[Federal Register Volume 76, Number 119 (Tuesday, June 21, 2011)]
[Proposed Rules]
[Pages 36178-36230]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-14357]



[[Page 36177]]

Vol. 76

Tuesday,

No. 119

June 21, 2011

Part II





Department of Labor





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Office of Labor-Management Standards





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29 CFR Parts 405 and 406





Labor-Management Reporting and Disclosure Act; Interpretation of the 
``Advice'' Exemption; Proposed Rule

  Federal Register / Vol. 76 , No. 119 / Tuesday, June 21, 2011 / 
Proposed Rules  

[[Page 36178]]


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DEPARTMENT OF LABOR

Office of Labor-Management Standards

29 CFR Parts 405 and 406

RIN 1215-AB79
RIN 1245-AA03


Labor-Management Reporting and Disclosure Act; Interpretation of 
the ``Advice'' Exemption

AGENCY: Office of Labor-Management Standards, Department of Labor.

ACTION: Notice of proposed rulemaking; request for comments.

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SUMMARY: The Office of Labor-Management Standards of the Department of 
Labor (Department) is proposing revisions to the Form LM-10 Employer 
Report and to the Form LM-20 Agreements and Activities Report, which 
are required under section 203 of the Labor-Management Reporting and 
Disclosure Act of 1959 (LMRDA or Act), 29 U.S.C. 433. These reports 
cover agreements or arrangements between employers and labor relations 
consultants whereby the consultant undertakes activities to persuade 
employees concerning their rights to organize and bargain collectively. 
The Department proposes to revise its interpretation of the ``advice'' 
exemption to such reporting, by limiting the definition of what 
activities constitute ``advice'' under the exemption, and thus 
expanding those circumstances under which reporting is required of 
employer-consultant persuader agreements. The Department also proposes 
to revise the forms and instructions to make them more user-friendly 
and require more detailed reporting on employer and consultant 
agreements, as well as to require that Forms LM-10 and LM-20 be filed 
electronically. The Department invites comments on any aspect of this 
proposed rule.

DATES: Comments must be received on or before August 22, 2011.

ADDRESSES: You may submit comments, identified by RIN 1215-AB79 and 
1245-AA03. (The Regulatory Information Number (RIN) identified for this 
rulemaking changed with publication of the Spring 2010 Regulatory 
Agenda due to an organizational restructuring. The old RIN (1215-AB79) 
was assigned to the Employment Standards Administration, which no 
longer exists; a new RIN (1245-AA03) has been assigned to the Office of 
Labor-Management Standards.) The comments can be submitted only by the 
following methods:
    Internet: Federal eRulemaking Portal. Electronic comments may be 
submitted through http://www.regulations.gov. To locate the proposed 
rule, use RIN number 1245-AA03. Follow the instructions for submitting 
comments.
    Delivery: Comments should be sent to: Andrew R. Davis, Chief of the 
Division of Interpretations and Standards, Office of Labor-Management 
Standards, U.S. Department of Labor, 200 Constitution Avenue, NW., Room 
N-5609, Washington, DC 20210. Because of security precautions the 
Department continues to experience delays in U.S. mail delivery. You 
should take this into consideration when preparing to meet the deadline 
for submitting comments.
    The Office of Labor-Management Standards (OLMS) recommends that you 
confirm receipt of your delivered comments by contacting (202) 693-0123 
(this is not a toll-free number). Individuals with hearing impairments 
may call (800) 877-8339 (TTY/TDD). Only those comments submitted 
through http://www.regulations.gov, hand-delivered, or mailed will be 
accepted. Comments will be available for public inspection at http://www.regulations.gov and during normal business hours at the above 
address.
    The Department will post all comments received on http://www.regulations.gov without making any change to the comments, 
including any personal information provided. The http://www.regulations.gov Web site is the Federal e-rulemaking portal and all 
comments posted there are available and accessible to the public. The 
Department cautions commenters not to include personal information such 
as Social Security numbers, personal addresses, telephone numbers, and 
e-mail addresses in their comments as such submitted information will 
become viewable by the public via the http://www.regulations.gov Web 
site. It is the responsibility of the commenter to safeguard this 
information. Comments submitted through http://www.regulations.gov will 
not include the commenter's e-mail address unless the commenter chooses 
to include that information as part of his or her comment.

FOR FURTHER INFORMATION CONTACT: Andrew R. Davis, Chief of the Division 
of Interpretations and Standards, Office of Labor-Management Standards, 
U.S. Department of Labor, 200 Constitution Avenue, NW., Room N-5609, 
Washington, DC 20210, [email protected], (202) 693-0123 (this is not 
a toll-free number), (800) 877-8339 (TTY/TDD).

SUPPLEMENTARY INFORMATION:

I. Statutory and Regulatory Background

A. History of the LMRDA's Reporting Requirements

    The Secretary of Labor administers and enforces the Labor-
Management Reporting and Disclosure Act of 1959, as amended (LMRDA), 
Public Law 86-257, 73 Stat. 519-546, codified at 29 U.S.C. 401-531. The 
LMRDA, in part, establishes labor-management transparency through 
reporting and disclosure requirements for labor organizations and their 
officials, employers, labor relations consultants, and surety 
companies.
    In enacting the LMRDA in 1959, a bipartisan Congress expressed the 
conclusion that in the labor and management fields ``there have been a 
number of instances of breach of trust, corruption, disregard of the 
rights of individual employees, and other failures to observe high 
standards of responsibility and ethical conduct which require further 
and supplementary legislation that will afford necessary protection of 
the rights and interests of employees and the public generally as they 
relate to the activities of labor organizations, employers, labor 
relations consultants, and their officers and representatives.'' 29 
U.S.C. 401(b).
    The LMRDA was the direct outgrowth of an investigation conducted by 
the Senate Select Committee on Improper Activities in the Labor or 
Management Field, commonly known as the McClellan Committee, which 
convened in 1958. Enacted in 1959 in response to the report of the 
McClellan Committee, the LMRDA addressed various ills identified by the 
Committee through a set of integrated provisions aimed, among other 
things, at shedding light on labor-management relations, governance, 
and management. These provisions include financial reporting and 
disclosure requirements for labor organizations, their officers and 
employees, employers, labor relations consultants, and surety 
companies. See 29 U.S.C. 431-36, 441.
    Among the abuses that prompted Congress to enact the LMRDA was 
questionable conduct by some employers and their labor relations 
consultants that interfered with the right of employees to organize 
labor unions and to bargain collectively under the National Labor 
Relations Act (``NLRA''), 29 U.S.C. 151 et seq. See, e.g., S. Rep. No. 
86-187 (``S. Rep. 187'') at 6, 10-12 (1959), reprinted in 1 NLRB, 
Legislative History of the Labor-Management Reporting and Disclosure 
Act of 1959 (``LMRDA Leg. Hist.''), at 397, 402, 406-408. Congress was 
concerned that labor

[[Page 36179]]

consultants, acting on behalf of management, worked directly or 
indirectly to discourage legitimate employee organizing drives and 
engage in ``union-busting'' activities. S. Rep. 187 at 10, LMRDA Leg. 
Hist. at 406. Congress concluded that such consultant activities 
``should be exposed to public view,'' id., S. Rep. at 11, because they 
are ``disruptive of harmonious labor relations and fall into a gray 
area,'' id. at 12, even if the consultant's conduct was not unlawful or 
otherwise constituted an unfair labor practice under the NLRA.
    As a result, Congress imposed reporting requirements on employers 
and their consultants under LMRDA section 203. Under LMRDA section 208, 
the Secretary of Labor is authorized to issue, amend, and rescind rules 
and regulations prescribing the form and publication of required 
reports, as well as ``such other reasonable rules and regulations * * * 
as [s]he may find necessary to prevent the circumvention or evasion of 
such reporting requirements.'' 29 U.S.C. 438. The Secretary is also 
authorized to bring civil actions to enforce the LMRDA's reporting 
requirements. 29 U.S.C. 440. Willful violations of the reporting 
requirements, knowing false statements made in a report, and knowing 
failures to disclose a material fact in a report are subject to 
criminal penalties. 29 U.S.C. 439.

B. Statutory and Regulatory Requirements for Employer and Labor 
Relations Consultant Reporting

    Section 203(a) of the LMRDA, 29 U.S.C. 433(a), requires employers 
to report to the Department of Labor:

    Any agreement or arrangement with a labor relations consultant 
or other independent contractor or organization pursuant to which 
such person undertakes activities where an object thereof, directly 
or indirectly, is to persuade employees to exercise or not to 
exercise, or persuade employees as to the manner of exercising, the 
right to organize and bargain collectively through representatives 
of their own choosing * * * .

29 U.S.C. 433(a)(4).\1\ ``[A]ny payment (including reimbursed expenses) 
pursuant to an agreement or arrangement described in'' this provision 
must also be reported. 29 U.S.C. 433(a)(5).
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    \1\ The LMRDA defines a ``labor relations consultant'' as ``any 
person who, for compensation, advises or represents an employer, 
employer organization, or labor organization concerning employee 
organizing, concerted activities, or collective bargaining 
activities.'' 29 U.S.C. 402(m).

    The report must be one ``showing in detail the date and amount of 
each such payment, * * * agreement, or arrangement * * * and a full 
explanation of the circumstances of all such payments, including the 
terms of any agreement or understanding pursuant to which they were 
made.'' 29 U.S.C. 433. The Department of Labor's implementing 
regulations require employers to file a Form LM-10 (``Employer 
Report'') that contains this information in a prescribed form. See 29 
CFR part 405.
    LMRDA section 203(b) imposes a similar reporting requirement on 
labor relations consultants and other persons. It provides, in part, 
that:

    Every person who pursuant to any agreement or arrangement with 
an employer undertakes activities where an object thereof is, 
directly or indirectly--(1) to persuade employees to exercise or not 
to exercise, or persuade employees as to the manner of exercising, 
the right to organize and bargain collectively through 
representatives of their own choosing * * * shall file within thirty 
days after entering into such agreement or arrangement a report with 
the Secretary * * * containing * * * a detailed statement of the 
terms and conditions of such agreement or arrangement.

29 U.S.C. 433(b). Section 203(b) also requires persons subject to this 
requirement to report receipts and disbursements of any kind ``on 
account of labor relations advice and services.'' The Department of 
Labor's implementing regulations require labor relations consultants 
and other persons who have engaged in reportable activity to file a 
Form LM-20 ``Agreement and Activities Report'' within 30 days of 
entering into the reportable agreement or arrangement, and a Form LM-21 
``Receipts and Disbursements Report'' within 90 days of the end of the 
consultant's fiscal year, if during that year the consultant received 
any receipts as a result of a reportable agreement or arrangement. The 
consultant must report the required information on a prescribed form. 
See 29 CFR part 406.
    LMRDA section 203 creates an exemption from the requirement to 
report agreements or arrangements to persuade employees for ``advice'' 
or representation before a court, agency or arbitral tribunal, or in 
collective bargaining. Section 203(c) provides in pertinent part that:

    Nothing in this section shall be construed to require any 
employer or other person to file a report covering the services of 
such person by reason of his giving or agreeing to give advice to 
such employer * * *.

29 U.S.C. 433(c).

    Finally, LMRDA section 204 exempts attorney-client communications 
from reporting, which is defined as, ``information which was lawfully 
communicated to [an] * * * attorney by any of his clients in the course 
of a legitimate attorney-client relationship.'' 29 U.S.C. 434.

II. Authority

    The legal authority for this notice of proposed rulemaking is set 
forth in sections 203 and 208 of the LMRDA, 29 U.S.C. 432, 438. Section 
208 of the LMRDA provides that the Secretary of Labor shall have 
authority to issue, amend, and rescind rules and regulations 
prescribing the form and publication of reports required to be filed 
under Title II of the Act and such other reasonable rules and 
regulations as she may find necessary to prevent the circumvention or 
evasion of the reporting requirements. 29 U.S.C. 438. The Secretary has 
delegated her authority under the LMRDA to the Director of the Office 
of Labor-Management Standards and permits re-delegation of such 
authority. See Secretary's Order 8-2009, 74 FR 58835 (Nov. 13, 2009).

