[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
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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:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
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.
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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.
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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:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
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.]
[all]