity was shrouded in
    mystery. Sometimes they themselves engaged employees directly
    and sometimes they engaged others to engage employees directly.
    And there was a lot of testimony about these so-called
    ``middlemen'' who formed ``vote no committees'' of employees,
    and they engaged in bribery and coercion and the like.
        The word ``indirectly'' was inserted into the statute so
    that if those middlemen did not themselves persuade but engaged
    others to persuade, they would be captured if they spoke or
    acted through others to speak directly to the employees.
        Now, the Department has twisted that to say if you as the
    labor relations consultant advised your own client on
    communications with employees, you are indirectly persuading
    within the meaning of the statute, and that is simply not the
    case. That takes us back to the advice exemption.
        As to the point about the worst-case scenario, as you point
    out, the most irresponsible activities and, frankly, the most
    ineffective ways to communicate with employees--this was really
    addressed in the original solicitor's memo that gave rise to
    the rule that we have lived with for more than 50 years.
        It was Solicitor of Labor Donahue who addressed this, and
    he addressed it in a very simple and straightforward fashion.
        He said, and I will quote, ``Even where the advice is
    embedded in a speech or a statement prepared by the advisor to
    persuade, it is nevertheless advice and must be fairly treated
    as advice.'' The employer and not the advisor is the persuader.
        In any situation in which an outside consultant, myself,
    Ms. Sellers, anybody that is giving advice to a client, it is
    up to the client to accept or reject that advice, and if the
    client does, whatever the client communicates is the employer's
    advice.
        Chairman Roe. Mr. Baumgarten, I am going to ask you to wrap
    up Mr. Guthrie's time.
        Mr. Guthrie. I have to go cast a vote, so I appreciate it.
    Thank you very much.
        Chairman Roe. Mr. Jeffries, you are recognized.
        Mr. Jeffries. Thank you, Mr. Chair. Ms. Sellers, do you
    think there is a public interest in making sure that
    unionization elections are conducted in a fair and equitable
    fashion?
        Ms. Sellers. I believe they should be fair and to the point
    where we should make sure that all those involved understand
    the rules and regulations and the do's and don'ts, and my big
    concern is that our small employers especially are not going to
    get that information with these rules.
        Mr. Jeffries. You have that concern because you believe
    that your clients would ultimately not want to reveal the fact
    that they have entered into a consulting relationship, is that
    right?
        Ms. Sellers. Well, I think a large part, especially on my
    behalf--probably the biggest irony is that I am in this
    committee meeting because not only do I not deal with employers
    when they are being under the threat of maybe union
    organization, I refer them to others. That is not my area of
    expertise.
        So, the reason for me being here is because in the
    definition, I am being scooped up and being part of this where
    I may actually have to do some of this filing because, quite
    frankly, I do not look good in handcuffs. So, I am extremely
    worried. This could be criminal charges. Things that I do today
    with my employers, it may just be advice, it may just be
    training, but as you know, unions do not knock on the front
    door and say we are getting ready to organize. Things can go on
    for months at a time.
        I could be offering opinions in general terms, but later we
    can find out that actually there is a union organization afoot.
        Mr. Jeffries. Why do you think that less information, just
    in terms of the public interest--you acknowledged having a
    free, equitable, fair election, I think, makes sense for all
    sides, but why is less information better than more
    information?
        Ms. Sellers. I do not believe I said that. As a matter of
    fact, I think supervisors should get more information so they
    can handle their employees. However, when we are talking about
    actual union organization, as I mentioned, that is not my area
    of expertise, and that is why I send people to those who know
    more about it.
        Mr. Jeffries. I think Justice Brandeis, directing my
    question to Mr. Newman, once said that, ``Sunlight is said to
    be the best of disinfectants; electric light, the most
    efficient policeman.''
        In your view, is the public interest served by a more
    expansive rule that just provides information to the public?
        Mr. Newman. Yes. That is why there is disclosure
    requirements with respect to your election, Representative, and
    everyone on the dais.
        Mr. Jeffries. There has been this concern that has been
    expressed about the attorney-client privilege being breached. I
    think there are many attorneys on both sides of the aisle, no
    one would support that type of approach, I would imagine.
        Do you think this concern is overblown? You touched on this
    in different ways. If so, why is this concern overblown and
    being overhyped here at this hearing?
        Mr. Newman. Let me try to emphasize one particular point.
    The information that is required under the persuader rule to be
    reported by the consultant and the employer is no different
    than the information that the Department of Labor has always
    required from a persuader and the employer if they engaged in
    face-to-face persuader activity.
        The issue is does the disclosure of that information
    violate the attorney-client privilege. Numerous courts have
    addressed that question under this law, the 4th Circuit Court
    of Appeals, the 5th Circuit Court of Appeals, 6th Circuit Court
    of Appeals.
        Mr. Jeffries. Is it fair to say, as you have pointed out, I
    believe, those are amongst the most conservative circuit courts
    in the Nation, particularly the 5th?
        Mr. Newman. In my opinion.
        Mr. Jeffries. Historically, the 4th, one of the most
    conservative?
        Mr. Newman. Not so much anymore, but, yes, historically.
        Mr. Jeffries. They have all concluded that the attorney-
    client privilege would not be breached, is that right?
        Mr. Newman. Correct.
        Mr. Jeffries. Under this particular statute, is that right?
