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

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

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

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

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

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

    Mr. Robinson. Thank you, Mr. Chairman, Ranking Member 
Polis, and distinguished members of this subcommittee. Thank 
you for this opportunity to testify before you.
    I am here to express my intense concerns over the 
Department of Labor's new so-called ``persuader rule.'' The new 
rule rejects the protection of confidentiality for attorney-
client communications embodied in the advice exemption of the 
Labor-Management Reporting and Disclosure Act, as recognized by 
President John F. Kennedy's administration in 1962, and 
consistently followed for more than 50 years, until now.
    When the Department of Labor first proposed this new rule 
in 2011, I wrote to the Department as president of the American 
Bar Association expressing the ABA's concerns. That letter 
expresses ABA policy then and now. It is Attachment B to my 
written statement.
    Today, however, I speak only for myself, and I want to 
emphasize that. As Chairman Roe indicated, Paulette Brown, the 
current distinguished president of the American Bar 
Association, has submitted to this committee a written 
statement on behalf of the ABA expressing the ABA's continued 
concerns about the new administrative rule.
    Many Bar associations have also spoken out against the new 
rule, and some of them are listed in Attachment A to my written 
statement.
    The overriding concern here is the best interest of 
clients, not the best interest of lawyers. In Upjohn Co. v. 
United States, decided in 1981, the Supreme Court taught us 
that the purpose of the attorney-client confidentiality is, 
``To encourage full and frank communications between attorneys 
and their clients and thereby promote broader public interests 
in the observance of law and administration of justice.''
    Client confidences are protected by the ethical rules 
applicable to lawyers. Model Rule 1.6 prohibits lawyers from 
revealing any information relating to the representation of a 
client, unless the client gives informed consent or certain 
narrow exceptions exist.
    For over 50 years, the Department of Labor has consistently 
followed the Kennedy administration's interpretation of the 
advice exemption. The Kennedy Administration's exemption--
interpretation rather--excludes from regulation and reporting 
all advice of attorneys to their employer clients. On the other 
hand, the act does not protect and does require reporting when 
an attorney communicates directly with a third party, namely 
the client's employees.
    The new law abandons the Kennedy Administration's bright 
line test. Instead, the new law substitutes a subjective 
arbitrary standard. This new standard administratively allows 
the Department of Labor to investigate any confidential 
communication to determine if that communication has the object 
to persuade the employees, even directly, to support the 
client's position.
    From what my labor partners tell me, few workplace 
decisions or communications are made in a vacuum without some 
concern for how employees may respond.
    For employers without a union, the employer may be pursuing 
the lawful objective of avoiding the union. For employers with 
a union, the employer's lawful objective may be to maintain 
harmony in its relationship with the union and its members. In 
either case, the interaction between the law and the employer 
client's goals are the labor lawyer's responsibility to 
navigate in order to ensure legal compliance.
    Especially troubling here is the ethical dilemma created by 
enforcement of the new rule. How can labor lawyers defend 
against accusations that they have violated the new rule? There 
really is only one answer. Disclosure will be required as to 
the purpose and content of the otherwise confidential 
communications.
    The new administrative rule must not be allowed to, in 
effect, wipe out the statutory advice exemption that Congress 
expressly, purposely, and explicitly included in Section 203 of 
the Act. The rule of law in America has been built on the 
cornerstone of the client-attorney confidentiality, and unless 
defeated, the new administrative rule will undermine in the 
context of labor relations the confidentiality so essential to 
effective attorney-client communications.
    Your support and vote for Congressman Byrne's House Joint 
Resolution 87 and for all other legislative efforts to defeat 
this rule are respectfully requested. Your leadership is 
needed. The labor law in labor law matters hangs in the 
balance.
    Thank you again for this special opportunity to address 
this subcommittee.
    [The statement of Mr. Robinson follows:]
    
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    Chairman Roe. Thank you, Mr. Robinson. I thank all the 
witnesses. I will now yield myself five minutes.
    Mr. Robinson, I want to start with you. In your long career 
as an attorney and certainly as president of the American Bar 
Association, have you ever had to disclose publicly information 
about your clients as will be required by this new rule?
    Mr. Robinson. Mr. Chairman, attorney-client confidentiality 
is the cornerstone of the rule of law. It has been so for 50 
years in labor relations matters and beyond. The rule of law 
goes back to the 16th century. The rule of law is the key to 
ensuring good client advice so the client is enabled to comply 
with the law. That requires closed door, confidential, 
trustworthy advice to consider what is and what is not lawful.
    That is compromised and jeopardized with any rule that 
requires disclosure of this information. Lawyers are bound by 
these ethical rules. They go back, as I say, centuries. They 
are the cornerstone of the rule of law in this country.
    Chairman Roe. And have been upheld by the courts.