III. History of the Department's Interpretation of LMRDA Section 203(c)

    The ``advice'' exemption of LMRDA section 203(c) is reflected in 
the Department's implementing regulations, but the regulations simply 
track the language of the statute. 29 CFR 405.6(b), 406.5(b). However, 
the Department has interpreted the ``advice'' exemption in the course 
of administering the LMRDA, and those interpretations have been 
communicated primarily in documents intended to guide Department staff 
in administering the statute. As explained below, interpretations have 
varied during the years since the LMRDA was enacted.\2\ A revised 
interpretation of the advice exemption, published in 2001 for public 
notice, 66 FR 2782, was rescinded almost immediately by the successive 
administration, 66 FR 18864.
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    \2\ That the ``advice'' exemption of LMRDA section 203(c) might 
pose interpretive challenges was quickly clear to at least some 
observers. See, e.g., Bureau of National Affairs, The Labor Reform 
Law 36 (1959) (``The exemption applicable to consultants who merely 
give advice is susceptible of several different interpretations. * * 
* It is questionable whether the exemption would also cover payments 
to a consultant who drafted anti-union letters and otherwise mapped 
out a campaign to combat union organizing'').
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A. The Initial Interpretation in 1960

    In its earliest approach to the ``advice'' exemption, reflected in 
a 1960 technical assistance publication to guide employers, the 
Department took the position that employers were required to report any 
``arrangement with a `labor relations consultant' or other third party

[[Page 36180]]

to draft speeches or written material to be delivered or disseminated 
to employees for the purpose of persuading such employees as to their 
right to organize and bargain collectively.'' Department of Labor, 
Bureau of Labor-Management Reports,\3\ Technical Assistance Aid No. 4: 
Guide for Employer Reporting at p. 18 (1960).
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    \3\ The Bureau of Labor-Management Reports is the predecessor 
agency to OLMS.
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    The Department also took the position, in at least some opinion 
letters to members of the public, that a lawyer or consultant's 
revision of a document prepared by an employer was reportable activity. 
In a 1961 article, a Department of Labor official, after noting that 
the drafting of speeches or written material by a consultant or lawyer 
was reportable, addressed the issue of revisions to material prepared 
by the employer:

    [A]dvice to a client with respect to a speech or letter, drafted 
by the client, is not reportable. However, if the individual 
undertakes to revise that speech, this constitutes an affirmative 
act; it is the undertaking of activities to persuade employees in 
the exercise of their rights and, comparable to the giving of a 
speech, requires reporting. The Bureau [Bureau of Labor-Management 
Reports] takes the position that reporting is required in any 
situation where it is impossible to separate advice from activity 
which goes beyond advice. In any situation where an attorney 
undertakes activities which are more than mere advice for the same 
employer, the exclusion of [LMRDA] section 203(c) does not apply 
since the causal relationship is clear.

    Benjamin Naumoff, Reporting Requirements under the Labor-Management 
Reporting and Disclosure Act, in Fourteenth Annual Proceedings of the 
New York University Conference on Labor 129, 140-141 (1961) (italics 
added).

B. The 1962 Revised Interpretation

    In 1962, the Department changed its original view of the ``advice'' 
exemption, adopting what remained the Department's interpretation, 
except for the brief period in 2001.
    The change is reflected in a February 19, 1962 memorandum from then 
Solicitor of Labor Charles Donahue to John L. Holcombe, then 
Commissioner of the Bureau of Labor-Management Reports, in response to 
a November 17, 1961 memorandum from Commissioner Holcombe. Commissioner 
Holcombe sought guidance on ``exactly what the Department's position is 
with respect to the drafting and editing of communications to employees 
which are intended to persuade employees.'' Holcombe endorsed the view 
that the initial preparation of a persuasive document by a lawyer or 
consultant for use by an employer was reportable, but that revising a 
draft constituted ``advice'' for purposes of Section 203(c).
    In response, the Donahue memorandum addressed three situations: (1) 
Where persuasive material is prepared and delivered by the lawyer or 
consultant; (2) where an employer drafts the material and intends to 
deliver it to his employees, and a lawyer or other person provides oral 
or written advice on its legality; and (3) where a lawyer or consultant 
prepares an entire speech or document for the employer. The Donahue 
memorandum concluded that the first activity (preparation and delivery 
of material) was reportable; that the second activity (legal review of 
a draft) constituted ``advice''; and that the third activity 
(preparation of an entire document) ``can reasonably be regarded as a 
form of written advice where it is carried out as part of a bona fide 
undertaking which contemplates the furnishing of advice to an 
employer.'' In discussing the reportability of preparing an entire 
document, the Donahue memorandum observed:

    [S]uch activity in itself will not ordinarily require reporting 
unless there is some indication that the underlying motive is not to 
advise the employer. In a situation where the employer is free to 
accept or reject the written material prepared for him and there is 
no indication that the middleman is operating under a deceptive 
arrangement with the employer, the fact that the middleman drafts 
the material in its entirety will not in itself generally be 
sufficient to require a report.

    The Donahue memorandum did not explicitly analyze the language of 
LMRDA section 203 or the statute's legislative history, but asserted 
that both had been examined.
    In a 1962 presentation to the American Bar Association's Section of 
Labor Relations Law, Solicitor Donahue described the Department's 
original interpretation of the ``advice'' exemption this way:

    [T]he Department of Labor originally took the position that [the 
exemptions in LMRDA section 203(b) and section 204] did not extend 
to drafting or revising speeches, statements, notices, letters, or 
other materials by attorneys or consultants for the use or 
dissemination by employers to employees for the purpose of 
persuading them with respect to their organizing or bargaining 
rights. This kind of help was not viewed as advice but, instead, was 
regarded as an affirmative act with the direct or indirect objective 
of persuading employees in the exercise of their rights.

    Charles Donahue, Some Problems under Landrum Griffin in American 
Bar Association, Section of Labor Relations Law, Proceedings 48-49 
(1962). Donahue observed that this position had been ``reviewed in the 
light of Congressional intent,'' which revealed ``no apparent attempt 
to curb labor relations advice in whatever setting it might be 
couched.'' Id. at 49. Expert legal advice was often necessary, Donahue 
suggested, and thus:

    Even where this advice is embedded in a speech or 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.

Id.

    The conclusions and language of the 1962 Donahue memorandum appear 
as current guidance in section 265.005 (``Scope of the Advice 
Exemption'') of the LMRDA Interpretative Manual (``IM''). The Manual 
reflects the Department's official interpretations of the LMRDA and is 
intended to guide the work of the staff of the Office of Labor-
Management Standards in the administration and enforcement of the 
statute. Section 265.005 of the Manual states:

    Section 203(b) provides for reports from every person who 
pursuant to an agreement or arrangement with an employer undertakes 
the type of activities described therein. Section 203(c) provides 
that nothing in section 203 shall be construed to require any person 
to file a report * * * by reason of his giving or agreeing to give 
advice to such employer * * *.''
    The question of application of the ``advice'' exemption requires 
an examination of the intrinsic nature and purpose of the 
arrangement to ascertain whether it essentially calls exclusively 
for advice or other services in whole or in part. Such a test cannot 
be mechanically or perfunctorily applied. It involves a careful 
scrutiny of the basic fundamental characteristics of any arrangement 
to determine whether giving advice or furnishing some other services 
is the real underlying motivation for it.
    As to specific kinds of activity, it is plain that the 
preparation of written material by a lawyer, consultant, or other 
independent contractor which he directly delivers or disseminates to 
employees for the purpose of persuading them with respect to their 
organizational or bargaining rights is reportable. Moreover, the 
fact that such material may be delivered or disseminated through an 
agent would not alter the result. Such undertakings obviously do not 
call for the giving of advice to an employer.
    However, it is equally plain that where an employer drafts a 
speech, letter or document which he intends to deliver or 
disseminate to his employees for the purpose of persuading them in 
the exercise of their rights, and asks a lawyer or other person for 
advice concerning its legality, the giving of such advice, whether 
in written or oral form, is not in itself sufficient to require a 
report.

[[Page 36181]]

Furthermore, we are now of the opinion that the revision of the 
material by the lawyer or other person is a form of written advice 
given the employer which would not necessitate a report.
    A more difficult problem is presented where the lawyer or 
middleman prepares an entire speech or document for the employer. We 
have concluded that such an activity can reasonably be regarded as a 
form of written advice where it is carried out as part of a bona 
fide undertaking which contemplates the furnishing of advice to an 
employer. Consequently, such activity in itself will not ordinarily 
require reporting unless there is some indication that the 
underlying motive is not to advise the employer. In a situation 
where the employer is free to accept or reject the written material 
prepared for him and there is no indication that the middleman is 
operating under a deceptive arrangement with the employer, the fact 
that the middleman drafts the material in its entirety will not in 
itself generally be sufficient to require a report.

    In later years, the Department reiterated the 1962 position, 
sometimes expressing doubts about its soundness. See Subcommittee on 
Labor-Management Relations, H. Comm. on Education and Labor, The 
Forgotten Law: Disclosure of Consultant and Employer Activity Under the 
L.M.R.D.A. (Comm. Print 1984) (statement of Richard Hunsucker, 
Director, Office of Labor-Management Standards Enforcement, Labor-
Management Standards Administration, U.S. Department of Labor); 
Subcommittee on Labor-Management Relations, H. Comm. on Education and 
Labor, 4 Pressures in Today's Workplace 5 (Comm. Print 1980) (statement 
of William Hobgood, Assistant Secretary of Labor for Labor-Management 
Relations) (current interpretation ``when stretched to its extreme, * * 
* permits a consultant to prepare and orchestrate the dissemination of 
an entire package of persuader material while sidestepping the 
reporting requirement merely by using the employer's name and 
letterhead or avoiding direct contact with employees'').

C. The Kawasaki Motor Corporation Litigation: International Union, 
United Automobile Workers v. Dole \4\
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    \4\ International Union, United Automobile Workers v. Dole, 869 
F.2d 616, 617 (DC Cir. 1989).
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    Prior to the interpretive revision announced in January 2001, the 
Department of Labor's public statements involving the ``advice'' 
exemption were made in the context of litigation. The Department's 
position in the litigation was consistent with, and derived from, the 
interpretation of LMRDA section 203(c) reflected in the Donahue 
memorandum and section 265.005 of the LMRDA Interpretative Manual.
    In 1982, the United Automobile Workers sued the Department, seeking 
to compel the Department to proceed against the Kawasaki Motor 
Corporation for failing to report conduct that the union alleged was 
reportable under LMRDA sections 203(a) and 203(b). One focus of the 
litigation was Kawasaki's payments to a consultant to devise personnel 
policies to discourage unionization. The Department took the position 
that the payments were not reportable, since the consultant's activity 
constituted ``advice'' under section 203(c). In a statement of its 
reasons for not proceeding against Kawasaki, the Department cited 
section 265.005 of the LMRDA Interpretative Manual and stated: ``An 
activity is characterized as advice if it is submitted orally or in 
written form to the employer for his use, and the employer is free to 
accept or reject the oral or written material submitted to him.''
    A Federal district court ruled against the Department. 
International Union v. Secretary of Labor, 678 F. Supp. 4 (D.D.C. 
1988). However, the U.S. Court of Appeals for the District of Columbia 
Circuit reversed this ruling and deferred to the Department's 
interpretation of LMRDA section 203 as reasonable in the context of the 
case, since the statute itself was ``silent or ambiguous with respect 
to the issues before'' the court. International Union, United 
Automobile Workers v. Dole, 869 F.2d 616, 617 (DC Cir. 1989) (Ginsburg, 
J.) Noting the ``tension between the coverage provisions of the LMRDA, 
and the Act's exemption for advice,'' the appellate court identified 
two views of those provisions. 869 F.2d at 618. In the ``overlap area'' 
of the statute, as the appellate court called it, in which guidance to 
employers by third-party consultants can theoretically constitute both 
advice within the meaning of section 203(c) and persuader activity 
within the meaning of Section 203(b), the interpretive problem involves 
whether the coverage provision or the exemption controls. Id. In the 
course of the litigation, the appellate court noted, the district court 
adopted one view and held that the coverage provision prevailed over 
the advice exemption, while the Secretary adopted the alternate view 
and concluded through administrative interpretation that the advice 
exemption trumped the coverage provision. Id. The court of appeals 
upheld the Secretary's long-standing interpretation, recognizing her 
``right to shape her enforcement policy to the realities of limited 
resources and competing priorities.'' 869 F.2d at 620.
    Following the decision of the Court of Appeals, OLMS staff was 
guided by a March 24, 1989 memorandum from then Acting Deputy Assistant 
Secretary for Labor-Management Standards Mario A. Lauro, Jr. The Lauro 
Memorandum cited LMRDA Interpretative Manual section 265.005 and 
stated:

    [T]here is no purely mechanical test for determining whether an 
employer-consultant agreement is exempt from reporting under the 
section 203(c) advice exemption. However, a usual indication that an 
employer-consultant agreement is exempt is the fact that the 
consultant has no direct contact with employees and limits his 
activity to providing to the employer or his supervisors advice or 
materials for use in persuading employees which the employer has the 
right to accept or reject.