        Mr. Newman. Yes.
        Mr. Jeffries. Let me just turn in closing to Mr.
    Baumgarten. In terms of the public good as it relates to free
    and fair elections, would you agree with the premise generally
    that unionization rates tend to correlate with States that have
    lower levels of poverty as compared to States, for instance,
    that lack unionization? Is that an accurate assessment?
        Mr. Baumgarten. I am not familiar with those statistics,
    Congressman. I would say to the extent of regulation, and I am
    familiar with this in the Northeast, businesses take into
    account regulation, they take into account requirements, and
    onerous requirements, and they have choices.
        Capital is mobile. There are no boundaries on capital
    anymore. Businesses will move and they will create jobs in the
    environment that is most receptive.
        Mr. Jeffries. I would just ask--
        Chairman Roe. The gentleman's time has expired.
        Mr. Jeffries. Can I just ask unanimous consent that we
    enter into the record two things, Poverty Rankings by State,
    and also a listing of State Right to Work Requirements?
        Chairman Roe. Without objection, so ordered.
        [The information follows:]

      [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Chairman Roe. Mr. Byrne, you are recognized for five
    minutes.
        Mr. Byrne. Thank you, Mr. Chairman. I would like to make a
    couple of points and ask a question. The last colloquy about
    attorney-client privilege is really interesting to me because I
    used to be one of those lawyers giving that advice. No court
    has ruled on this because this has not been out there long
    enough for a court to rule on, so to say that any existing
    Circuit Court of Appeals' opinion is applicable to this new
    interpretation is just flat wrong, that is erroneous.
        So, let me say as somebody that had to comply with it, this
    would invade my client's attorney-client privilege. Just
    remember, it is not the attorney's privilege, it is the
    client's privilege. We are, in fact, invading that privilege
    with this rule. I would just make that point.
        Second point, let us get down to what is really going on
    here. Unions do not want employers talking to their employees
    about this. Who loses in that environment? Employees. When
    unions go to organize, they sell, and they sell what they think
    are the good parts of what they do and they never tell the
    employees the other side of the story, never.
        They never tell the employees that they can take them out
    on strike without the employees having any right to have any
    say about that. They never tell them that their dues can be
    increased without the employees having a vote or anything to
    say about that. They never tell them that there has been a
    history of violence or criminal activity inside the union.
    Obviously, they do not do that.
        Who is going to say that? If the union is not going to say
    that, somebody else has to say it. It has to be the employer.
    If an employer cannot get legal advice to know what the
    employer can say and not say, an employer is not going to say
    anything. That is what the unions want with this rule, for
    employers to say nothing. That way, the employees of the United
    States of America do not get the other side of the story. Who
    loses? The employees, the people that we say we are here to
    protect, they lose in this. That is who is the real loser here.
        Now, this law has been in effect for a very long time. It
    has been in effect during the John F. Kennedy Administration,
    the Lyndon B. Johnson Administration, the Jimmy Carter
    Administration, the Bill Clinton Administration. None of those
    great Democratic administrations ever put this interpretation
    on this law, ever.
        Mr. Baumgarten, are you familiar with the Kennedy
    Administration's interpretation when this was first passed and
    how they applied it?
        Mr. Baumgarten. I think I am.
        Mr. Byrne. Could you speak to it, please?
        Mr. Baumgarten. As I am sure the members of the
    subcommittee know, then Senator Kennedy was one of the sponsors
    of the Landrum-Griffin Act when he was in the Senate. The
    interpretation of the rule that has been in existence up until
    just a couple of days ago for more than 50 years was, as you
    point out, the interpretation that was given in 1962 as a
    result of a memorandum prepared by the Solicitor of Labor, Mr.
    Donahue, that was enacted during the Kennedy Administration.
    And interestingly enough, the Secretary of Labor at that time
    was Arthur Goldberg, who later became Justice Goldberg, and
    spent a career before entering public service as a preeminent
    union-side labor lawyer. I would submit that Arthur Goldberg
    knew a little bit about labor law and knew a little bit about
    the Landrum-Griffin Act, and was obviously a fair-minded public
    servant as well.
        So, we have lived under an interpretation that was given to
    us under the administration by one of the drafters of the bill
    and interpreted by people who I think we can fairly say had an
    objective view of it. And I think it is also worth pointing out
    that the interpretation was upheld in the courts. It was upheld
    by the D.C. Circuit. And it will take a couple of lines, and
    the judge who wrote the decision summarized the then
    Secretary's position by saying if the arrangement is solely for
    advice to the employer, then it matters not that the advice has
    as an object employee persuasion.
        The very purpose of Section 203's exemption proscription is
    to remove from the section's coverage certain activity that
    otherwise would have been reportable. In the overlap area, the
    Secretary thus concludes the exemption direction, not the
    coverage provision, generally must control.
        That is the interpretation that the Department of Labor--
    you might be interested to know that interpretation was
    withheld in this decision and the decision was written by then
    Circuit Court Judge Ruth Bader Ginsburg.
        Mr. Byrne. Thank you. Mr. Chairman, I would like unanimous
    consent to insert letters from the NFIB, the Retail Industry
    Leaders Association, and the National Association of Home
    Builders into the record.