    Mr. Robinson. Over and over and over, as recently as a case 
in California, which has looked at this issue and has 
recognized how sacrosanct this attorney-client confidentiality 
really is in implementing and ensuring the rule of law.
    Chairman Roe. My concern is not labor law. My concern is 
the law in general. If we start down this slippery slope, where 
are we going to end if we dissolve attorney-client privilege?
    If you are my attorney, I feel like I can bear my soul with 
you in a closed door, and I can get good information back from 
you about what is in the best interest of my business, myself, 
and my employees, so I do not do something wrong. Am I right 
about that or wrong about that?
    Mr. Robinson. Let's say you were accused of a crime or 
being investigated for a crime, and you came to me as a lawyer 
and wanted to discuss that with me, and I had to say to you at 
the outset, look, there is a new rule at work here and it may 
require that I disclose everything you are going to tell me. 
How much do you think you would tell me? Probably not very 
much. My ability to advise you on your legal rights, the best 
course for you to take, would be severely compromised.
    I think it is really clear if one appreciates and respects 
the significance and importance of client confidentiality to 
the rule of law that this is really a key issue. This is not 
about transparency. This is about ensuring that adequate advice 
is given to those who want to comply with the law, need to 
comply with the law, and need to be able to think out loud and 
explore options and opportunities to get the advice that 
assures they comply with the law.
    Chairman Roe. I think this is a frightening rule when you 
begin to think that 50 years from now, you could take this as 
precedent and take this slippery slope anywhere. I think this 
needs to be stopped now.
    It should be bipartisan because we are going to vote on a 
bill today on the House about the Internet, and the government 
being able to look at your emails over 180 days. It is 
bipartisan because this should affect and does affect all 
Americans.
    Another question to any of the witnesses, why would an 
employer hire a consultant or an attorney during a union 
organizing campaign if this is the case? What benefit would it 
be? Ms. Sellers? Anyone?
    Mr. Newman. Ask the union, to do what they do--
    Chairman Roe. I am asking Ms. Sellers.
    Mr. Newman. I thought you said anyone. My apology.
    Ms. Sellers. I believe with this rule employers will be 
less likely to contact labor attorneys or consultants, even 
when they are asking for advice. In my line of work, 50 percent 
of my clients are employers with less than 100 employees. Many 
of these people are not experts in union organizations. They 
are trying to run a business, many times wearing various hats, 
and they do not know this information, but still they certainly 
do not want to turn out on a form and get on the radar, they 
would be worried about having their name made public any time 
they ask any questions.
    So, I think they would refrain from asking the questions, 
which would really put them at a disadvantage, not only in the 
union organization for themselves but for the whole process, 
because they will not have the information. There could be 
inadvertent unfair labor practices, which could jeopardize the 
whole election process.
    Chairman Roe. Mr. Baumgarten, you said with 203(c) 
expanding this rule would have a chilling effect on free 
speech.
    Mr. Baumgarten. Yes, that is right, Mr. Chairman, it would 
have a chilling effect. Let me say that in any policy situation 
where we are evaluating an agency rule, we must start with the 
language of the statute, and 203(c) is a broad exemption for 
advice, any kind of advice that is given.
    The reality of this situation is the LM-10 and the LM-20 
obligations cannot be thought about without thinking about the 
LM-21 as well, which is the roll-up report, and in the 
Department of Labor's view that report requires disclosure of 
receipts received from any client--any client--who receives 
labor relations advice or services of any kind, even if not 
persuader advice.
    No client will want to be on that list, and no consultant 
or law firm will want to have that disclosure.
    Chairman Roe. My time has expired. I am going to yield to 
Mr. Polis.
    Mr. Polis. Thank you, Mr. Chair. Mr. Newman, are you an 
attorney, a member of the Bar?
    Mr. Newman. Yes, I am.
    Mr. Polis. As such, do you have any concerns at all with 
regard to any conflict this rule has with the long and 
important tradition of attorney-client confidentiality?
    Mr. Newman. I do not. What the rule requires is the 
identification of a client, fee arrangement with a client, the 
nature and scope of that client representation. That has been 
upheld by the 4th Circuit Court of Appeals, the 5th Circuit 
Court of Appeals, certainly no pro-union sentiment on that 
court, as well as the 6th Circuit Court of Appeals, and is not 
violating the attorney-client privilege.
    Mr. Polis. It seems to me another precedent outside of the 
direct organizing realm is the additional disclosure 
requirements that attorneys who function as lobbyists have as 
well with regard to how much they are paid and for whom they 
lobbied.
    Do you see that as an analogous requirement that also is no 
threat to attorney-client confidentiality, but is consistent 
with the rules of public policy just as this is?
    Mr. Newman. I do. I also cited another statute in my 
written testimony that applies where an attorney is paid in 
cash, they have to disclose their client and the amount, et 
cetera.