    The reliance in the 1989 memo on the distinction between a 
consultant's direct or indirect contact with the employer's employees 
has origins in the 1962 interpretation.

D. The 2001 Interpretation

    In 2001, the Department published a notice of a revised statutory 
interpretation regarding the advice exemption without request for 
public comment, which narrowed the category of information exempted 
from disclosure by consultants. See Interpretation of the ``Advice'' 
Exemption in section 203(c) of the Labor-Management Reporting and 
Disclosure Act, 66 FR 2782 (Jan. 11, 2001) (stating that the 
application of the ``advice'' exemption depends on whether an activity 
can be considered giving ``advice,'' meaning an oral or written 
recommendation regarding a decision or a course of conduct, as opposed 
to engaging in direct or indirect persuasion of employees). However, 
later in 2001, the implementation of the revised interpretation was 
delayed for sixty days to enable an administration-wide policy review. 
Interpretation of the ``Advice'' Exemption in Section 203(c) of the 
Labor-Management Reporting and Disclosure Act, 66 FR 9724 (Feb. 9, 
2001) (temporarily delaying for sixty days the enforcement date of the 
interpretation).
    Then, on April 11, 2001, the Department rescinded the new 
interpretation and returned to its prior interpretation. See 
Interpretation of the ``Advice'' Exemption in section 203(c) of the 
Labor-Management Reporting and Disclosure Act, 66 FR 18,864 (Apr. 11, 
2001) (rescinding the Clinton administration revision of the ``advice'' 
exemption of the Labor-Management Reporting and Disclosure Act). In 
support of the rescission, the April 11 notice cited insufficient 
evidence to

[[Page 36182]]

justify the revised interpretation and a lack of notice-and-comment 
procedures. 66 FR at 18864. The April 11 notice also did not subject 
its return to the prior interpretation to notice-and-comment 
procedures. However, because the Department views input from the 
regulated community as important to the revision of the Department's 
interpretation, this notice now requests such input.\5\
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    \5\ Agency interpretive rules are excepted from the notice-and-
comment procedures of the Administrative Procedures Act. See 5 
U.S.C. 553(b)(3)(A).
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IV. The Need for a Revised Interpretation

A. Summary of the Proposed Interpretation

    We now believe that the Department's current interpretation of the 
advice exemption may be overbroad, and could sweep within it agreements 
and arrangements between employers and labor consultants that involve 
certain persuader activity that Congress intended to be reported under 
the LMRDA. In its Fall 2009 Regulatory Agenda, the Department announced 
its intention to initiate notice and comment rulemaking on this matter, 
and on May 24, 2010, a public meeting was held regarding employer and 
consultant reporting. See 75 FR 27366. At the meeting, the Department 
heard from interested members of the public, including labor 
organizations, employer associations, and labor relations 
consultants.\6\ Though rulemaking is not required to revise the 
interpretation of ``advice,'' the Department has elected to do so in 
order to obtain broad public consultation in a matter at the heart of 
current labor-management relations practice.
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    \6\ An audio recording of the meeting and a copy of a PowerPoint 
presentation shown at the meeting are available on the OLMS Web site 
at: http://www.dol.gov/olms/regs/compliance/ecrmeeting.htm.
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    The Department proposes to adopt the approach of the ``advice'' 
exemption as set forth in its January 11, 2001 notice, as that approach 
better effectuates the purpose of section 203 of the LMRDA to secure 
public disclosure concerning employer-consultant agreements that have a 
direct or indirect object to persuade employees concerning their rights 
to organize and bargain collectively and preserves the ``advice'' 
exemption than the Department's current interpretation.\7\ As discussed 
in more detail below, the proposed addition to the Form LM-20 and LM-10 
instructions describing the application of the ``advice'' exemption 
rejects the current interpretation, which distinguishes between direct 
and indirect contact and asks whether or not an employer is ``free to 
accept or reject'' materials provided. Rather, the revised 
interpretation focuses on the plain meaning of the term ``advice'' in 
the statute's text, and contrasts that plain meaning with those 
activities undertaken by consultants, which go beyond mere advice and 
that have a direct or indirect object to persuade employees with 
respect to their statutory rights. The revised interpretation defines 
reportable ``persuader activities'' as all actions, conduct, or 
communications that have a direct or indirect object to persuade 
employees, and does not simply address the preparation of persuader 
materials. The proposed new instructions will state:
---------------------------------------------------------------------------

    \7\ In focusing on how the ``advice'' exemption applies to the 
preparation of written material, the 2001 notice articulates 
principles generally applicable to determining whether any activity 
may be considered ``advice'' within the meaning of the LMRDA or 
reportable persuader activity.

    With respect to persuader agreements or arrangements, ``advice'' 
means an oral or written recommendation regarding a decision or a 
course of conduct. In contrast to advice, ``persuader activity'' 
refers to a consultant's providing material or communications to, or 
engaging in other actions, conduct, or communications on behalf of 
an employer that, in whole or in part, have the object directly or 
indirectly to persuade employees concerning their rights to organize 
or bargain collectively. Reporting is thus required in any case in 
which the agreement or arrangement, in whole or part, calls for the 
consultant to engage in persuader activities, regardless of whether 
---------------------------------------------------------------------------
or not advice is also given.

See, infra, Sec. V. The proposed instructions also provide examples of 
reportable and non-reportable agreements or arrangements. See, infra, 
Sec. VI.C. and Appendix A. Reportable agreements include those in which 
a consultant agrees to plan or orchestrate a campaign or program on 
behalf of an employer to avoid or counter a union organizing or 
collective bargaining effort, such as through the specific persuader 
activities illustrated in the instructions, or otherwise engages on 
behalf of the employer, in whole or part, in any other actions, 
conduct, or communications designed to persuade employees. Id. A 
consultant must report if he or she engages in any conduct, actions, or 
communications that utilize employer representatives to persuade 
employees. Id. For example, a consultant must report if he or she 
plans, directs, or coordinates the activities of employer 
representatives (i.e., an employer's managers or supervisors), or 
provides persuader material to them for dissemination or distribution 
to employees. Id. Further, drafting or implementing policies for the 
employer that have the object to directly or indirectly persuade 
employees would also trigger a reporting obligation. No report is 
required concerning an agreement or arrangement to exclusively provide 
advice to an employer, such as when a consultant exclusively counsels 
employer representatives on what they may lawfully say to employees, 
ensures a client's compliance with the law, or provides guidance on 
NLRB practice or precedent. Id.
    As discussed more fully below, support for this revised 
interpretation is firmly rooted in the plain meaning of the statutory 
text. In addition, in examining the legislative history of the 
reporting obligations pertinent here, the Department has concluded that 
this revised approach better reflects the congressional intent in 
enacting the LMRDA. Also, the preamble demonstrates that this revised 
interpretation has been suggested for decades by various Department 
agency heads and Executive Branch and Congressional observers, and is 
amply supported by contemporary academic research in the industrial 
relations and labor-management fields. This body of research and 
commentary clearly demonstrates that the labor consultant industry has 
proliferated since the passage of the LMRDA, that employers mount 
sophisticated responses to the presence of union-related activity among 
their employees, and that employers rely to a great extent on such 
consultants to assist with those responses.
    In addition, evidence suggests that despite the extraordinary 
growth in the labor consultant industry and employers' utilization of 
that industry to respond to protected employee activity, current 
reporting under the LMRDA about persuader activity is negligible, as a 
result of the current overly broad interpretation of the advice 
exemption. The Department views reporting of persuader agreements or 
arrangements as providing employees with essential information 
regarding the underlying source of the views and materials being 
directed at them, as aiding them in evaluating their merit and 
motivation, and as assisting them in developing independent and well-
informed conclusions regarding union representation and collective 
bargaining. Congress viewed such disclosures as mitigating the 
disruptive impact of labor relations consultants, or as Congress called 
them, ``middlemen,'' on peaceful and stable labor relations. Indeed, in 
the Department's view, full

[[Page 36183]]

disclosure of the participation of outside consultants will lead to a 
better informed electorate, which invariably produces more reliable and 
acceptable election results less subject to charges and counter-
charges, and thus becomes a less disputed, more stable foundation for 
subsequent labor-management relations.
    The Department also proposes related changes to the employer and 
consultant reporting standards on the Form LM-10 Employer Report and on 
the Form LM-20 Agreement and Activities Report. In addition, expanded 
reporting detail concerning reportable agreements and arrangements is 
proposed for both forms. The Department also proposes modifications of 
the layout of the LM-10 and LM-20 forms and instructions to better 
outline the reporting requirements and improve the readability of the 
information. Finally, the Department proposes that Form LM-10 and Form 
LM-20 reports must be submitted to the Department electronically, and 
provides a process to apply for an electronic filing exemption on the 
basis of specified criteria.
    The Department invites comment on the proposed changes, their 
advantages and disadvantages, and whether the changes would better 
implement the LMRDA. The Department invites general and specific 
comments on any aspect of this proposal; it also invites comment on 
specific points, as noted throughout the text of this notice.

B. The Textual Basis for the Current Interpretation

    Section 203(c) of the statute exempts a consultant's services 
provided ``by reason of his giving or agreeing to give advice,'' 
without expressly defining or otherwise giving meaning to the term 
``advice.'' As noted above, the Department has employed various 
interpretations of the term over the past five decades, but those 
interpretations, excluding the short-lived 1960 and 2001 
interpretations, have not provided analytical distinctions between 
exempt ``advice'' and reportable persuader activity in order to ensure 
adequate reporting of persuader agreements. In particular, the 
interpretation of advice currently contained in section 265.005 of the 
LMRDA Interpretative Manual (IM)--that an activity is characterized as 
advice if it is submitted orally or in written form to the employer for 
his use, and the employer is free to accept or reject the oral or 
written material submitted to him--sets a standard that is not grounded 
in common or ordinary understanding of the term ``advice'' as used in 
section 203(c). The focus on whether an employer can ``accept or 
reject'' the material submitted by a consultant has resulted in an 
overbroad interpretation of ``advice'' that, in the Department's 
present view, exempts from reporting agreements and arrangements to 
persuade employees for which disclosure is appropriate. The 
interpretation now proposed by the Department better serves the 
purposes of section 203 to provide the level of disclosure for 
persuader agreements as described.
    ``Advice'' ordinarily is understood to mean a recommendation 
regarding a decision or a course of conduct. See, e.g. Merriam-
Webster's Collegiate Dictionary, Tenth ed., 18 (2002) (defining 
``advice'' as ``recommendation regarding a decision or course of 
conduct: Counsel''); Black's Law Dictionary (online) (defining 
``advice'' as ``guidance offered by one person, esp. a lawyer, to 
another'') (8th ed. 2004); The Oxford English Dictionary (defining 
``advice'' as ``opinion given or offered as to action; counsel. spec. 
medical or legal counsel'') (2d ed. 1989). Thus, this common 
construction of ``advice'' does not rely on the advisee's acceptance or 
rejection of the guidance obtained from the advisor. Indeed, the act of 
supplying the guidance itself, or supplying a ``recommendation 
regarding a decision or a course of conduct,'' constitutes the 
provision of advice, regardless of the advisee's ability or authority 
to act or not to act on it.
    The practical applications of the current interpretation of 
``advice'' provide illustrative guidance. The current ``advice'' 
standard in the IM treats as advice not only the situation in which a 
lawyer or consultant reviews drafts of persuasive material at the 
employer's request to determine whether the statements in the material 
are permissible under the National Labor Relations Act, but also covers 
a lawyer or consultant's preparation of persuasive material to be 
disseminated or distributed to employees. Because an employer generally 
has the authority to accept or reject the work performed for him or her 
in either case, the Department's current IM interpretation regards both 
examples as advice and therefore not triggering reporting. However, in 
the Department's view, the latter example appears to be quintessential 
persuader activity--one that has an object to persuade employees. This 
application demonstrates that the current scope of the ``advice'' 
exemption is overbroad and ultimately does not appear to be the best 
approach in making the statutory distinctions called for.
    In contrast, the common understanding of ``advice'' noted above 
would not include, for example, the preparation of persuasive material 
for dissemination or distribution to employees because undertaking such 
activity is itself more than a recommendation regarding a course of 
conduct in the ordinary sense. It is the supply of material or 
communications that have an object to persuade employees. This 
distinction is further underscored by the deliberate disclosure in this 
example of material or communications to third parties (the employees), 
thus waiving any attorney-client privilege that might have attached to 
the activity. The Department's current view--that preparation of 
persuasive material or communications is advice so long as the employer 
is free to accept or reject the material--thus does not appear to 
provide the best analytical framework for ensuring necessary 
disclosure.
    For purposes of the LMRDA, the distinction between activities 
properly characterized as ``advice'' and those that go beyond 
``advice'' has not been made clear. This is particularly so in the case 
in which an employer essentially serves as the conduit for persuasive 
communication or material developed or prepared by an outside 
consultant or lawyer. The role of the outside consultant in attempting 
to influence or persuade employees, whether the consultant deals 
directly with employees or deals with the employer and his or her 
agents who in turn deal with employees, is the matter required to be 
disclosed by the statute. To be sure, Congress identified the potential 
for abuse when employers rely heavily on third parties in the context 
of union organizing drives and collective bargaining. See, e.g., S. 
Rep. 187 at 10-11, in LMRDA Leg. Hist. at 406-407 (citing evidence that 
``large sums of money are spent in organized campaigns on behalf of 
some employers'' and stating that such activity ``should be exposed to 
public view'').
    As a result, reporting is essential to fulfill the statutory 
purpose, and thus is mandated, when the consultant activity goes beyond 
recommending a course of conduct and either directly or indirectly 
persuades or influences, or attempts to persuade or influence, 
employees regarding their protected rights. Thus, the better approach 
for distinguishing between ``advice'' and ``persuader activity'' should 
focus on whether an activity calls exclusively for recommendations or 
guidance for use by the advisee regardless of whether the advisee may 
accept or reject it.
    Furthermore, the Department's most recent approach does not appear 
to be