        I would say to this committee I think it is time for us to
    vote on the bill I have recently introduced in Congress to
    repeal this unconscionable interpretation by the Department of
    Labor, and I yield back.
        Chairman Roe. Without objection, so ordered.
        [The information follows:]

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        Chairman Roe. Ms. Bonamici, you are recognized for five
    minutes.
        Ms. Bonamici. Thank you very much, Mr. Chairman, and thank
    you to our witnesses. Before I ask a question, I want to
    address a couple of things that have been placed on the record.
        First, a little clarification about concerns that have been
    raised about the potential for criminal penalties under this
    act. It is my understanding there is a willfulness requirement,
    so we are not talking about mistakes or even negligence here.
    There is a willful requirement before any criminal penalties
    would be imposed.
        Also, with regard to the recent discussion, it is also my
    understanding there is a suggestion made that the Clinton
    administration was aligned with others and, in fact, the
    Clinton administration tried to reverse the 1962 determination
    about what needed to be disclosed.
        So, Mr. Newman, I also used to practice law, so I know
    about the attorney-client privilege, and I know how critical it
    is for effective client representation.
        So, we have had a lot of discussion this morning, but I
    wanted to follow up on some of that, because Section 2 of the
    Labor-Management Reporting Disclosure Act actually states,
    ``Nothing contained in this chapter shall be construed to
    require an attorney who is a member in good standing of the Bar
    of any State to include in any report required to be filed
    pursuant to the provisions of this chapter any information
    which was lawfully communicated to such attorney by any of his
    clients in the course of an attorney-client relationship.''
        So, can you talk a little bit about the suggestion that has
    been made in testimony that lawyers will have to disclose the
    content of advice they give? Do you agree with that? Do you
    agree the rule might somehow change that?
        Mr. Newman. No. If you read the rule and if you read the
    forms on which this reporting will take place, what is
    disclosed is the identity of the client, fee arrangement, scope
    and nature of the services, all of which have been held by
    those Circuit Courts of Appeals I cited not to violate the
    attorney-client privilege.
        The rule goes on to say that it requires also the
    attachment of the arrangement or agreement between the
    consultant and the employer. If that agreement contains any
    attorney-client privileged information, then it should be
    redacted and can be redacted consistent with the rule.
        Ms. Bonamici. Thank you. Since you mentioned what needs to
    be reported, how do the reporting obligations of employers
    under this rule compare with the reporting obligations of the
    unions under the act? So, compare what the unions have to
    report with respect to hiring attorneys and consultants with
    what employers report.
        Mr. Newman. Oh, my goodness. They do not compare, and they
    do not compare because unions have to report the identity of
    the attorneys that they retain, the amounts of money they pay
    them, not just for persuader activities, but for any
    activities.
        If someone retains--if the union retains my law firm for
    the purposes of looking at their lease and advising them on
    real estate issues, then the union has to disclose those
    payments if they exceed $5,000, and, as you know, lawyers can
    rack up a $5,000 bill in short order. They have to disclose
    that on their annual report.
        It is available publicly. It is on the Department of
    Labor's website, and not only can you search by union, you can
    search by law firm. Up pops every dollar that was paid by
    unions to their attorneys and who their attorneys are.
        Ms. Bonamici. The unions also disclose salaries of officers
    and executives?
        Mr. Newman. Yes.
        Ms. Bonamici. Companies do not do that, the employers?
        Mr. Newman. They do not. I should add the disclosure
    requirements that are imposed on unions were amended and
    broadened substantially under the George W. Bush Administration
    in 2003-2006, including all this disclosure information with
    respect to what attorneys must disclosure.
        I should add that the ABA at that time did not say a word
    about it.
        Ms. Bonamici. There is a little bit of time left. Could you
    expand just a little bit on--this law has been around since the
    late 1950s. This loophole really did come up through the
    implementation. Can you talk a little bit about the history of
    that and why it needs to be closed in the remaining time?
        Mr. Newman. Sure. The House version of this, LMRDA, this
    law, did exactly what the ABA wants to do. In fact, verbatim,
    just took the ABA's language and inserted it into the statute.
    Attorneys do not have to disclose basically anything. The bill
    goes to conference. The conference committee rejects completely
    that language the ABA was pushing.
        Fast forward to 1962, Representative Landrum, who was the
    House leader of the LMRDA, pushes it again with the Department
    of Labor with the ABA. If you read the 1962 letter that my
    learned colleague, Mr. Baumgarten, described, it references
    both the ABA and Representative Landrum were pushing that
    opinion.
        So, in 1962, the Department of Labor takes the view that
    you only have to have direct face-to-face persuader activity to
    trigger a reporting requirement, and then the Clinton
    Administration reversed that.
        Chairman Roe. The gentlelady's time has expired.
        Ms. Bonamici. Thank you, Mr. Chairman. I yield back.
        Chairman Roe. Mr. Allen, you are recognized.
        Mr. Allen. Thank you, Mr. Chairman. This administration has
    unleashed an onslaught of rules and regulations since I began
    to serve in Congress just last year. We have had hearings on
    ambush elections, joint employer rules, overtime mandates. That
    is just a few of the regulations that will negatively impact
    how job creators run their businesses.
        Now, we add another to the list, the persuader rule. I am
    frustrated with yet another example of regulatory overreach
    from this administration, meaning this one-size-fits-all,
    particularly with regard to my State.