    Mr. Polis. So, as was briefly mentioned, the Labor-
Management Reporting Disclosure Act does mandate a reporting 
obligation for labor consultants and employers, including those 
who work indirectly to persuade workers, and the Labor 
Department says there are zero reports from union avoidance 
consultants who indirectly persuade people not to organize.
    It has been alluded to there is a loophole.
    Mr. Newman, I wanted to ask you what exactly is this 
loophole that has allowed this to go on, contrary to 
legislative intent, contrary to the words of the legislation 
and the law, for the past 54 years? How is the Department of 
Labor's new rule more consistent with the actual law than the 
previous policy?
    Mr. Newman. Sure. The statute applies to persuasion that is 
not only direct but indirect. The advice exemption has been 
interpreted from 1962 until 2000, and I will get to that, 
saying so long as the union buster or the persuader is behind 
the scenes and does not show his face and speak directly to 
employees, he does not have to report. In other words, he only 
has to report if he engages in direct persuader activity, 
leaving the word ``indirect'' out of the statute.
    In 2000, the Department of Labor took a different 
interpretation, similar to what they are taking now in the 
persuader rule. There was an election, obviously, in 2000, and 
the Department of Labor overturned that interpretation in 2001 
and went back to that which existed from 1962.
    Mr. Polis. So, before this rule, essentially the previous 
Secretaries of Labor and Departments of Labor have chosen to 
ignore a word that is in the statute, that is ``indirect'' 
consultants, is that your opinion?
    Mr. Newman. Yes. They have ignored the statutory language 
and they have ignored the legislative history.
    Mr. Polis. Now, let us get to the topic of why this can be 
important. Your testimony included an advertisement from a 
union avoidance firm where they actually talked about a money 
back guarantee if they do not successfully defeat the 
organizing effort.
    What are some reasons it might be important for workers to 
know about that kind of persuader arrangement or other kinds of 
examples of ways the consultants try to dissuade employees from 
joining unions?
    Mr. Newman. In my experience, one thing that a consultant 
always does is script messages where the employer says to its 
employees we are one big, happy family, the union is a third 
party outsider that has no business coming into this workplace. 
They will also proclaim that this outsider union is going to 
drive up the employer's costs and impede their ability to 
compete.
    When you have a money back guarantee, the consultant has 
skin in the game. So, it seems to me perfectly reasonable for 
the voters, the employees, to know, number one, their employer 
has hired a third party outsider to script their messages; 
number two, what they are paying that consultant when they are 
saying at the same time they cannot afford a union; and, number 
three, the words from the supervisors are not the supervisors' 
words, they are the words of the consultant that has skin in 
the game, that has guaranteed to the employer we will bust your 
union, we will defeat the union.
    Mr. Polis. If, in fact, the fee was entirely contingent on 
success, which I understand is the case some of the time in 
these agreements, let us say arbitrarily it is $500,000, would 
the employees also know that were they to succeed and the 
company not to pay that $500,000, there would, therefore, be an 
additional $500,000 available on an operating basis that the 
employees might be able to share in, in the form of raises and 
promotions?
    Mr. Newman. Yes, they would.
    Mr. Polis. A very tangible identification if a company is 
otherwise saying there are no resources available, it is clear 
in that case they would have saved X-dollars by losing the 
campaign, a great way for companies to save money by losing 
organizing campaigns.
    I yield back the balance of my time.
    Chairman Roe. I thank the gentleman for yielding. Dr. Foxx, 
you are recognized.
    Ms. FOXX. Thank you, Mr. Chairman, and I thank our 
witnesses for being here today. Mr. Baumgarten, with the new 
NLRB rules that shorten the time between union petitions and 
elections, do you feel employers are likely to require any more 
assistance in legally and effectively communicating with 
employees about both sides of the decision to unionize?
    Mr. Baumgarten. Yes. One of the great myths that has been 
created is that employers lie in wait and plan and practice and 
hire consultants and hone their message months in advance of a 
petition filed with the NLRB.
    My experience and the experience of many of my colleagues 
has been just the opposite, that very often employers are very 
surprised to receive a representation petition, and that is 
particularly true for smaller employers who do not have the 
sophistication to really understand what may be going on in the 
workplace.
    We now have a regime which has already been alluded to that 
the NLRB has created an environment that makes it more and more 
difficult to effectively respond to a representation petition 
by virtue of the rules that preclude pre-election hearings, by 
virtue of the micro unit rules, and by virtue of the ambush 
election rules.
    An election can be held now in as little as 11 days from 
filing of the petition to the election. In general, I think the 
latest statistics show that it takes about 20 days or so down 
from 38 days prior to the ambush election rules last year.
    Employers are already behind the eight ball, so to speak, 
in respect of their ability to understand what is going on, to 
develop the message, to understand what is legal, to understand 
what is going to be effective, to understand what should be 
communicated, what is the message employees want to hear.