[[Page 36184]]

the better reading of LMRDA section 203(a)(4), which requires employer 
reporting of agreements or arrangements with consultants involved in 
``activities where an object thereof, directly or indirectly, is to 
persuade employees,'' or of LMRDA section 203(b), which uses a nearly 
identical formulation (``activities where an object thereof is, 
directly or indirectly--to persuade employees''). The direct object, or 
at least the indirect object, of preparing persuasive material that is 
intended to be transmitted to employees is to persuade employees, 
regardless of whether it is the employer or the consultant that 
disseminates the material. It is reasonable to conclude that Congress 
envisioned that this type of activity, which goes beyond just giving 
advice in the ordinary sense, would trigger reporting. It is fair to 
infer that reporting is required when a person engages in persuader 
activities, whether or not advice is also given. In such instances, the 
lawyer or other consultant functions less as an advisor to the employer 
than as a persuader of employees.

C. The Legislative History Supports Narrowing the Interpretation of 
``Advice''

    The current IM interpretation seems inconsistent with the 
legislative history of section 203 of the LMRDA. It is clear from the 
legislative history that one of the primary purposes behind the 
enactment of section 203(b) was to promote an employee's freedom of 
choice by revealing to him or her the real source of persuader activity 
designed to influence the employee in the exercise of protected rights. 
Further, it is readily apparent from the history that Congress was most 
concerned with the so-called ``middleman'' operating under an 
arrangement with an employer to persuade employees either directly or 
indirectly through an agent or through some other indirect means.
    The problems related to the interference of ``middlemen'' in the 
labor relations arena were first identified in Congress by the Senate 
Select Committee on Improper Activities in the Labor or Management 
Field, which, after the name of its chairman, became known as the 
McClellan Committee. Among the abuses uncovered by the McClellan 
Committee was the employment of middlemen by management to spy on 
employee organizing activity or to otherwise prevent employees from 
forming or joining a union, or to induce them to form or join company 
unions through such deceptive devices as ``spontaneous'' employee 
committees, essentially fronts for the employer's anti-union activity. 
S. Rep. No. 85-1417 at 255-300 (1958). In particular, the select 
committee scrutinized the activities of Nathan W. Shefferman and his 
labor consulting firm, Labor Relations Associates of Chicago, Inc., 
concluding that this firm indulged in the worst types of deceptive 
consultant activity, including organizing ``vote no'' committees during 
union campaigns, designing psychometric employee tests designed to weed 
out pro-union workers, and negotiating improper ``sweetheart'' 
contracts with union officials. Id.; see also S. Rep. No. 86-1139 at 
871. (1960). Having successfully countered 90 percent of the organizing 
drives he worked to oppose, [Nathan W. Shefferman, The Man In The 
Middle (New York: Doubleday, 1961)], Shefferman can be credited with 
developing many of the strategies that continue to dominate the field.
    In reporting on S. 1555, the Senate version of the bill that 
ultimately became the LMRDA, the Senate Committee on Labor and Public 
Welfare adopted one of the central recommendations of the McClellan 
Committee to ``curb activities of middlemen in labor-management 
disputes.'' S. Rep. 187 at 2, LMRDA Leg. Hist. at 398. In describing 
the problem of ``union-busting middlemen,'' the Labor Committee stated 
that it had:

    Received evidence in prior hearings showing that large sums of 
money are spent in organized campaigns on behalf of some employers 
for the purpose of interfering with the right of employees to join 
or not to join a labor organization of their choice, a right 
guaranteed by the National Labor Relations Act. Sometimes these 
expenditures are hidden behind committees or fronts. However the 
expenditures are made, they are usually surreptitious because of the 
unethical content of the message itself. The committee believes that 
this type of activity by or on behalf of employers is reprehensible 
* * * [W]here they are engaged in they should be exposed to public 
view, for if the public has an interest in preserving the rights of 
employees then it has a concomitant obligation to insure free 
exercise of them.

S. Rep. 187 at 10-11, LMRDA Leg. Hist. at 406-407. The Labor Committee 
further noted that:

    In almost every instance of corruption in the labor-management 
field there have been direct or indirect management involvements. 
The report of the McClellan Committee describes management middlemen 
flitting about the country on behalf of employers to defeat attempts 
at labor organization. In some cases they work directly on employees 
or through committees to discourage legitimate organizational drives 
or set up company-dominated unions. These middlemen have been known 
to negotiate sweetheart contracts. They have been involved in 
bribery and corruption as well as unfair labor practices. The 
middlemen have acted in fact if not in law as agents of management. 
Nevertheless, an attorney for the National Labor Relations Board has 
testified before the McClellan committee that the [National Labor 
Relations Act] is not adequate to deal with such activities.

S. Rep.187 at 10, LMRDA Leg. Hist. at 406.

    Accordingly, the Labor Committee indicated that the provision that 
ultimately became section 203(b) of the LMRDA was necessary in order to

requir[e] reports from middlemen masquerading as legitimate labor 
consultants. The committee believes that if unions are required to 
report all their expenditures, including expenses in organizing 
campaigns, reports should be required from employers who carry on, 
or engage such persons to carry on, various types of activity, often 
surreptitious, designed to interfere with the free choice of 
bargaining representatives by employees and to provide the employer 
with information concerning the activities of employees or a union 
in connection with a labor dispute.

S. Rep. 187 at 39-40, LMRDA Leg. Hist. at 435-436. Thus, section 203(b) 
includes a reporting requirement for consultant activity that not only 
interferes with, restrains, or coerces employees in their protected 
rights under the NLRA, i.e., constitutes an unfair labor practice, but 
also requires reporting of activity to persuade employees that involves 
conduct that is otherwise legal under the NLRA. S. Rep. 187 at 11, 12, 
LMRDA Leg. Hist. at 406, 407 (reportable expenditures ``may or may not 
be technically permissible under the National Labor Relations or 
Railway Labor Acts'').\8\
---------------------------------------------------------------------------

    \8\ Labor relations consultants may be held liable by the 
National Labor Relations Board for unfair labor practices committed 
on behalf of employers. See, e.g., Blankenship and Associates, Inc. 
v. N.L.R.B., 999 F.2d 248 (7th Cir. 1993), enforcing 306 N.L.R.B. 
994 (1992). Employers may also be held liable, based on the actions 
of their consultants. See, e.g., Wire Products Manufacturing Corp., 
326 N.L.R.B. No. 62 (1998).
---------------------------------------------------------------------------

D. Post-LMRDA Congressional and Executive Branch Observations Regarding 
Labor Consultant Activity

    In 1980 and again in 1984, the Subcommittee on Labor Management 
Relations of the House Committee on Education and Labor investigated 
and reported on, among other things, the role of management consultants 
in employee organizing campaigns and the Department's requirements for 
reporting that activity. See Subcommittee on Labor-Management 
Relations, H. Comm. on Education and Labor, Pressures in Today's 
Workplace (Comm. Print 1980) (``1980 Subcommittee Report''); 
Subcommittee on Labor-Management

[[Page 36185]]

Relations, H. Comm. on Education and Labor, The Forgotten Law: 
Disclosure of Consultant and Employer Activity Under the L.M.R.D.A. 
(Comm. Print 1984) (``1984 Subcommittee Report'').
    The 1980 Subcommittee Report noted the growth in employers' 
utilization of labor relations consulting firms to engage in persuader 
activity. 1980 Subcommittee Report at 28 (``[T]he labor consultant 
industry has undergone very substantial growth since the [passage of 
the LMRDA], particularly during the past decade.''). This report also 
notes the increase in the use of law firms to assist employers in their 
union avoidance activities:

    Many lawyers no longer confine their practice to traditional 
services such as representing employers in administrative and 
judicial proceedings or advising them about the requirements of the 
law. They also advise employers and orchestrate the same strategies 
as non-lawyer consultants for union ``prevention,'' union 
representation election campaigns, and union decertification and de-
authorization. Lawyers conduct management seminars, publish widely, 
and often form their own consulting organizations.

1980 Subcommittee Report at 28-29. In addition to noting the increase 
in labor consultant activity, the 1980 Subcommittee Report 
characterizes the extent and effectiveness of employer and consultant 
reporting under the LMRDA as a ``virtual dead letter, ignored by 
employers and consultants and unenforced by the Department of Labor.'' 
1980 Subcommittee Report at 27. The Subcommittee concluded that the 
``current interpretation of the law has enabled employers and 
consultants to shield their arrangements and activities[,]'' and called 
upon the Department to ``adopt[] a more reasonable interpretation so 
the Act can reach consultants who set and control the strategy for 
employer anti-union efforts but who do not themselves communicate 
directly with employees.'' Id. at 44. This recommendation came about, 
in part, as the result of testimony before the Subcommittee by 
Assistant Secretary of Labor for Labor-Management Relations William 
Hobgood, who ``acknowledged that Department [enforcement] activity had 
`declined significantly' since the first few years after the enactment 
of [the LMRDA].'' 1980 Subcommittee Report at 45. Hobgood testified in 
1980 that the Department's interpretation of advice `` `troubles' 
him,'' and that the Department was ``reviewing the question of where 
advice ends and persuasion begins to make sure the Department's 
position is consistent with the law and adequate to deal with the 
approaches to persuader activities that have evolved since the law was 
enacted more than 20 years ago.'' Id. at 44.
    One commenter describes the 1980 Subcommittee hearings this way:

    Lawmakers learned that little had changed since the enactment of 
the LMRDA. Although the consulting industry's spokesmen claimed that 
their firms acted only as industrial `marriage counselors,' majority 
members rejected this contention, writing, `consultants promote a 
perspective of labor-management relations which exalts the short-run 
over the long-run, presuming that workers will vote against a union, 
if management exercises the correct combination of manipulation, 
persuasion and control during the relatively brief duration of an 
organizing campaign.' Much of the committee's interest centered on 
the business community and their mercenaries' reluctance to comply 
with the Landrum-Griffin Act.