        Ms. Sellers, how will this rule impact professional
    associations focused on providing educational resources to
    their members? I understand industry groups often conduct
    webinars and presentations on the basis of the NLRB to educate
    employers about their rights and responsibilities under the
    law. Everyone here wants employers and employees informed.
        Ms. Sellers. Yes, they do.
        Mr. Allen. In my understanding, sometimes these sessions
    discuss how to prepare for potential union organizing
    activities. How is this going to be affected?
        Ms. Sellers. The revision, the recent revision, did clarify
    this some, but it is still going to affect associations such as
    SHRM. We have a labor relations panel that traditionally and
    will probably continue to hold these types of webinars and
    seminars, and in some cases they do discuss preparing for union
    activity.
        Again, we have employers of all sizes, many of them do not
    have the luxury of in-house counsel, and some of them do not
    have very informed HR departments, so they need this training,
    and it is our belief that if we do present these types of
    webinars and seminars, we will have to file.
        Mr. Allen. From your experience, are smaller employers
    generally prepared for communicating with employees about union
    issues or do they require assistance from consultants?
        Ms. Sellers. They do require assistance. They do not know,
    especially small employers. The leaders in small employers wear
    multiple hats. They are trying to do production. They are doing
    marketing. They are doing accounting and everything else. The
    last thing they are thinking about at this point is union
    organization. That is not even on their radar.
        So, when they are approached, and oftentimes they are
    approached far after the union has had a long time talking to
    their employees in secret, these employers need to find some
    assistance from attorneys and consultants who understand this
    information and can help them catch up quickly.
        Mr. Allen. As a small business owner, it is unconscionable
    to me that I cannot talk to my employees. I know their
    children, their families, hobbies, everything. It is just
    amazing. I guess this is the world as we see it.
        Mr. Baumgarten, the Department of Labor says that requiring
    more people to file disclosures will bring transparency to
    workers considering union representation. In your opinion, how
    will unions and employees use this information?
        Mr. Baumgarten. Well, I am afraid that what the Department
    of Labor has done is create an artificial need for something
    that really is beside the point.
        You know, 50 years ago or so, when the statute was enacted,
    something like close to one in three of American workers
    belonged to unions. When I started practicing law in 1983, that
    was down to about 20 percent. Today, in the private sector, it
    hovers between 6 and 7 percent; all told, it is about 11
    percent including the public sector.
        The law has not changed. It is the same law that was in
    effect, applied more or less the same way, for the last 50
    years. So, my point is do not blame it on the law. The economy
    has changed, and union messages have to change if they want to
    keep up, and they just have not done that.
        I am afraid that what the Department has done is
    essentially, under the heading of talking about underreporting,
    has really deprived the employers and employees of fundamental
    rights.
        Mr. Allen. That is what my argument is. All of a sudden I
    have to tell my employees, hey, do not come into my office, I
    have an open door, I cannot talk to you. How is that going to
    make them feel? I think that is going to alienate them even
    further.
        Mr. Baumgarten. And all of this is under the artifice of
    claiming there was underreporting. If there was underreporting
    under the old rule, then the Department should have enforced
    the old rule more vigorously instead of trying to change the
    rule, cast the net wider, capture more people within that net,
    and then characterize them in this, frankly, boogieman fashion.
        Mr. Allen. Thank you, panel. I yield back.
        Chairman Roe. The gentleman's time has expired. Mr. Takano,
    you are recognized.
        Mr. Takano. Thank you, Mr. Chairman. It seems to me all
    this talk about underreporting is a lot of mumbo-jumbo. It
    seems to me the Department's persuader rule is about
    guaranteeing the intent of the Labor-Management Reporting
    Disclosure Act, that the intent is met.
        Unions have long had to submit very detailed reports under
    the LMRDA, and it is correct that employees should know--
    employees are voting. They are the voters in this case. They
    are deciding the facts, the presentations on both sides, the
    arguments of the labor and the arguments of management.
        It is right that employees should know all of the parties
    who are involved in this persuasion exercise when they are
    considering whether or not they are going to vote for union
    representation.
        Now, we have talked about this comparison of congressional
    candidates running for office, all reporting requirements. I am
    required to report contributors and people involved in the
    campaign.
        It seems to me that if I claimed attorney-client privilege
    as a way of trying to disguise who is contributing to me or who
    is acting on my behalf or who I am paying, I do not think the
    voters would accept that. I would say voters would feel they
    have a right to know.
        In a similar fashion, do not workers have a right to this
    transparency, but would they not more widely consider all the
    facts being taken into account if employers were required to
    disclose who they are hiring as persuaders? Mr. Newman?
        Mr. Newman. Thank you for the question. Yes, I think that
    is obvious. I think transparency is good. I think the more
    information that employees have before they decide whether to
    choose representation, the better.
        Mr. Takano. So, this idea that--we are trying to draw a
    distinction between persuaders, people who are hired
    specifically to persuade the workers one way or the other on
    whether or not to vote for union representation from legal
    advice, from legal advice which is protected.
        Can we hone in on that? What is that distinction?
        Mr. Newman. Again, I draw up the playbook, I design the
    plays, I script the message, and I carry that out through
    supervisors. That is not advice. That is persuasion.