    There is, I think, a fundamental misunderstanding of what 
this rule will provide. When a company that does not have in-
house experience and does not have prior experience with a 
representation campaign receives a petition, what do they do?
    They call their lawyer and they say what is this? They find 
out what it is. The very first question, if not the first 
question then the second question, is what should I say to the 
employees? What should I say?
    The answer to that under this rule will be I cannot tell 
you because if I tell you, we will both become persuaders, and 
pending resolution of what goes on with the LM-21, which the 
Department has played hide-and-seek with, I, as a lawyer, may 
then have to disclose information, privileged information, 
about the identity of all of my other labor relations clients. 
That is an unworkable system.
    Ms. FOXX. Thank you very much. Ms. Sellers, I would like to 
go a little farther on the comments Mr. Baumgarten talked 
about. Let us talk a little bit about the impact on employees. 
Tell us about how an employer being better prepared and 
informed about labor issues benefits the employees. What are 
some of the unintended consequences of the new rule for 
employees?
    Ms. Sellers. Thank you for the question. It is a very good 
question because my heart is in education of supervisors, and I 
know you have a wonderful background, also, in employee 
education.
    Supervisors that I normally deal with my small employers 
are not people that came from colleges with MBA degrees. As a 
matter of fact, most small employers cannot afford to hire the 
best and brightest with the biggest degrees. A lot of them grow 
their own and they have to hire them from within and, in many 
cases, they want to hire them from within. They have good 
people who are technical people, and now they have placed them 
in a supervisory role. They have no other knowledge.
    So, with my training, I work very hard to give them basic 
information, including the labor information, such as making 
sure they do not say the wrong thing that could eventually 
result in an unfair labor practice.
    Proper education of supervisors will result in an engaged 
workplace, where you will really have the sense--this sounds 
very naive--the truth is you will have much happier employees 
if you have well-trained supervisors, and as a result, you will 
have more successful organizations that will then create more 
jobs.
    Ms. FOXX. Thank you, Mr. Chairman. I yield back.
    Chairman Roe. The gentlelady's time is expired. Mr. Pocan, 
you are recognized for five minutes.
    Mr. Pocan. Thank you, Mr. Chairman. Thank you to the 
witnesses. So, I guess I come to this from a little bit of an 
interesting perspective because I have a small union printing 
business, and about weekly, I get one of these mailers. I will 
be honest, I have not looked at them all that closely on the 
way to the recycling bin as I have got them.
    Clearly, there is a very big business in union busting, and 
I think maybe my perspective is slightly different in that 
while you are talking about these rules that are going to be so 
terrible for employers versus workers, you know, I come from 
Wisconsin, where recently we passed a law that made it harder 
for people to collectively bargain. We just passed a right to 
work law.
    I would say quite the opposite, this has been much more 
onerous on workers than it has been on employers. I guess I do 
not quite understand the concern at some level when it gets to 
the persuading level versus the regular legal information 
level.
    I know you are all familiar with ``Confessions of a Union 
Buster.'' I am sure you all have a copy. Just the first line in 
the prologue, ``Union busting is a field populated by bullies 
and built on deceit.''
    Now, there is a big difference from just providing simple 
advice and then when you get to the steps of--are you all 
familiar with Cruz & Associates? This is just one firm that 
does this sort of work and does it with some of the big hotels.
    If you look at the things that have happened in some of 
these campaigns, whether it would be the firing and 
intimidation of employees, whether it be a cartoon--here is a 
cartoon management put out at the Miramar Sheraton, and it 
shows a cartoon of Hitler with an arm band showing ``814,'' 
which is the number of the Local.
    I do not know if that is really legal advice or if that 
falls maybe a little more to the persuading, but I do not know 
if you need a well-paid attorney to tell you that Adolf Hitler 
cartoons may or may not help persuade, but this business seems 
to go much farther than what people are talking about.
    Mr. Newman, specifically, what is listed--under this rule, 
what will you be listing? People are talking about bearing 
their soul and confidential information. What is going to be 
disclosed on this form?
    Mr. Newman. The identity of the employer that has retained 
the union buster, the amount the employer is paying to the 
union buster, the scope of the union buster's representation, a 
copy, if there is one, of the agreement or arrangement between 
the union buster and the employer.
    Mr. Pocan. By ``scope,'' how many words are we talking 
about? Pages and pages? Are we talking sentences and sentences?
    Mr. Newman. I think we are talking about a sentence or two, 
and I think what is important to understand is that information 
has always been required on the LM-10 filed by the employer, 
the LM-20 filed by the consultant.
    The scope of the information that is being sought in this 
rule is no different than what the Department of Labor has 
always sought when the union buster deals directly face-to-face 
with employees.
    Numerous courts have said that it is not protected by the 
attorney-client privilege, numerous courts have said it is 
completely consistent with State ethics obligations.