Robert Michael Smith, From Blackjacks to Briefcases: A History of 
Commercialized Strikebreaking and Unionbusting in the United States 115 
(Athens, OH: Ohio University Press, 2003)
    Subsequent subcommittee hearings, conducted in 1984, also addressed 
labor relations consultants' and employers' noncompliance with the 
LMRDA's reporting and disclosure requirements. The 1984 Subcommittee 
Report further underscored the reduction in the filing of LMRDA 
consultant and employer reports despite evidence of the continuing 
growth of the consultant industry. 1984 Subcommittee Report at 15. ``In 
the 25 years since the enactment of the LMRDA there has been a dramatic 
increase in management's use of consultants to counter the unionization 
efforts of employees or to decertify existing unions. This well-
documented increase has been most pronounced in the past 10 years.'' 
1984 Subcommittee Report at 2. The Subcommittee again admonished the 
Labor Department for failing to act on its recommendations from 1980 
regarding the need for more vigorous enforcement of employer and 
consultant reporting requirements, 1984 Subcommittee Report at 4, and 
suggested that lack of robust enforcement of employer and consultant 
reporting requirements of section 203 ``frustrated Congress' intent 
that labor-management relations be conducted in the open.'' Id. at 18.
    Concern about the impact of consultant activity on labor-management 
relations emanated from the Executive Branch as well. In March, 1993, 
the Secretaries of Labor and Commerce announced the establishment of 
the U.S. Commission on the Future of Worker-Management Relations, which 
was charged with investigating and making recommendations regarding 
enhancement of workplace productivity and labor-management cooperation, 
among other things. The Commission, also called the Dunlop Commission 
after its chairman, Professor John T. Dunlop of Harvard University, 
held public hearings and took testimony on the state of labor relations 
in the early 1990s. The Commission issued a fact-finding report in June 
1994 and a final report in December of the same year, and the reports 
provide further support for the need for the revision of the 
interpretations involving consultant reporting.
    In assessing economic costs that labor and management face in the 
competition surrounding representation elections, the Commission found 
in its fact-finding report that ``[f]irms spend considerable internal 
resources and often hire management consulting firms to defeat unions 
in organizing campaigns at sizable cost.'' Commission on the Future of 
Worker-Management Relations, Fact-Finding Report at 74 (May 1994) 
(hereafter ``Dunlop Commission Fact-Finding Report''). Indeed, the 
Commission concluded, the ``NLRA process of representation elections is 
often highly confrontational with conflictual activity for workers, 
unions, and firms that thereby colors labor-management relations.'' Id. 
at 75. The same report observed that ``[s]tudies show that consultants 
are involved in approximately 70 percent of organizing campaigns,'' but 
also noted that at the time there were ``no accurate statistics on 
consultant activity.'' Id. at 68. Ultimately, in its final report, the 
Commission concluded that the ``import of the worst features of 
political campaigns into the workplaces by managers and unions creates 
confrontation and is not conducive to achieving the goals'' of 
enhancing worker productivity and labor-management cooperation. 
Commission on the Future of Worker-Management Relations, Report and 
Recommendations, Final Report at p. 36 (December 1994) (hereafter 
``Dunlop Commission Final Report'').

E. Current Industrial Relations Research Evidences Proliferation of 
Consultant Industry and Substantial Use by Employers of Labor Relations 
Consultants

    Contemporary research in the industrial relations arena provides 
ample support for the conclusion that the consultant industry has 
mushroomed, and the use of consultants by employers to defeat union 
organizing efforts has similarly proliferated in recent years. One 
study estimated that only 100 management consultant firms operated in 
the 1960s, shortly after the

[[Page 36186]]

passage of the LMRDA, and that this number had grown ten times by the 
mid-1980s. John Logan, The Union Avoidance Industry in the U.S.A., 44 
British Journal of Industrial Relations 651, 653 (2006) (hereafter 
``Logan, Union Avoidance Industry''). In addition, while the 1980 
Subcommittee Report estimated that 66% of employers hired consultants 
during organizing drives to manage their anti-union campaigns, 1980 
Subcommittee Report at 27, and the Dunlop Commission estimated in 1994 
that 70% of employers utilized labor consultants, Dunlop Fact-Finding 
Report at 74, more recent studies place the contemporary consultant-
utilization rate of employers who face employee organizing drives 
somewhere between 71% and 87%. See Kate L. Bronfenbrenner, Employer 
Behavior in Certification Elections and First-Contract Campaigns: 
Implications for Labor Law Reform, in Restoring the Promise of American 
Labor Law 80 (Sheldon Friedman et al. eds. ILR Press 1994) (hereafter 
``Bronfenbrenner, Employer Behavior'') (71% of employers); Logan, Union 
Avoidance Industry at 669 (75% of employers); Kate Bronfenbrenner, 
Economic Policy Institute, No Holds Barred: The Intensification of 
Employer Opposition to Organizing 13 (2009) (hereafter 
``Bronfenbrenner, No Holds Barred'') (75% of employers in period 1999-
2003); Chirag Mehta and Nik Theodore, American Rights at Work, 
Undermining the Right to Organize: Employer Behavior during Union 
Representation Campaigns 5 (2005) (hereafter ``Mehta and Theodore, 
Undermining the Right to Organize'') (82% of employers); James Rundle, 
Winning Hearts and Minds in the Era of Employee Involvement Programs, 
in Organizing to Win: New Research on Union Strategies 213, 219 (Kate 
Bronfenbrenner, et al. eds., Cornell University Press 1998) (hereafter 
``Rundle, Winning Hearts and Minds'') (87% of employers). Based on this 
review, there can be no doubt that ``[e]mployer campaigns against 
unionization have become standardized, almost formulaic, in large part 
because employers frequently turn to outside consultants and law firms 
to manage their anti-union efforts * * * [O]utside consultants have 
become ubiquitous in representation elections.'' Mehta and Theodore, 
Undermining the Right to Organize at 14.
    As labor consultants' roles in employer responses to union activity 
has grown, so too has the role of law firms specializing in union 
avoidance. See Logan, Union Avoidance Industry at 658, citing Bruce E. 
Kaufman and Paula E. Stephan, The Role of Management Attorneys in Union 
Organizing Campaigns, 16 Journal of Labor Research 439 (1995); John 
Logan, Trades Union Congress, U.S. Anti-Union Consultants: A Threat to 
the Rights of British Workers 11 (2008) (hereafter ``Logan, U.S. Anti-
Union Consultants''); 1984 Subcommittee Report at 2. As one study 
reported, attorneys provide employers with a range of services, and 
have varying degrees of involvement, during union avoidance campaigns:

    Typically at the first sign of union activity at a facility 
management seeks the advice and counsel of one or more attorneys. In 
some cases the attorney's role is largely one of providing legal 
assistance, such as advising supervisors on what constitutes an 
unfair labor practice under the NLRA, with overall direction of the 
firm's campaign entrusted to either top management or an outside 
consultant. In other situations, the attorney not only provides 
legal counsel but also plays an important (sometimes dominant) role 
in developing and implementing the company's anti-union strategy and 
campaign tactics.

Kaufman and Stephan at 440.

    Another evolving dimension of the union avoidance industry is its 
increasingly sophisticated use of technology, including highly produced 
anti-union videos and the growing use of information technology. These 
methods permit consultants to more easily locate anti-union media 
stories and to disseminate persuader communication more quickly and 
easily. John Logan, Consultants, Lawyers, and the `Union Free' 
Movement, 33 Industrial Relations Journal 197, 212 (2002) (hereafter 
``Logan, Union Free Movement''). For example, a prominent labor 
relations consulting firm presents the following information on its Web 
site:

    In today's digital and media driven world, messages must be 
delivered in varied formats. Custom labor videos provide excellent 
pro-employer messages with hard-hitting facts as well as personal 
testimonials and perspectives from employees and supervisors. CD/DVD 
hosted presentations are another format that will enable you to 
reach the technical savvy of your employee group, allowing employees 
to browse through information in ``chapters'' and learn at their own 
pace. Digital communications strengthen critical messages with 
verbal and visual reinforcement.

    Another consultant's Web site promises to ``reinforce your campaign 
message in a format that preserves employee anonymity, enhances 
personalization and enables dynamic content solutions. Employees will 
be able to access current news, organizational communications, union 
activity data and statistics anywhere, anytime.''

F. The Underreporting Problem Is Significant

    Although it is clear that employer-consultant persuader activity 
has continued since enactment of the LMRDA, evidence suggests that much 
of this persuader activity goes unreported. Although there is some 
variation from year to year, the average number of representation cases 
filed with NMB during the FY 2005-2009 is 38.8; the average number of 
NLRB representation cases filed during the same period is 3,429.2.\9\ 
Using the median utilization rate of consultants by employers from the 
studies discussed above, the Department would expect that 75% of the 
combined NLRB and NMB representation matters would result in 2,601 
arrangements or agreements requiring a Form LM-20 consultant report 
annually during the same five year period.\10\ However, the Department 
received an average of 192.4 LM-20's annually,\11\ only 7.4% of those 
expected. It appears clear that only a small fraction of the organizing 
campaigns in which consultants were utilized resulted in the filing of 
a Form LM-20. When such a small proportion of persuader consulting 
activity is reported, employees are not receiving the information that 
Congress intended they receive.
---------------------------------------------------------------------------

    \9\ See Seventy-Fourth Annual Report of the National Labor 
Relations Board for the Fiscal Year Ended September 30, 2009 10 
available at http://www.nlrb.gov/shared_files/Annual_Reports/NLRB2009.pdf; 2009 NMB Annual Report, Table 1 at 79, available at 
http://www.nmb.gov/documents/2009annual-report.pdf.
    \10\ This figure may still under represent the total, as it does 
not take into account employers who hire multiple consultants or 
consultants who hire sub-consultants, each of whom would need to 
file separate Form LM-20 reports.
    \11\ Information on the number of LM reports received is 
available through the Department's Electronic Labor Organization 
Reporting System (e.LORS). The Department also used the FY 2009 
total for the number of Form LM-20 reports received in estimating 
the number of Form LM-20 reports for the last information collection 
request renewal. See the Paperwork Reduction Act analysis in Section 
VII, C, 1.
---------------------------------------------------------------------------

    Several observers have suggested that persuader reporting has 
decreased despite the increase in employer utilization of consultants 
because of the ineffectiveness of the LMRDA. John Logan, `Lifting the 
Veil' on Anti-Union Campaigns: Employer and Consultant Reporting under 
the LMRDA, 1959-2001, 15 Advances in Industrial and Labor Relations 
295, 297(2007) (hereafter ``Logan, Lifting the Veil'') (``As the size 
and sophistication of the consultant industry has grown, the 
effectiveness of the law on consultant disclosure and reporting has 
diminished.'') Indeed, the charge is that

[[Page 36187]]

``[e]nforcement of the consultant reporting requirements had 
practically ground to a halt by the mid-1980s--all during a time when, 
according to organized labor, employers and consultants were ever more 
actively, boldly, and creatively fighting unionization.'' Id. at 
311.\12\ A former consultant, Martin Jay Levitt, has confirmed this 
criticism:
---------------------------------------------------------------------------

    \12\ See also Assistant Secretary Hobgood's testimony, discussed 
supra, ``acknowledg[ing] that Department [enforcement] activity had 
`declined significantly' since the first few years after the 
enactment of [the LMRDA].'' 1980 Subcommittee Report at 45.

    The law states that management consultants only have to file 
financial disclosures if they engage in certain kinds of activities, 
essentially attempting to persuade employees not to join a union or 
supplying the employer with information regarding the activities of 
employees or a union in connection with a labor relations matter. Of 
course, that is precisely what anti-union consultants do, have 
always done. Yet I never filed with Landrum-Griffin in my life, and 
few union busters do * * * 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, 
---------------------------------------------------------------------------
which collects the Landrum-Griffin reports.

    Martin Jay Levitt (with Terry Conrow), Confessions of a Union 
Buster 41-42 (New York: Crown Publishers, Inc. 1993). Mr. Levitt 
describes consultant strategies that he employed to avoid reporting his 
activities:

    Within a couple of weeks I had identified the few supervisors 
who were willing to work extra hard for me * * * Through that 
handful of good soldiers I set to work establishing a network of 
rank-and-file employees who would serve as spies, informants, and 
saboteurs. Those so-called loyal employees would be called upon to 
lobby against the union, report on union meetings, hand over union 
literature to their bosses, tattle on their co-workers, help spread 
rumors, and make general pests of themselves within the organizing 
drive. I rarely knew who my company plants were * * *. It was 
cleaner that way. Nobody could connect me to the activities, I 
steered clear of the reporting requirements of Landrum-Griffin, and 
the workers' `pro-company' counter campaign was believed to be a 
grass-roots movement.