        Mr. Takano. If you have been paid to do that, that has to
    be disclosed and how much you are being paid, how much is being
    spent on that, right?
        Mr. Newman. Yes, who retained you and how much is being
    paid, so that employees can know that information when they
    make a very important choice.
        Mr. Takano. That is what is at stake here, the employees'
    right to be able to know that. It is relevant. We are not
    getting to the point where we are disclosing the chief
    executive officers of the company's salaries, which would be
    even more relevant than, say, a contract negotiation where you
    are trying to get a bump up of $1 or $2 in your pay if you are
    a worker, right?
        If the company says we cannot afford to give you that
    raise, we are not even saying you have a right to know what the
    chief executive officers are making. All we are saying here is,
    worker, you have a right to know when the company is hiring
    somebody to try to spin you or persuade you or try to dissuade
    you or counteract what the union is saying. You have a right to
    know how much money the company is spending on doing that, is
    that right?
        Mr. Newman. That is right, and let me add union busters in
    my experience are not shy and always use the reports that the
    unions have to file to try to engage in persuader activity. And
    to that point, and I mentioned the legislative history, let me
    quote the Senate report on the LMRDA, authored by then Senator
    John F. Kennedy.
        ``If unions are required to report all their expenditures
    including expenses in organizing campaigns, reports should be
    required for employers who carry on or engage some persons to
    carry on various types of activity, often surreptitious,
    designed to interfere with the free choice of bargaining
    representatives by employees.''
        Mr. Takano. Senator Kennedy has been invoked to make the
    argument on the other side, but it is clear what his intent is,
    that even the indirect activity should be covered by this law.
    So, the intent of the law has not been really reflected by the
    regulations.
        Mr. Newman. Up until now.
        Mr. Takano. Up until now.
        Mr. Newman. And in 2000.
        Mr. Takano. Up until now and 2000. We are trying to correct
    that loophole now.
        Mr. Newman. Correct.
        Mr. Takano. Thank you.
        Chairman Roe. I thank the gentleman for yielding. Mr.
    Grothman, you are recognized for five minutes.
        Mr. Grothman. Thank you. We are going to start with Mr.
    Baumgarten. Under the final rule, the employer will have to
    report if the advice it receives is given with the intent to
    persuade.
        Now, I can imagine talking to a consultant and that could
    be a vague standard, but I want you to comment, is that a hard
    standard or it is one of these things where there is a grey
    area in the law and you do not know if you are breaking the law
    or not?
        Mr. Baumgarten. This is a prime example of poorly drafted
    rules that leave everybody scratching their heads, everybody in
    the real world, which is where I function, trying to scratch
    their head as to what it really means, and there are criminal
    penalties, and it does not make anybody feel much better that
    it has to be willful because God help any of us if we have to
    defend a claim, claiming we made an error, but it was not a
    willful error.
        Mr. Grothman. What is the penalty?
        Mr. Baumgarten. The penalties are criminal penalties.
        Mr. Grothman. Do you know what it is?
        Mr. Baumgarten. Imprisonment.
        Mr. Grothman. How long?
        Mr. Baumgarten. I am not sure, but I can tell you that even
    one day is too long for me.
        Mr. Grothman. Okay. How does the employer know about this
    law?
        Mr. Baumgarten. Well, the employer has to be advised by its
    legal counsel. If the employer does not have legal counsel but
    simply hires a consultant who is a labor relations advisor but
    not counsel, they may not ever know about it.
        Mr. Grothman. This is one of the major problems we have in
    this country, in my opinion. You go into business, whatever
    that business is, service industry, manufacturing, whatever. It
    is hard enough to know in your business how to make your
    customers happy. They have all these peripheral laws out here.
    There is no guarantee the employers even know this law exists.
        Mr. Baumgarten. One of the problems with this law is it is
    very, very sweeping. Under the new LM-10 and new LM-20, there
    are 13 boxes to have to fill out, and if you engage somebody to
    help you draft, revise, or provide a personnel policy, you
    might have to report if it is intended to persuade.
        How do we know if it is going to be intended to persuade?
    The Department of Labor will ultimately tell us whether that
    was the intent or not, because all they have said is they will
    look at all the facts and circumstances.
        As an attorney talking to a client, if a client comes to
    you and says we want you to help us draft a personnel policy,
    that is okay. I can help you draft a personnel policy. I can
    begin to draft it. Tell me what you are trying to achieve.
    Well, we want to achieve competitive state-of-the-art policies
    that will help us recruit and retain effective employees and
    compete in a very competitive marketplace. I can do that. I can
    start to do that.
        What else would be your objectives? We want to remain a
    union-free workplace because we have the right to do that. We
    do not think--whoa, now we have to stop, whether we started the
    project or did not start the project, whether I have one person
    as a client, a general counsel, who has one objective, and I
    have a senior vice president of Human Resources who has a
    different objective, it is simply too vague to have any
    confidence that you are complying.
        Mr. Grothman. You are a lawyer, right, Mr. Baumgarten? That
    is why you are here today?
        Mr. Baumgarten. Yes.
        Mr. Grothman. If your client asks you a question, you have
    to respond. Even you, a trained lawyer who went to law school,
    been an expert on this, been to many seminars, you are going to
    have to respond. I do not know if you have to or not.
        Mr. Baumgarten. In many cases, it will be unclear.