    Mr. Pocan. In these firms, often the work does go way 
beyond. We are hearing the nice of it. We just give a little 
advice on what they are doing. A lot of these firms are doing 
things like this. This is the advice they give. That definitely 
goes to a different level of what I think was intended, and 
that is why we want the disclosure.
    It has been said people will not hire these firms. I do not 
know why, if that is all the disclosure is, why that is so 
chilling to an employer, because if they are going through 
this, and I have that mailing and I decide I want to bust my 
union for whatever reason, to have to disclose that little bit 
is not exactly the bearing of one's soul and the conflict that 
people are asking for.
    Why would someone be afraid to be listed on there?
    Mr. Newman. Because they like to have these consultants 
operating in the shadows. And consultants in the book that you 
referenced, Mr. Levitt's book, not only does that allow the 
consultant not to report, but I think the industry has found 
they are more persuasive when they operate in the shadows 
because employees do not know that.
    When the employer comes out and says, hey, we are one big, 
happy family, do not listen to this third party outsider, I 
always have an open-door policy, and by the way, here is your 
paycheck. I mean, that is going to resonate with employees. And 
at the same time, they do not know that the message that is 
being delivered is by someone like Cruz & Associates and others 
who are not providing legal advice.
    Legal advice is not reportable under the rule, period, 
done. What they are doing is drafting the game plan, running 
the plays, directing supervisors on how to do it.
    Mr. Pocan. Persuading?
    Mr. Newman. Persuading, absolutely.
    Mr. Pocan. Thank you. I yield back.
    Chairman Roe. I thank the gentleman for yielding. Mr. 
Walberg, you are recognized for five minutes.
    Mr. Walberg. Thank you, Mr. Chairman. I was just sitting 
here thinking in listening to all of this of what it would be 
like to have this same persuader rule for political campaigns, 
all of us at the dais here, what impact it would have. It 
certainly would change the presidential campaign going on right 
now, would it not? Well, that is another issue.
    Mr. Robinson, what other areas of law could the reporting 
requirements like those in the new rule be applied to, if this 
precedent is allowed to stand?
    Mr. Robinson. I suspect various Federal agencies, whether 
involved in consumer matters--all kinds, everything should be 
transparent. If everything should be outside the protection of 
attorney-client privilege, if clients are not to be able to 
turn to lawyers without cautioning them that whatever they are 
discussing may have a persuader impact on the employees, and, 
therefore, not be confidential, I really do not know what is 
foreseeable and really unforeseeable.
    The scope of this carries over in unlimited ways, and it 
gives us great concern.
    Mr. Walberg. Most likely a chilling effect on the issue of 
seeking good counsel in almost any area.
    Mr. Robinson. What was mentioned about the LM-20 form being 
so harmless and really not being of any consequence, let me say 
that under the new rule, the rule going into effect, otherwise 
legal advice in compliance--I say this in my written 
statement--under the new rule, otherwise legal advice in 
compliance with the statute itself will now actually trigger 
administrative disclosure under the LMRDA.
    One needs to look at the new form and see all the different 
boxes that have to be checked off disclosing what the legal 
advisor, the lawyer, has done with respect to that client if 
the advice could even be indirectly identified/called 
``persuader advice.''
    Even though that advice is offered only to the client, in 
all instances where the advice of the lawyer furthers the 
employer client's object explicitly or implicitly--I am quoting 
now from the instructions to Form LM-20 that was referred to--
``Explicitly or implicitly, directly or indirectly, the object 
to affect an employee's decision concerning his or her 
representation or collective bargaining rights.'' That is 
persuader advice.
    Mr. Walberg. Pretty broad.
    Mr. Robinson. Pretty broad, and if we want good advice at 
all levels on both sides, imagine the position of the advisor, 
the legal advisor, when a complaint is filed with the 
Department of Labor alleging that persuader activity was taken 
and no report was filed, and there is a dispute over whether it 
was persuader activity, even indirectly, what is going to be 
the defense to that allegation or charge?
    At that point, the defense is going to require that counsel 
and the client do what? Tell everything they talked about, 
explain that it was not persuader activity, but they have to 
disclose the confidential conversation, the advice, the various 
considerations that went into that conference that was 
otherwise confidential.
    Mr. Walberg. Thank you.
    Mr. Robinson. That is what they are going to be facing, so 
the lawyer today with this new rule has to say to the employer 
client at the outset, look, I cannot assure you that somebody 
is not going to say our discussion--
    Mr. Walberg. I appreciate that. I think we get the message 
there. I want to go to the consultant, Ms. Sellers. As a 
general HR consultant, you are likely not the intended target 
for the persuader rule, but you would clearly be impacted by 
the rule.
    Ms. Sellers. Correct.
    Mr. Walberg. Clearly, that is why you are here. How will 
SLS Consulting respond to the persuader rule, and what 
consequences does it create for your clients, in particular 
small businesses?