Id. at 181. Mr. Levitt's description of the actual practice of labor 
relations consultants is consistent with prior statements by other 
consultants. See 1980 Subcommittee Report at 44 (quoting testimony of 
labor relations consultant and stating that the ``current 
interpretation of the law has enabled employers and consultants to 
shield their arrangements and activities'').\13\
---------------------------------------------------------------------------

    \13\ See also Robert Michael Smith, supra, at 112, which states 
that ``[a]lthough they claimed to tailor their strategy to each 
client's needs, most modern union busters employed a standardized 
three-pronged attack. Cognizant of LMRDA guidelines requiring 
consultants to report their activity only when engaged directly in 
persuading employees in regards to their right to bargain 
collectively, most consulting teams utilized supervisory personnel 
as `the critical link in the communications network.' '' (Italics in 
original.)
---------------------------------------------------------------------------

    Considering Mr. Levitt's extensive personal experience in the 
field, his statements raise concerns about the effectiveness of the 
LMRDA's reporting provisions. Mr. Levitt is incorrect in suggesting 
that the LMRDA, by its terms, requires direct contact between a 
consultant and employees before the statutory duty to report persuader 
activities is triggered. But the Department's most recent 
interpretation of LMRDA section 203(c) lends itself to the 
understanding described by Mr. Levitt, since it views most activity 
other than direct contact between a consultant and employees as falling 
within the ``advice'' exemption. If Mr. Levitt's statement is 
representative of the consulting industry, then the Department's most 
recent interpretation may be contributing to the substantial under-
reporting of persuader activities that Congress wanted disclosed.
    The evidence suggests that consultants, in order to avoid reporting 
under the LMRDA, engage predominantly in indirect persuader activity by 
directing their activities to the employer's supervisors. The 
clarification of the distinction between advice and persuader activity 
is intended to correct this problem, and will result in better 
information for employees when making decisions about representation.

G. The Proposed Interpretation Would Provide Information That Enables 
Employees To Make a More Informed Choice Regarding the Exercise of 
Their Rights To Organize and Bargain Collectively

    The reporting of persuader and information-supplying agreements and 
arrangements enables workers to become more informed as they determine 
whether to exercise, and the manner of exercising, their protected 
rights to organize and bargain collectively. As stated above, such 
disclosure makes employees aware of the underlying source of the 
information they are receiving, helps them in assessing its content, 
and assists them in their decision making process regarding union 
representation. As described above, many employers engage third-party 
consultants, often attorneys, to conduct ``union avoidance'' or 
``counter-organizing'' efforts to prevent workers from successfully 
organizing and bargaining collectively or otherwise acting concertedly. 
These efforts include the dissemination of persuader material to 
workers, whether conveyed verbally or in written or electronic formats, 
as well as the development and implementation of personnel policies and 
actions. These campaigns often begin before employees initiate a 
National Labor Relations Board (NLRB) or National Mediation Board (NMB) 
representation process. Moreover, third-party consultants and attorneys 
routinely conduct and direct these activities, as employers often 
retain their services to orchestrate, in whole or part, these union 
avoidance and counter-organizing efforts.
    While in some cases workers may recognize the presentation of anti-
union views as those of the employer, and may be aware of some of the 
employer's methods used to disseminate those views, employees generally 
do not know the source of those views or the tactics and strategies 
chosen to disseminate them. Indeed, to the extent that the employees 
recognize the presence of a concerted counter-campaign, they typically 
do not know that a third party has been retained to orchestrate it. 
See, Logan, Union Free Movement, at 201. The disclosure of the 
employer's agreement or arrangement with a third-party consultant 
provides workers with the true source of the arguments and information 
presented to them, particularly during union organizing efforts. With 
this information, employees can better evaluate the merits of the 
employer's views, and thus are better positioned to make choices 
regarding their protected rights. Further, workers often do not know 
that certain actions, such as revisions to personnel policies, are 
designed and implemented, in whole or part, by a third party, and have 
an object to persuade them. Nor are they aware whether a consultant or 
other independent contractor or organization is retained to provide 
information to the employer concerning the employees or union involved 
in the labor dispute.
    To illustrate the above points, the Department observes that 
employers often argue to their employees that a union is a ``third 
party'' that they do not need to further their interests. See Logan, 
U.S. Anti-Union Consultants, at 7. However, independent of the merits 
of this view, employees would benefit from information concerning 
persuader agreements, which reveal a counter-campaign orchestrated in 
whole or part by a third-party consultant. Employees are more informed 
in exercising their protected rights when they know the

[[Page 36188]]

true source of those views and the methods used to disseminate them.
    In particular, as discussed in more depth above, union avoidance 
efforts often utilize supervisors and other lower-level management 
representatives, as these individuals are generally known and more 
easily trusted by the employees than is the consultant. See, Logan, 
Union Free Movement, at 201-203. Employees may evaluate their choices 
differently when they have information concerning persuader agreements 
that reveal that a third-party consultant is coordinating the 
activities of the supervisors by, for example, drafting speeches for 
one-on-one meetings and directing other day-to-day interactions with 
employees. Indeed, as explained, the current interpretation of the 
``advice exemption'' exempts reporting when consultants do not have 
direct contact with employees, even though the direction of 
supervisors' persuader activity by third-party consultants is precisely 
the area about which employees currently lack knowledge.
    While employees may or may not otherwise know detailed information 
concerning their employer, potential union, or the larger labor-
management context, the information concerning a persuader agreement 
with a third-party consultant may provide important clues to the 
employees that assist them in making decisions. Indeed, employees have 
a great deal of information available to them concerning unions, such 
as the annual union financial reporting provided on the Form LM-2, LM-
3, and LM-4 pursuant to section 201 of the LMRDA. See submitted reports 
on the Department's Web site at http://www.unionreports.gov; see also 
S.Rep. 187 at 39-40, LMRDA Leg. Hist. at 435-436, stating, in part, 
that ``if unions are required to report all their expenditures, 
including expenses in organizing campaigns, reports should be required 
from employers who'' use third-party consultants.
    The disclosure of consultants' interests in representation and 
bargaining campaigns promotes the same goals the Department has 
advanced in regulating unions' financial disclosure, and furthers 
parity between the two reporting regimes. The overarching purpose of 
the LMRDA's labor organization reporting requirements is to provide 
union members with ``all the vital information necessary for them to 
take effective action in regulating affairs of their organization.'' 
Labor Organization Annual Financial Reports, 68 FR 58,374, 58,380 (Oct. 
10, 2003), quoting S. Rep. 187, 86th Cong., 1st Session, p.9, 1959 
U.S.C.C.A.N. 2318, 2325 (1959). By mandating that labor organizations 
disclose their financial operations to employees they represent, 
Congress intended to promote union self-government by providing union 
members with complete and accurate information that would permit them 
to take effective action in regulating internal union affairs. 
``[U]nion financial disclosure regimes are intended to reduce the 
informational advantages agents [unions] have over principals [members] 
and permit principals to monitor and assess the performance of 
agents.'' Id. at 58,378. Disclosure of persuader agreements, in 
addition to the currently required financial disclosure requirements 
for unions, will provide the contextualized information that will 
enhance employees' ability to evaluate the information and arguments 
presented by both the employer and the union. This creates more 
informed voters and more effective employee participation in election 
decision-making.
    Furthermore, the financial disclosure provided by the Form LM-10 
concerning the disbursements to the consultant, and the details of the 
terms and conditions of the persuader agreement on the Form LM-10 and 
the Form LM-20, also provides important information to the employees. 
See S.Rep. 187 at 10-11, LMRDA Leg. Hist. at 406-407, referring to the 
``large sums of money'' spent on behalf of some employers to interfere 
with employee rights guaranteed by the NLRA. For example, as discussed 
in more detail below, employers have been estimated to spend 
approximately $200 million per year in direct payments to defeat 
organizing drives, with the actual value closer to $1 billion when 
factoring indirect costs, such as management time off to oppose unions. 
Logan, Union Free Movement at 198, citing John J. Lawler, Unionization 
and Deunionization (Columbia, SC: University of South Carolina Press 
1990). When these persuader expenditures are made to third-party 
consultants, pursuant to a persuader agreement, employees should have 
access to information about these payments in order to assess arguments 
presented to them regarding the merits of organizing a union.
    The LMRDA's provisions requiring the disclosure of consultant 
participation in representation elections have close analogs in Federal 
election campaign law. See Buckley v. Valeo, 424 U.S. 1 (1976). Early 
disclosure laws required the reporting of contributions and 
expenditures to reveal to voters interests or influence that may be 
involved in Federal election campaigns. Buckley, 424 U.S. at 61-62. By 
1972, Congress replaced the early statutes with the Federal Election 
Campaign Act (FECA), which imposed reporting obligations on political 
committees and candidates that receive contributions or make 
expenditures of over a certain amount in a calendar year. Id. at 62. In 
assessing whether these disclosure requirements served a substantial 
government interest, the Court noted that FECA's disclosure 
requirements ``provide[] the electorate with information `as to where 
political campaign money comes from and how it is spent by the 
candidate' in order to aid the voters in evaluating those who seek 
Federal office. It allows voters to place each candidate in the 
political spectrum more precisely than is often possible solely on the 
basis of party labels and campaign speeches. The sources of a 
candidate's financial support also alert the voter to the interests to 
which a candidate is most likely to be responsive and thus facilitate 
predictions of future performance in office.'' Id. at 66-67, quoting 
H.R.Rep. No. 92-564, p. 4 (1971). This governmental interest, the Court 
held, was substantial, and met the constitutional requirements imposed 
on disclosure laws. Id. at 68; see also Citizens United v. Federal 
Election Commission, 130 S.Ct. 876, 916 (2010) (``disclosure permits 
citizens and shareholders to react to the speech of corporate entities 
in a proper way. This transparency enables the electorate to make 
informed decisions and give proper weight to different speakers and 
messages.'')
    The LMRDA's disclosure provisions are not unlike the financial 
disclosure requirements in the FECA and reviewed in Buckley. The 
LMRDA's requirements are intended to shed light on the financial 
interests of third parties who have assumed a role in influencing the 
electorate, which, in the case of the LMRDA, consists of employees 
making decisions regarding union representation and collective 
bargaining. Disclosure of the fact that consultants participating in 
the representation campaign may not be disinterested third parties, but 
rather are in the business of discouraging union activity, permits 
employees to better evaluate the arguments presented to them by the 
consultants. This need for transparency is underscored throughout the 
statute's legislative history: ``Legislation was needed to control the 
activities of management middlemen who flitted about the country on 
behalf of employers interfering with restraining and coercing employees 
in the exercise

[[Page 36189]]

of the right to organize and bargain collectively * * *. The committee 
believes that employers should be required to report their arrangements 
with these union-busting middlemen.'' S. Rep. No. 85-1684, 85th Cong., 
2d Sess. 7-8. To be sure, disclosure statutes serve to ``[empower] 
voters so that they use their vote effectively,'' thus increasing voter 
competence. See Garrett, Elizabeth, The William J. Brennan Lecture in 
Constitutional Law: The Future of Campaign Finance Reform Laws in the 
Courts and in Congress, 27 Okla. City U. L. Rev. 665, 675 (2002). 
``Just as disclosure in the corporate realm improves confidence in the 
economic system and demonstrates values undergirding the economy, 
disclosure can serve the same function in the political realm.'' Id. at 
691
    The Department contends that this reasoning also applies to workers 
making a determination regarding a vote in a union representation 
election or otherwise exercising their rights to organize and bargain 
collectively. Furthermore, regardless of election outcome, the 
integrity of the union representation election process is strengthened 
when voters become better informed--by virtue of union disclosure, as 
well as by consultant and employer disclosure. In this way, the public 
can be more confident that the election outcomes reflect the sound and 
informed intent of the voters. This in turn creates greater confidence 
and trust in labor-management relations.
    Similarly, the NLRB has promoted and protected the value to 
employees of full and accurate information during representation 
campaigns in its regulation and maintenance of ``laboratory 
conditions'' surrounding union elections. See General Shoe Corp., 77 
NLRB 124 (1948). The Board's high standard governing the conduct of the 
parties during representation elections requires the Board ``to provide 
a laboratory in which an experiment may be conducted, under conditions 
as nearly ideal as possible, to determine the uninhibited desires of 
the employees.'' Id. at 127. The Board has held that determining the 
``uninhibited desires of employees'' is impeded by ``a lack of 
information with respect to one of the choices available during the 
election.'' Excelsior Underwear, 156 NLRB 1236, 1240 (1966) (employer 
must file with NLRB election eligibility list with names and addresses 
of all eligible voters, which is provided to all parties in election). 
In adopting the Excelsior rule, the Board noted that disclosure of the 
eligible voter list will maximize the likelihood that all voters will 
be exposed to arguments for, as well as against, union representation; 
that it will permit the employees to make a more fully informed and 
reasoned choice; that it will tend to eliminate challenges to voters 
based solely on lack of knowledge of their identity; that many 
objections to elections will be settled well in advance of the 
election; and that the public interest will be furthered in obtaining 
more prompt resolutions of questions of representation. Id. at 1240-
1241.
    Further, the Board has promoted the goal of achieving the 
``uninhibited desires of employees'' in a multitude of election cases 
regulating the campaign conduct of the parties. See, e.g., Peerless 
Plywood Co., 107 NLRB 427, 429 (1954) (forbidding election speeches on 
company time to assembled employees within 24 hours before election 
because such speech ``overrides arguments made through other campaign 
media and gives an unfair advantage to the party, whether employer or 
union, who in this manner obtains the last most telling word.''); 
Milchem, Inc., 170 NLRB 362 (1968) (election set aside where parties 
engage in prolonged conversations with prospective voters waiting to 
cast their ballots, regardless of the content of the remarks 
exchanged); Kalin Construction Co., 321 NLRB 649 (1996) (prohibiting 
employer changes in the paycheck process during the 24-hour period 
prior to the election because the paycheck is symbol of ``economic 
dependence of the employees on their employer'' that must not be made 
part of last-minute campaign).
    As with the Board's rules promoting employee free choice, the 
LMRDA's requirements regarding the disclosure of consultant 
participation in representation campaigns, and specifically the 
limitations on the interpretation of ``advice'' proposed here, advance 
the goals of an informed electorate able to distinguish between well-
reasoned and accurate information and campaign pressure. The 
environment of an NLRB-supervised election is highly competitive and 
adversarial, and the parties can engage in sophisticated campaign 
tactics that approach, but may not cross into, objectionable election 
conduct or unfair labor practices. Pressurized campaign tactics can and 
do lead to objections regarding the outcome of the election, which 
results in long periods of litigation before the NLRB about the 
election conduct. Such disputes heighten the acrimony between the 
parties, and in the event that the union is ultimately certified, 
prevent bargaining during the pendency of the election-related 
litigation. Making transparent the role of consultants during a 
campaign will permit employees to better evaluate campaign materials 
and tactics, increase the integrity of the election outcome, and 
promote reliance on the results of the election. Non-disputatious 
representation elections thus establish a firm foundation for the 
bargaining relationship that may ensue following an election.