        Mr. Grothman. The expert, here you are testifying before
    Congress, the expert, and we have another vague law here in
    which your clients do not know whether they are doing something
    criminal or not. Is that true?
        Mr. Baumgarten. It is for no demonstrable, appreciable
    reason. We had 50-plus years of a bright line rule that worked
    well and that everybody could apply.
        Mr. Grothman. Okay. Ms. Sellers, I have a question for you.
    We sit here before this committee as well as the other
    committees and we keep coming across new laws, new regulations,
    new things, that if you dare to do business in the United
    States of America, you have to know something.
        How long have you been involved in--
        Ms. Sellers. I have been in human resources for 30 years.
        Mr. Grothman. I would never have guessed it.
        Ms. Sellers. Thank you.
        Mr. Grothman. During this 30 years, and I am sure you have
    been at seminars, blah, blah, blah, and new stuff keeps coming
    up, how many times have you seen laws disappear in which your
    clients get good news, and all of a sudden we do not have to
    worry about something anymore?
        Ms. Sellers. I have very seldom ever had something like
    that.
        Mr. Grothman. Ever in 30 years?
        Ms. Sellers. I cannot recall any.
        Mr. Grothman. We never take away any rules, all we do is
    add new rules? You have never seen anything taken away, Ms.
    Sellers, in 30 years?
        Chairman Roe. The gentleman's time has expired. Ms. Wilson,
    you are recognized for five minutes.
        Ms. Wilson. Thank you, Mr. Chair. I want to ask a question
    of Mr. Newman. In current Federal employment and labor law, do
    workers benefit by not having all relevant information they
    need in order to make informed decisions as it relates to their
    working conditions, wages, or retirement?
        Mr. Newman. I have been doing this for 22 years, and I
    think not.
        Ms. Wilson. If not, what credence do you give to arguments
    that workers should not have information needed to make
    decisions regarding their collective bargaining and unionizing
    rights?
        Mr. Newman. I do not give any credence to it. I think, as I
    said, the idea and the title of this hearing that the persuader
    rule is an attack on employee free choice is bizarre, to put it
    diplomatically.
        Ms. Wilson. You stated in your testimony that in your
    practical experience, in most union campaigns, the evidence of
    the use of anti-union consultants is overwhelming. What are
    these signs?
        Mr. Newman. The signs are it does not matter the size of
    the employer, it does not matter the industry in which the
    employer operates, it does not matter what part of the country
    in which the employer operates.
        The messages are the same, the manner of their delivery is
    the same, and there are scripted messages. There are handbills
    and leaflets that are drafted, sometimes they are identical.
    You will see the identical handbill in one campaign, in one
    industry, in one part of the country that is used in a
    different industry, in a different part of the country.
        The messaging is exactly the same. The theme of the
    campaign is exactly the same. The union is a third party
    outsider, we are one big, happy family, reject that outsider.
        To the extent that a variety of different employers of all
    sizes in all varieties of industries can themselves come up
    with the exact same campaign materials, I think, is impossible.
    And I think the academic studies on this support that, that up
    to 87 percent of cases employers retain union-busting
    consultants.
        Ms. Wilson. Do you think the average worker working today
    has the knowledge or experience needed to detect these signs
    and recognize the true source of communications?
        Mr. Newman. They do not. Most employees give their
    employers and their supervisors the benefit of the doubt. When
    their supervisors are telling them something that they claim is
    their opinion and their message, they are going to believe it,
    unless they are able to understand through disclosure that
    supervisor's message is not the message from the supervisor, it
    is a message from a union buster.
        Ms. Wilson. What is the dividing line between labor and
    consultants or attorneys giving advice and engaging in
    persuader activity?
        Are attorneys who keep detailed records of their time spent
    and routinely make determinations about the character of their
    communications able to easily identify whether they are
    engaging in reportable persuader advice?
        Mr. Newman. Yes. Let me say something that I say to my
    children often, which is saying something over and over does
    not make it true. Saying that legal advice is reportable under
    this rule is just not true.
        The Department of Labor is very clear about this. Let me
    quote the rule. ``An attorney or consultant does not need to
    report when he counsels a business about its plans to undertake
    a particular action or course of action, advises the business
    about its legal vulnerabilities and how to minimize those
    vulnerabilities, identifies unsettled areas of the law, and
    represents the business in any disputes and negotiations that
    may arise.''
        That is legal advice, it is not reportable.
        Ms. Wilson. So, the rule gives examples or instructions in
    this regard?
        Mr. Newman. Detailed examples.
        Ms. Wilson. Detailed. That is great. Does the disclosures
    on Form LM-20 filed by consultants and Form LM-10 filed by
    employers in any way aid employers in complying with disclosure
    requirements? Can employers use information filed by
    consultants to file their disclosures?
        Mr. Newman. Can employers use information filed by
    consultants? They can. They can certainly look at the
    consultant's report to see whether the consultant has deemed
    its activities reportable, which would trigger a reporting
    requirement for the employer.
        Employers often do not use the consultant's reports, they
    use the union's reports, and the consultants use the union
    reports to persuade employees.
        Ms. Wilson. Is there any way--
        Chairman Roe. The gentlelady's time has expired. Mr.
    Carter, you are now recognized for five minutes.
        Mr. Carter. Thank you, Mr. Chairman. Thank all of you for
    being here today, we appreciate it very much.