    Ms. Sellers. I am very concerned about the rule, obviously. 
I am still trying to determine what I am going to do. I have 
basically two choices. I can continue as I am doing and risk or 
jeopardize the fact that I may trigger filing that form. I know 
a lot of my employer clients will not want me to be on that 
form, and they will not want their names on the form.
    So, the other opportunity would be for me to basically stop 
doing any discussion when I train employers and train 
supervisors regarding the union organization or what people 
should and should not say. In that case, I feel like I am doing 
a disservice to those employers and those supervisors by 
withholding information.
    Mr. Walberg. Mr. Chairman, I think it is clear that 
employees and employers could be hurt by taking away this type 
of--
    Chairman Roe. The gentleman's time has expired.
    Mr. Walberg. Thank you.
    Chairman Roe. I now yield five minutes to the full 
committee ranking member, Mr. Scott.
    Mr. Scott. Thank you. Mr. Newman, can you tell me how this 
rule differs or conforms with the actual statute?
    Mr. Newman. Yes, sir. Yes, Representative Scott. The rule, 
unlike previous interpretations, conforms with the language in 
the statute because it will require persuaders to report not 
only their direct persuader activities but also their indirect 
persuader activities.
    Mr. Scott. And what does the statute require?
    Mr. Newman. Both direct and indirect to be reported.
    Mr. Scott. And so the statute just recites--the rule just 
recites the statute?
    Mr. Newman. Correct, and supported by the legislative 
history as well.
    Mr. Scott. I would like to ask a question of Mr. Robinson, 
I guess. You indicated there would be a disclosure of 
privileged information if this rule went through. You would 
have the same problem you articulated under the present rule, 
is that right?
    Mr. Robinson. No, we would not because there is 
specifically in the statute an advice exemption which by the 
Department of Labor for 50 years, over 50 years, has been 
interpreted as not applying to a lawyer's advice to an employer 
client as long as they do not communicate directly with the 
employees.
    Mr. Scott. The client-lawyer relationship, under Rule 1.6 
of the ABA rule--you are a former president of the ABA, is that 
right?
    Mr. Robinson. Yes, sir.
    Mr. Scott. Rule 1.6, confidentiality of information, says 
the lawyer may reveal information relating to the 
representation of a client to the extent the lawyer reasonably 
believes it is necessary, and Subsection (6) is to comply with 
other law. If the law requires the disclosure, where is the 
problem with the representation?
    Mr. Robinson. So, the new rule is not a law. It is an 
administrative regulation which we are arguing and pointing out 
is in direct conflict with the Department of Labor's 
interpretation of the advice exemption in the statute which is 
the law and, therefore--
    Mr. Scott. How do you interpret the statute? How do you 
read the statute? Does it not say ``direct or indirect?''
    Mr. Robinson. I am sorry.
    Mr. Scott. Does not the statute say ``direct or indirect?''
    Mr. Robinson. I am not addressing the point of whether it 
is direct or indirect. I am directing to the fact that either 
way, it is an administrative regulation and cannot overrule 1.6 
as adopted by the various States around this country, because 
it is not the law, it is an administrative regulation.
    The statute itself says there is an advice exemption, and 
that advice exemption, as it has been implemented for over 50 
years, beginning with the administration of President Kennedy, 
has protected confidential attorney-client communications.
    Mr. Scott. It is protected under the indirect, also?
    Mr. Robinson. Indirect and direct, yes.
    Mr. Scott. Right. We would not expect to have a problem 
with forced revelation of privileged information? You are 
suggesting that the rule would require the revelation of 
privileged information, actual communication, when, in fact, 
all that is revealed is the fact of representation.
    Mr. Robinson. It would be revealed in the face of 
investigation by DOL and accusations and challenges as to 
whether or not the advice was persuader advice. The only way to 
defend against that would be to say what the advice was, to 
disclose the advice, to lay it all on the table, which 
effectively would erase the client confidentiality of the 
conversation.
    Mr. Scott. How is that different from present law?
    Mr. Robinson. I am sorry, I could not hear.
    Mr. Scott. How is that different from present law? Why do 
you not have the same problem--
    Mr. Robinson. Under present law, it is not to be disclosed 
as long as the lawyer advisor of the employer client does not 
communicate directly with the employer client's employees.
    Mr. Scott. They do not--right now, they do not ask for that 
information. If there is a question, they use what is objective 
evidence. They do not ask for the privileged conversations, is 
that right?
    Mr. Robinson. Well, they could ask, but--
    Mr. Scott. They can ask now?
    Mr. Robinson. It would not be required to be disclosed.
    Mr. Scott. They can ask now and they do not?
    Mr. Robinson. They can ask. With all due respect, they can 
ask anything, but it would not need to be disclosed if the 
advisor has not spoken directly to the employees.