H. Effects on Contemporary Labor-Management Relations

    In enacting section 203 of the LMRDA, Congress was concerned about 
the effect of consultant activity on peaceful labor relations. The 
National Labor Relations Act was enacted in 1935 in part to promote 
industrial peace through establishing and protecting workers' 
fundamental rights to organize and bargain collectively. See 29 U.S.C. 
151. By 1959, it had become clear to Congress through the McClellan 
Committee hearings that activities of consultants, or ``middlemen'' as 
they were referred to, were interfering with those protected rights. S. 
Rep.187 at 11, LMRDA Leg. Hist. at 407. Whether or not these activities 
were lawful under the NLRA, or fall into a ``gray area,'' they were 
``not conducive to sound and harmonious labor relations'' and thus 
should be reported. Id. Full disclosure of those activities ensured an 
employee's freedom of choice by revealing to him the real source of 
propaganda activity designed to persuade him in the exercise of his 
protected rights.
    As in 1959, there is strong evidence today that the undisclosed 
activities of labor relations consultants are interfering with worker's 
protected rights and that this interference is disruptive to effective 
and harmonious labor relations. For instance, research in the 
industrial relations arena shows that newly certified unions are much 
less likely to secure a first contract in cases in which the employer 
has hired a consultant.\14\ See Logan, Union Free

[[Page 36190]]

Movement at 198, citing R. Hurd, Union Free Bargaining Strategies and 
First Contract Failures, in Proceedings of the 48th Meeting of the 
Industrial Relations Research Ass'n 145 (P. Voos ed. IRRA 1996), and G. 
Pavy, Winning NLRB Elections and Establishing Collective Bargaining 
Relationships, in Restoring the Promise of American Labor Law 110 
(Sheldon Friedman et al. eds. ILR Press 1994); Bronfenbrenner, Employer 
Behavior at 84 (citing probability of winning first contract declining 
by 10 to 30 percent in bargaining units in which the employer utilizes 
a labor relations consultant).
---------------------------------------------------------------------------

    \14\ First-contracts are crucial to newly certified unions. 
Under section 9(c)(3) of the NLRA, no elections may be held within 
one year of the election of an incumbent employee representative. 29 
U.S.C. 159(c)(3). Employers understand that unions that do not show 
results in bargaining during that first year are more vulnerable to 
challenges, including decertification petitions. As a result, 
employers may adopt strategies, with the assistance of consultants, 
to stall bargaining and prevent the adoption of a first contract. 
One year after an election in which employees voted in favor of 
union representation, only 48% of bargaining units with certified 
representatives have executed an initial collective bargaining 
agreement. Bronfenbrenner, No Holds Barred at 22. The Department 
notes that the observed effects may not be entirely attributable to 
the use of a consultant, as some employers may be less supportive of 
unionization and may choose certain tactics and strategies 
independent of the use a consultant.
---------------------------------------------------------------------------

    Studies also show that accompanying the proliferation of employers' 
use of labor relations consultants is the substantial utilization of 
anti-union tactics that are unlawful under the NLRA. Since the rise of 
consultant industry in the 1970s and 1980s, ``no-holds-barred counter-
organising campaigns'' have become mainstream. Logan, Union Free 
Movement at 207. Some consultants counsel the employer to fire union 
activists for reasons other than their union activity, or engage in 
other unfair labor practices, particularly because the penalties for 
unlawful conduct are typically delayed and may be insignificant, from 
the employer's viewpoint, compared to the longer-term obligation to 
deal with employee representatives. Logan, Union Free Movement at 207-
208 (consultants promote unlawful discharge, surveillance, 
interrogation, unscheduled pay increases, and threats of dismissal) see 
also Logan, The Union Avoidance at 660-661 (allegations of a prominent 
anti-union law firm assisting employer in engaging in unlawful tactics 
in an anti-union campaign in which the employer paid the law firm $2.7 
million). If not unlawful, consultant tactics may be merely offensive. 
For instance, a prominent anti-union law firm, utilizing a common 
approach among such firms, advances ``militant anti-union rhetoric when 
marketing its services,'' such as pushing employers to regard union 
organizers as a ``contagious disease'' and to inoculate their employees 
against the ``union virus.'' The same consultant also has run a seminar 
titled, ``Union Avoidance War Games.'' Logan, The Union Avoidance 
Industry at 659.
    With or without the advice of labor consultants, employers utilize 
aggressive and even unlawful tactics in opposing unions. Bronfenbrenner 
found that during the course of an NLRB-supervised election, 14% of 
employers utilize surveillance, 63% used supervisors to interrogate 
employees, 54% used supervisors to threaten employees, 47% threatened 
cuts in benefits or wages, 18% granted unscheduled raises, 46% made 
promises of improvement, and 41% harassed and disciplined union 
activists. Bronfenbrenner, No Holds Barred at 10-11. She further 
estimates that employers discharge union-activist employees in 34% of 
NLRB-supervised elections, with an average of 2.6 employees discharged 
per election. Id.
    The acquired expertise of labor consultants in union avoidance has 
enabled them to request and be granted complete autonomy in conducting 
employers' responses to union campaigns. Logan, Union Free Movement at 
200; Logan, Union Avoidance Industry at 652. However, given the view of 
consultants noted above that they need to operate unseen in the 
background in order to avoid LMRDA reporting requirements, it is more 
likely today that employers will hide the activities of consultants, 
whereas in the 1950s it was more likely that consultants were hired to 
mask the anti-union sentiments of employers. Logan, Union Avoidance 
Industry at 652. For a more detailed discussion of the activities 
engaged in by consultants during an anti-union campaign, see Logan, 
Union Free Movement in the U.S.A., at 200-212. Moreover, the labor 
consultant industry has developed into a multi-million dollar 
enterprise. Employers have been estimated to spend approximately $200 
million per year in direct payments to defeat organizing drives, with 
the actual value closer to $1 billion when factoring indirect costs, 
such as management time off to oppose unions. Logan, Union Free 
Movement at 198, citing John J. Lawler, Unionization and Deunionization 
(Columbia, SC: University of South Carolina Press 1990). As such, 
workers currently or potentially involved in organizing campaigns, as 
well as unions, and even other employers and the public need 
information concerning these expenditures to ensure the free and 
informed choice of employees and harmonious labor-management relations.
    The deleterious effect of labor consultant activity on industrial 
relations is not a new theme. Thirty years ago, it was noted that 
consultant-led anti-union campaigns and their resulting disruptions 
inevitably result in declines in workplace productivity. 1980 
Subcommittee Report at 42. Similarly, sixteen years ago, it was noted 
that the ``worst features'' of political campaigns had been imported 
into union election campaigns, Dunlop Commission Final Report at 15, 
resulting in confrontation and conflict that unnecessarily colors 
labor-management relations. Dunlop Commission Fact-Finding Report at 
68. Current research indicates that these observations are as true 
today as they were in their time.
    The Department concludes that, as was true in the 1950s, the 
undisclosed use of labor relations consultants by employers interferes 
with employees' exercise of their protected rights to organize and 
bargain collectively and disrupts labor-management relations. The 
current state of affairs is clearly contrary to Congressional intent in 
enacting section 203 of the LMRDA. Congress intended that employees be 
permitted to know whether employers are using consultants to run anti-
union campaigns or otherwise engage in persuader activities. Such 
information provides employees the ability to assess the underlying 
source of the information directed at them, aids them in evaluating its 
merit and motivation, and assists them in developing independent and 
well-informed conclusions regarding union representation. As noted 
above, the rise in the use of labor consultants, the increased tension 
in labor-management relations, and evidence that the Department's 
interpretation of the ``advice'' exemption has led to the under-
reporting of these activities all support revision of the 
interpretation. The Department must take action to ensure that its 
interpretation of the provisions of section 203 comports with 
Congressional intent.

V. Proposed Revised Interpretation of the Section 203(c) ``Advice'' 
Exemption

    As a result of the evidence cited above, the Department considers 
its current interpretation of the LMRDA section 203(c) ``advice'' 
exemption as contributing to substantial underreporting of employer-
consultant persuader agreements. The Department's current 
interpretation of ``advice'' does not represent the best reading of the 
statutory language and Congressional intent.
    The application of the ``advice'' exemption depends on whether the 
activities can fairly be considered as exclusively giving ``advice,'' 
as opposed to engaging, in whole or part, in any activities that go 
beyond mere advice and constitute direct or indirect persuasion of 
employees. For the purposes of the Department's interpretation of 
section 203(c), ``advice'' means an oral or written

[[Page 36191]]

recommendation regarding a decision or a course of conduct. A lawyer or 
other consultant who exclusively counsels employer representatives on 
what they may lawfully say to employees, ensures a client's compliance 
with the law, or provides guidance on NLRB practice or precedent, is 
providing ``advice.'' However, persons who give advice to employers may 
also engage in activities that must be reported. When a consultant or 
lawyer, or her agent, communicates directly with employees in an effort 
to persuade them, the ``advice'' exemption does not apply. The duty to 
report can be triggered even without direct contact between a lawyer or 
other consultant and employees, if persuading employees is an object, 
direct or indirect, of the person's activity pursuant to an agreement 
or an arrangement with an employer.
    As discussed above in the discussion of the textual basis for the 
interpretation, an essential place to begin to draw the distinction 
between advice and persuader activity is with regard to the preparation 
of or revision to persuasive materials by labor relations consultants 
and other persons. Under the proposed interpretation, when such a 
person prepares or provides a persuasive script, letter, videotape, or 
other material or communication, including electronic and digital 
media, for use by an employer in communicating with employees, the 
``advice'' exemption does not apply and the duty to report is 
triggered. Similarly, a consultant's revision of the employer's 
material or communications to enhance the persuasive message also 
triggers the duty to report, unless the revisions exclusively involve 
advice and counsel regarding the exercise of the employer's legal 
rights. Material or communications, or revisions thereto, are 
persuasive if they, for example, explicitly or implicitly encourage 
employees to vote for or against union representation, to take a 
certain position with respect to collective bargaining proposals, or 
refrain from concerted activity (such as a strike) in the workplace.
    The concentration on the application of the proposed interpretation 
to the preparation of persuasive materials and communications, however, 
does not provide sufficient guidance in view of the array of 
contemporary practices and tactics of labor consultants. For example, 
persuader activities may additionally include: Training or directing 
supervisors and other management representatives to engage in persuader 
activity; establishing anti-union committees composed of employees; 
planning employee meetings; deciding which employees to target for 
persuader activity or discipline; creating employer policies and 
practices designed to prevent organizing; and determining the timing 
and sequencing of persuader tactics and strategies.\15\ In these 
instances, the lawyer or labor consultant has gone beyond mere 
recommendation and has engaged in actions, conduct, or communications 
with the object to persuade employees, either directly or indirectly, 
about the employees' protected, concerted activity. As such, these 
activities, whether or not the consultant is in direct contact with the 
employees, trigger the duty to report. These persuader actions, 
conduct, or communications are precisely the type of activities that 
Congress intended to bring to light through the section 203 disclosure 
requirements, and they should not be exempt from reporting by an 
overbroad application of the section 203(c) advice exemption.
---------------------------------------------------------------------------