        Ms. Sellers, I want to start with you. As I understand it,
    you are a human resources professional, and certainly you have
    had a lot of experience in this type of thing, in this kind of
    work, and particularly in the compliance area.
        Earlier during your testimony you mentioned the fact that
    you work primarily with small businesses.
        Ms. Sellers. Right.
        Mr. Carter. Under 100 employees?
        Ms. Sellers. Fifty percent of my clients have 100 employees
    or less, and I think 34 percent have 50 employees or less.
        Mr. Carter. I was formerly a small business owner, and now
    my wife is a small business owner. I am from a right-to-work
    state, I am from Georgia. We are a right-to-work state. Of
    course, we are very concerned--we have had a tremendous amount
    of job growth, and that is good, and that is what we wanted to
    do, that is what we have intended to do.
        I am particularly concerned about what this is going to do
    to small businesses. Can you give me an idea of the impact this
    could have on small businesses?
        Ms. Sellers. Because of the vagueness of certain areas of
    this rule, I think we are all, the small business owners as
    well, going to over report or just back away from the topic
    completely. Over reporting will result in a great deal of time
    and effort.
        It may take 60 minutes to review the form, but if I have to
    go through each of the services that I provide to each of my
    clients, and I must admit, it is usually different things every
    day, to determine whether or not this could possibly be
    considered persuader or offering advice in the event of some
    sort of union organization, many times after the fact, without
    my knowledge, I would either over report or I would just make
    sure all employers knew we were not to discuss employee
    organization, and I could not share with them the rules.
    Because even if I just go by the rules, with TIPS, not to
    threaten, interrogate, and so forth, someone is going to say,
    well, what can I do?
        When I start telling them what they can do, now I am
    offering that advice, and I would then be under the indirect
    persuader rule.
        Mr. Carter. I would suspect that the opposite could be
    true, and that is some small businesses and, in fact, a lot of
    small businesses, instead of over reporting, they will not be
    able to report at all.
        Ms. Sellers. Absolutely, they are going to shy away because
    they do not want their name on the form.
        Mr. Carter. Right. That is the impact it is going to have
    on businesses. What about the employees? Can you see it having
    an impact on the employees?
        Like most small business owners, my employees, they are my
    family. I want to make sure they are okay, too.
        Ms. Sellers. Well, I believe if we start shying away from
    we cannot say this and that in employer training and
    supervisory training, I think a lot of these supervisors are
    just going to back away because we are still at risk even if I
    change my outlines and my training. We are still at risk for
    the attendee asking a question that will then turn into advice.
        I am afraid that a lot of employers will turn away from
    having any of that type of training for their supervisors. We
    really firmly believe at SHRM that supervisors should be
    trained well, that will lead to employee engagement and
    successful companies.
        So, the employees will be directly affected because they
    will not have as effective supervisors as they could.
        Mr. Carter. Right. One last thing, and this is for you, Mr.
    Baumgarten. You obviously have an extensive background in labor
    law, and obviously that is where your expertise is.
        When businesses hire a lawyer, they hire them primarily for
    one reason, and that is to just make sure they are legally
    abiding by the laws. They want to make sure they are in
    compliance. I certainly have done that myself. It is more a
    precautionary measure than anything.
        The direct contact test that was established in 1962 and
    has been in place since then, can you explain that to me a
    little bit just to make sure I understand it correctly?
        Mr. Baumgarten. The issue that was addressed during the
    McClellan hearings and the fundamental issue that was addressed
    in the Landrum-Griffin Act were these middlemen who were acting
    on their own or through other third parties in ways that were
    coercive, involved corruption, or otherwise were in the
    shadows.
        When an employer is speaking directly to its employees,
    whether it is with the advice of counsel, whether it is with
    the advice of a labor relations consultant, an accounting firm,
    or anybody else, it is the employer's message. There is nothing
    that is in the shadows, and the employees have no lack of
    clarity as to who stands behind that message. It is the
    employer.
        Mr. Carter. Right. Mr. Chairman, I know my time has
    expired. I appreciate it. I just wanted to make sure because
    this is probably going to impact that quite significantly.
        Chairman Roe. I thank the gentleman for yielding. Again, I
    want to thank our witnesses, great discussion today, big
    turnout of members. I would like to thank you for taking your
    time to testify in front of the subcommittee today.
        Mr. Polis, do you have any closing remarks?
        Mr. Polis. I do. I would like to begin by submitting two
    letters for the record, without objection, Mr. Chairman. One is
    an ABA policy statement, the other is a letter from attorneys.
        Chairman Roe. Without objection, so ordered.
        [The information follows:]

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        Mr. Polis. This is a letter from many, many attorneys,
    including many professors of law, that states in part, ``For
    the reasons discussed below, we believe that the reporting
    regime contemplated by the MLRDA, as amended, can coexist
    comfortably with the lawyers' obligation under the American Bar
    Association's model rules of professional conduct,'' as Mr.
    Newman also testified to, and as is also contemplated in the
    ABA's own information section, also entered into the record,
    which has a clear component to comply with the law or other
    court orders.
        I want to thank our witnesses for joining us today and for
    engaging members of the subcommittee in a substantive
    discussion.
        As we have discussed, reforms to the persuader rule are
    more than 54 years overdue, and help conform the actual
    implementation of the rule with the words of the law and the
    legislative intent.