    Mr. Scott. And the rule could be implemented in such a way 
that the confidentiality is not--
    Chairman Roe. The gentleman's time has expired. Mr. 
Guthrie, you are recognized for five minutes.
    Mr. Guthrie. Thank you. Thank you, Mr. Robinson, for coming 
up from the Commonwealth of Kentucky. I know a lot of people 
have pointed out certain situations, and a good friend of both 
of ours, our former Senate president, David Williams, one time 
when I was in the State Senate told me that there are bad 
situations, and sometimes bad situations result in bad law.
    I know your reputation. I know who you are. I know when 
people hire you, you are walking in to tell them how to comply 
and how to follow. I think probably 99 percent of the cases are 
that way. It is just going to tie up people who are trying to 
do things the right way and trying to do things correctly and 
getting the correct advice.
    My understanding of where you were going with the last 
point is once you speak to the employees, then it triggers the 
persuader, so there is no need to know what you told the 
employees, all they have to do is know you spoke to the 
employees. When you speak to the employer, then they have to 
figure out what you said to say whether or not it triggered the 
advice. That was where you were going, right? Did I make that 
clear, Mr. Robinson?
    The current persuader rule, they do not really need to know 
the content, the way it is previously applied, they do not need 
to know the content of the conversation, they just need to know 
you talked to the employees?
    Mr. Robinson. Correct, it is a bright line. It is clearly 
enforceable. A lawyer on behalf of the employer client who 
talks directly to the employees knows the lawyer is engaged in 
persuader activities and discloses that, files the appropriate 
forms and so on, and the client knows that.
    But now the advice given in private could be subject to 
investigation if the inference or accusation is made or the 
allegation is made that had the object of persuading the 
employees indirectly, implicitly. If that accusation is made, 
and I do not want to be redundant--
    Mr. Guthrie. Yes, I know.
    Mr. Robinson.--then we are back to disclosing what should 
have been confidential.
    Mr. Guthrie. I will ask the question. Some other people 
have kind of talked similarly, but I will ask it again. You can 
elaborate again as well, Mr. Robinson. This change that the 
Department of Labor is moving towards or putting in place, do 
you think that is authorized by the statute?
    Mr. Robinson. It is a dramatic change. It is erasing or 
attempting to erase over 50 years of respect and recognition of 
attorney-client privilege as an essential component of the rule 
of law. And that is why I am here today as an individual to 
make that point, so that it is understood how catastrophic this 
will be for the rule of law if it is allowed to go forward.
    Mr. Guthrie. What are your biggest concerns with the way 
the Department would enforce this rule? Well, I would say, 
getting into the content of your conversation, to be able to 
enforce the rule.
    Mr. Robinson. I guess in that regard I would defer to Mr. 
Baumgarten since he practices this law every day. I do not. It 
is not my area. I have expressed my thoughts and concerns. I 
will defer to him, if I may.
    Mr. Guthrie. Absolutely.
    Mr. Baumgarten. Let me address a couple of things that are 
embedded in the last few questions. First, the suggestion has 
been made that the change of the rule is necessary in order to 
give effect to the statutory mandate that reporting is required 
if somebody indirectly persuades, and I would submit to you 
that the Department has misconstrued what the word ``indirect'' 
was intended to capture.
    The abuses detailed in the McClellan hearings focused on 
so-called ``middlemen,'' and their identity was shrouded in 
mystery. Sometimes they themselves engaged employees directly 
and sometimes they engaged others to engage employees directly. 
And there was a lot of testimony about these so-called 
``middlemen'' who formed ``vote no committees'' of employees, 
and they engaged in bribery and coercion and the like.
    The word ``indirectly'' was inserted into the statute so 
that if those middlemen did not themselves persuade but engaged 
others to persuade, they would be captured if they spoke or 
acted through others to speak directly to the employees.
    Now, the Department has twisted that to say if you as the 
labor relations consultant advised your own client on 
communications with employees, you are indirectly persuading 
within the meaning of the statute, and that is simply not the 
case. That takes us back to the advice exemption.
    As to the point about the worst-case scenario, as you point 
out, the most irresponsible activities and, frankly, the most 
ineffective ways to communicate with employees--this was really 
addressed in the original solicitor's memo that gave rise to 
the rule that we have lived with for more than 50 years.
    It was Solicitor of Labor Donahue who addressed this, and 
he addressed it in a very simple and straightforward fashion.
    He said, and I will quote, ``Even where the advice is 
embedded in a speech or a statement prepared by the advisor to 
persuade, it is nevertheless advice and must be fairly treated 
as advice.'' The employer and not the advisor is the persuader.
    In any situation in which an outside consultant, myself, 
Ms. Sellers, anybody that is giving advice to a client, it is 
up to the client to accept or reject that advice, and if the 
client does, whatever the client communicates is the employer's 
advice.