        The MLRDA does not require reporting when consultants
    really give employers advice, but the DOL's previous
    interpretation of the advice exemption was so broad that it
    allowed employers and consultants to avoid disclosing things
    that any reasonable person would consider indirect persuader
    activities covered under the statute.
        The previous interpretation was, in fact, rooted in an
    erroneous two-page solicitor's memorandum issued in 1962.
        This rule is the final step towards fulfilling the original
    requirement in MLRDA, and will provide needed transparency in
    the workplace.
        I do want to address briefly some of the arguments we have
    heard today, that somehow the disclosure would affect an
    attorney's ethical duty of client confidentiality. As Mr.
    Newman said very clearly, many experts, legal experts, agree,
    which is also in the letter, that this does not in any way
    violate confidentiality, nor does the additional reporting
    requirements for attorneys who happen to be registered
    lobbyists.
        As Mr. Newman and many of my Democratic colleagues shared,
    the persuader rule helps level the playing field for workers,
    rather than having an enormous stack of filings that unions
    have to have with regard to persuasion activities, we are
    talking about simply for employers, a few pages, help level
    that playing field for transparency, not to the benefit of
    either party.
        I believe we as a society and all those acting in good
    faith, both employers and unions, benefit from transparency
    around the process.
        Despite clear congressional direction to provide public
    disclosure of indirect persuader agreements, disclosure has
    been a one-sided proposition. Unions have to file hundreds of
    pages to report on how they spend money. Meanwhile, workers
    seeking to form unions are denied information and kept in the
    dark about their employer's persuader arrangements.
        Under this new rule, which fulfills the statute, employers
    and consultants would be on more of a level playing field with
    regard to disclosures. It is a significant step forward,
    requiring employers to make public a small fraction of
    important information that unions have already made public for
    years.
        Transparency helps ensure good governance in unions, and
    transparency will also help ensure a more democratic workplace,
    and above-board process at the employer level.
        A level playing field is exactly what our workers and
    corporations need today.
        I support this rule and look forward to successful
    implementation, and I yield back.
        Chairman Roe. I thank the gentleman for yielding. I again
    thank the panel, a great discussion.
        Let me just conclude briefly by saying that you have a
    right in America to belong to a union or not belong to a union.
    That is a right. I grew up in a union household. My father was
    a member of the union. I understand and realize what that union
    membership entailed during the time I was a kid growing up.
        As a small business owner, which I was until I got here,
    the most valuable asset that we have in small business are our
    employees. No question about it, certainly in our service
    industry like I was in, in a medical practice.
        As Mr. Allen said, many of these employees are like family
    members to us, and to not be able to speak to them in any way
    seems to me not who we are as a country.
        What has happened through nine administrations--I just
    counted them off in my head--this did not seem to be a problem
    through nine administrations until this administration came
    along. What has happened in the labor market? What has happened
    in NLRB in the seven years I have been here?
        We have seen the push to have card checks, not a secret
    ballot, that is the most sacrosanct thing. I put on a uniform,
    left this country, and went to Southeast Asia to protect your
    right to have a secret ballot. It is the most sacrosanct thing
    we can have, number one. That did not go anywhere.
        Ambush elections, and it seems that my colleagues are very
    interested in getting all this sunshine on somebody getting
    some legal advice, but it can only shine for 11 days because we
    have to get this election done really quick before anybody
    finds out what is really there.
        What is wrong with having a process that goes longer so the
    employees and the employers and everyone understands, because
    it is a huge thing that we are voting for. That is all anybody
    is asking for.
        Micro unions, persuader rule, overtime, on and on I could
    go with the Department of Labor and this administration.
        My concern, quite frankly, since it is arguable, and
    attorneys make a lot of money arguing about things, if the
    attorney-client privilege is arguable, if we are arguing about
    that, then we have lost a very basic right that we had as
    American citizens. Our system of laws in this country has been
    to protect individual rights throughout the 200-plus years of
    this Republic.
        I will just go through them briefly, there are some
    differences of opinion. We have the American Bar Association
    who opposes this. The Association of Corporate Counsel, the
    Ohio Management Lawyers Association, State Bar of Arizona, the
    Broom County, New York Bar Association, the Ohio Metropolitan
    Bar Association, the Florida Bar, the State Bar of Georgia,
    Illinois State Bar Association, the State Bar of Michigan, the
    Missouri Bar, the Mississippi Bar, the Nebraska State Bar, the
    Ohio State Bar, the Peoria County Bar Association, the South
    Carolina Bar, the Tennessee Bar Association, the West Chester
    County, New York Bar Association, the West Virginia State Bar
    Association, and on and on, seem to oppose this.
        I think this is a rule that starts us down a slippery
    slope, and not a law, I might add, but a rule that could negate
    the attorney-client privilege. We need to go very thoughtfully
    and carefully with this.
        Once again, this was a very thoughtful discussion, great
    debate from both sides of the aisle. And with nothing further,
    this meeting is adjourned.
        [Additional submission by Mr. Byrne follows:]

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        [Additional submissions by Mr. Jeffries follows:]

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        [Additional submission by Mr. Newman follows:]

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        [Whereupon, at 12:03 p.m., the Subcommittee was adjourned.]

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