    Chairman Roe. Mr. Baumgarten, I am going to ask you to wrap 
up Mr. Guthrie's time.
    Mr. Guthrie. I have to go cast a vote, so I appreciate it. 
Thank you very much.
    Chairman Roe. Mr. Jeffries, you are recognized.
    Mr. Jeffries. Thank you, Mr. Chair. Ms. Sellers, do you 
think there is a public interest in making sure that 
unionization elections are conducted in a fair and equitable 
fashion?
    Ms. Sellers. I believe they should be fair and to the point 
where we should make sure that all those involved understand 
the rules and regulations and the do's and don'ts, and my big 
concern is that our small employers especially are not going to 
get that information with these rules.
    Mr. Jeffries. You have that concern because you believe 
that your clients would ultimately not want to reveal the fact 
that they have entered into a consulting relationship, is that 
right?
    Ms. Sellers. Well, I think a large part, especially on my 
behalf--probably the biggest irony is that I am in this 
committee meeting because not only do I not deal with employers 
when they are being under the threat of maybe union 
organization, I refer them to others. That is not my area of 
expertise.
    So, the reason for me being here is because in the 
definition, I am being scooped up and being part of this where 
I may actually have to do some of this filing because, quite 
frankly, I do not look good in handcuffs. So, I am extremely 
worried. This could be criminal charges. Things that I do today 
with my employers, it may just be advice, it may just be 
training, but as you know, unions do not knock on the front 
door and say we are getting ready to organize. Things can go on 
for months at a time.
    I could be offering opinions in general terms, but later we 
can find out that actually there is a union organization afoot.
    Mr. Jeffries. Why do you think that less information, just 
in terms of the public interest--you acknowledged having a 
free, equitable, fair election, I think, makes sense for all 
sides, but why is less information better than more 
information?
    Ms. Sellers. I do not believe I said that. As a matter of 
fact, I think supervisors should get more information so they 
can handle their employees. However, when we are talking about 
actual union organization, as I mentioned, that is not my area 
of expertise, and that is why I send people to those who know 
more about it.
    Mr. Jeffries. I think Justice Brandeis, directing my 
question to Mr. Newman, once said that, ``Sunlight is said to 
be the best of disinfectants; electric light, the most 
efficient policeman.''
    In your view, is the public interest served by a more 
expansive rule that just provides information to the public?
    Mr. Newman. Yes. That is why there is disclosure 
requirements with respect to your election, Representative, and 
everyone on the dais.
    Mr. Jeffries. There has been this concern that has been 
expressed about the attorney-client privilege being breached. I 
think there are many attorneys on both sides of the aisle, no 
one would support that type of approach, I would imagine.
    Do you think this concern is overblown? You touched on this 
in different ways. If so, why is this concern overblown and 
being overhyped here at this hearing?
    Mr. Newman. Let me try to emphasize one particular point. 
The information that is required under the persuader rule to be 
reported by the consultant and the employer is no different 
than the information that the Department of Labor has always 
required from a persuader and the employer if they engaged in 
face-to-face persuader activity.
    The issue is does the disclosure of that information 
violate the attorney-client privilege. Numerous courts have 
addressed that question under this law, the 4th Circuit Court 
of Appeals, the 5th Circuit Court of Appeals, 6th Circuit Court 
of Appeals.
    Mr. Jeffries. Is it fair to say, as you have pointed out, I 
believe, those are amongst the most conservative circuit courts 
in the Nation, particularly the 5th?
    Mr. Newman. In my opinion.
    Mr. Jeffries. Historically, the 4th, one of the most 
conservative?
    Mr. Newman. Not so much anymore, but, yes, historically.
    Mr. Jeffries. They have all concluded that the attorney-
client privilege would not be breached, is that right?
    Mr. Newman. Correct.
    Mr. Jeffries. Under this particular statute, is that right?
    Mr. Newman. Yes.
    Mr. Jeffries. Let me just turn in closing to Mr. 
Baumgarten. In terms of the public good as it relates to free 
and fair elections, would you agree with the premise generally 
that unionization rates tend to correlate with States that have 
lower levels of poverty as compared to States, for instance, 
that lack unionization? Is that an accurate assessment?
    Mr. Baumgarten. I am not familiar with those statistics, 
Congressman. I would say to the extent of regulation, and I am 
familiar with this in the Northeast, businesses take into 
account regulation, they take into account requirements, and 
onerous requirements, and they have choices.
    Capital is mobile. There are no boundaries on capital 
anymore. Businesses will move and they will create jobs in the 
environment that is most receptive.
    Mr. Jeffries. I would just ask--
    Chairman Roe. The gentleman's time has expired.
    Mr. Jeffries. Can I just ask unanimous consent that we 
enter into the record two things, Poverty Rankings by State, 
and also a listing of State Right to Work Requirements?
    Chairman Roe. Without objection, so ordered.
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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.]

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