    \15\ Services offered on consultant Web sites may also include: 
Counter-organizing campaigns, including: Developing a campaign 
strategy; educating management about the organizing process; 
developing an employee communications program; training, coaching, 
or counseling supervisors and managers; directing employees to 
develop and manage the employer's message; helping businesses avoid 
union petitions and card signing drives; providing vulnerability 
assessment; labor contract negotiations; developing corporate 
campaign strategies; providing labor research and communications, 
including preparation of customized videos, CDs and DVDs with pro-
employer messages, and employee and supervisor testimonials; and 
developing plans to respond to a strike and employees' return to 
work.
---------------------------------------------------------------------------

    The Department has considered whether seminars, webinars, or 
conferences offered by lawyers or labor consultants to employers and 
their representatives must be reported. During such events, guidance is 
offered to attendees, who represent multiple employers on labor-
management relations matters, including how to persuade employees 
concerning their organizing and bargaining rights. In general, to the 
extent that these meetings involve actions, conduct, or communications 
that have a direct or indirect object to persuade employees concerning 
their representation or collective bargaining rights, then the 
consultant and employer would be required to file the necessary 
reports. By contrast, in cases in which a seminar or conference 
involves no persuader activity, then no duty to report is triggered 
under the LMRDA. For example, if persuader materials, which are 
intended for presentation, dissemination, or distribution to employees, 
are provided to employers at such events, then reporting is triggered. 
Additionally, if, at such events, consultants train supervisors to 
conduct individual or group employee meetings, then reporting is also 
triggered. These examples reflect actions, conduct, and communications 
that have an object to persuade employees. The Department generally 
views so-called ``union-avoidance'' seminars and conferences offered by 
lawyers or labor consultants to employers to involve reportable 
persuader activity. The Department also cautions that employers and 
consultants cannot avoid the reporting requirements by inappropriately 
labeling an otherwise reportable persuader agreement or arrangement 
involving a seminar or conference as ``advice.'' The Department invites 
specific comment on the nature and scope of such seminars, and the 
applicability of the section 203 reporting requirements to them.
    In the past, the Department has concluded that in cases in which a 
particular consultant activity involves both advice to the employer and 
persuasion of employees, the ``advice'' exemption controls. See, e.g., 
United Automobile Workers v. Dole, supra, 869 F.2d at 617-618 
(Secretary adopted permissible interpretation that ``in the overlap,'' 
advice exemption took precedence over the coverage provision). Based on 
its administrative authority and discretion to select the controlling 
provision--the coverage provision or the advice provision--that applies 
in cases in which an activity involves among its purposes a direct or 
indirect object to persuade employees, 869 F.2d at 620, the Department 
proposes to adopt its initial 1960 interpretation, which held that 
``reporting is required in any situation where it is impossible to 
separate advice from activity that goes beyond advice.'' Where a 
particular consultant activity has among its purposes an object, direct 
or indirect, to persuade employees, the duty to report is triggered. 
Because persons who give advice to employers in the context of a union 
organizing campaign or labor dispute may frequently also engage in 
activities that trigger reporting, the Department concludes that the 
choice to require reporting in such cases better implements 
Congressional intent. Thus, if a consultant engages in activities 
constituting persuader services, then the exemption would not apply 
even if activities constituting ``advice'' were also performed or 
intertwined with the persuader activities. In such circumstance the 
activities provided pursuant to the agreement or

[[Page 36192]]

arrangement with an employer should be reported.\16\
---------------------------------------------------------------------------

    \16\ The Department's position has consistently been, and 
remains, that in those cases in which an agreement or arrangement 
involves multiple activities, any one persuader activity covered by 
the agreement will trigger the duty to report all activities covered 
by the agreement or arrangement. See Form LM-20 Instructions at 
http://www.dol.gov/olms/regs/compliance/GPEA_Forms/lm-20_Instructions.pdf (``If the agreement or arrangement provides for any 
reportable activity, you must report the information required for 
the entire agreement or arrangement.'').
---------------------------------------------------------------------------

    Regarding the application of the advice exemption to attorneys, the 
Department first notes that, with respect to reports by attorneys,\17\ 
the ``advice'' exemption establishes that so long as the attorney 
confines him- or herself to advice, he or she need not report, but if 
the attorney engages in persuader activity, he or she is subject to the 
reporting requirements. Humphreys, Hutcheson, and Moseley v. Donovan, 
755 F.2d 1211, 1216 (6th Circuit 1985). For example, if a lawyer drafts 
a speech for a company's top manager to give to workers in a captive 
audience setting, neither the lawyers' work to ensure its legal 
sufficiency or implications nor a characterization of the work product 
as legal advice would alter the reportability of the speech as 
persuader activity. Section 204 exempts attorneys from reporting ``in 
any report required to be filed'' any information protected by the 
attorney-client privilege. 29 U.S.C. 434. By this provision, Congress 
intended to afford to attorneys the same protection as that provided in 
the common-law attorney-client privilege, which protects from 
disclosure communications made in confidence between a client seeking 
legal counsel and an attorney. Id. In general, the fact of legal 
consultation, clients' identities, attorney's fees and the scope and 
nature of the employment are not deemed privileged. Id.; see also 
Restatement (Third) of the Law Governing Lawyers Sec.  69. However, in 
applying the privilege to ``report[s] required to be filed,'' this 
provision is operative only after the attorney is required to report 
because he or she has engaged in persuader activity. Therefore, 
attorneys who engage in persuader activity must file the Form LM-20, 
which may require information about the fact of the agreement with an 
employer involving persuader activity, the client's identity, the fees 
involved and the scope and nature of the employment. To the extent that 
an attorney's report about his or her agreement or arrangement with an 
employer may disclose privileged communications, for instance where an 
attorney provides an employer with both legal advice and engages in 
persuader activities, the privileged matters are protected from 
disclosure.
---------------------------------------------------------------------------

    \17\ The ``advice'' exemption in section 203(c) excuses 
``persons''--lawyers and non-lawyers alike--from reporting 
agreements or arrangements covering the services of such person ``by 
reason of his giving or agreeing to give'' advice to an employer.
---------------------------------------------------------------------------

    For the foregoing reasons, the Department proposes to revise the 
Form LM-10 and Form LM-20 instructions to better implement the 
objectives of section 203. The revisions to the instructions will 
provide filers with guidance on the use of the ``advice'' exemption of 
section 203(c).
    The Department proposes to amend page 3 of the Form LM-20 
instructions to read as follows (the revised language is in italics):

GENERAL INSTRUCTIONS FOR AGREEMENTS, ARRANGEMENTS, AND ACTIVITIES

    You must file a separate report for each agreement or 
arrangement made with an employer where the object is, directly or 
indirectly:
    (1) To persuade employees to exercise or not to exercise, or to 
persuade them as to the manner of exercising, the right to organize 
and bargain collectively through representatives of their choice. 
(Excluded are agreements or arrangements that cover services 
relating exclusively to: (1) Giving or agreeing to give advice to 
the employer; (2) representing the employer before any court, 
administrative agency, or tribunal of arbitration; and (3) engaging 
in collective bargaining on the employer's behalf with respect to 
wages, hours, or other terms or conditions of employment or the 
negotiation of any agreement or any questions arising under the 
agreement.)

or

    (2) To supply the employer with information concerning 
activities of employees or a labor organization in connection with a 
labor dispute involving such employer. (Excluded are agreements or 
arrangements that cover services relating exclusively to supplying 
the employer with information for use only in conjunction with an 
administrative, arbitral, or judicial proceeding.)
    NOTE: If the agreement or arrangement provides for any 
reportable activity, the exemptions do not apply and information 
must be reported for the entire agreement or arrangement.
    With respect to persuader agreements or arrangements, ``advice'' 
means an oral or written recommendation regarding a decision or a 
course of conduct. In contrast to advice, ``persuader activity'' 
refers to a consultant's providing material or communications to, or 
engaging in other actions, conduct, or communications on behalf of 
an employer that, in whole or in part, have the object directly or 
indirectly to persuade employees concerning their rights to organize 
or bargain collectively. Reporting is thus required in any case in 
which the agreement or arrangement, in whole or part, calls for the 
consultant to engage in persuader activities, regardless of whether 
or not advice is also given.

Reportable Agreements or Arrangements

    An employer and consultant each must file a report concerning an 
agreement or arrangement pursuant to which the consultant engages in 
activities that have as a direct or indirect object to, explicitly 
or implicitly, influence the decisions of employees with respect to 
forming, joining or assisting a union, collective bargaining, or any 
protected concerted activity (such as a strike) in the workplace.
    Specific examples of persuader activities that, either alone or 
in combination, would trigger the reporting requirements include but 
are not limited to: drafting, revising, or providing a persuader 
speech, written material, website content, an audiovisual or 
multimedia presentation, or other material or communication of any 
sort, to an employer for presentation, dissemination, or 
distribution to employees, directly or indirectly; planning or 
conducting individual or group meetings designed to persuade 
employees; developing or administering employee attitude surveys 
concerning union awareness, sympathy, or proneness; training 
supervisors or employer representatives to conduct individual or 
group meetings designed to persuade employees; coordinating or 
directing the activities of supervisors or employer representatives 
to engage in the persuasion of employees; establishing or 
facilitating employee committees; developing employer personnel 
policies or practices designed to persuade employees; deciding which 
employees to target for persuader activity or disciplinary action; 
and coordinating the timing and sequencing of persuader tactics and 
strategies.
    Reportable agreements or arrangements include those in which a 
consultant plans or orchestrates a campaign or program to avoid or 
counter a union organizing or collective bargaining effort, such as 
through the specific persuader activities illustrated above, or 
otherwise engages on behalf of the employer, in whole or part, in 
any other actions, conduct, or communications designed to persuade 
employees. Persuader activities trigger reporting whether or not the 
consultant performs the activities through direct contact with any 
employee. For example, a consultant must report if he or she engages 
in any activities that utilize employer representatives to persuade 
employees, such as by planning, directing, or coordinating the 
activities of employer representatives or providing persuader 
material to them for dissemination or distribution to employees, or 
in which the consultant drafts or implements policies for the 
employer that have as an object to directly or indirectly persuade 
employees.

Exempt Agreements or Arrangements

    No report is required concerning an agreement or arrangement to 
exclusively provide advice to an employer. For example, a consultant 
who exclusively counsels employer representatives on what they may 
lawfully say to employees, ensures a client's compliance with the 
law, or provides

[[Page 36193]]

guidance on NLRB practice or precedent, is providing ``advice.'' 
Reports are not required concerning agreements or arrangements to 
exclusively provide such advice.
    Generally, no report is required for an agreement or arrangement 
whereby a lawyer or other consultant conducts a group seminar or 
conference for employers solely to provide guidance to them. 
However, if a consultant engages in persuader activities at such 
meetings, such as those activities enumerated above, then the 
consultant and employer would be required to file reports concerning 
such agreement or arrangement. The Department cautions that 
employers and consultants cannot avoid the reporting requirements by 
inappropriately labeling an otherwise reportable persuader agreement 
or arrangement as a ``seminar'' or ``conference.''

    Additionally, the Department proposes to include the above guidance 
in the revised Form LM-10 instructions in like manner.\18\ The 
Department seeks comment on its proposed revisions to the Form LM-20 
and Form LM-10 instructions.
---------------------------------------------------------------------------

    \18\ The Department also proposes to replace IM entry 265.005 
with the proposed text.
---------------------------------------------------------------------------

VI. Proposed Revised Form LM-20, Form LM-10, and Instructions

    The Department has not revised the Form LM-20 and Form LM-10 since 
the advent of the forms in 1963. See 28 FR 14381. With today's proposed 
change to the interpretation of the advice exemption of section 203(c), 
the Department also proposes revising Form LM-20 and Form LM-10 and 
their instructions. The Department is also proposing revisions to 
sections 405.5 and 405.7 of title 29 of the Code of Federal Regulations 
to update cross-references in those sections to the instructions.
    While some of the proposed revisions are minor stylistic and layout 
modifications (with the exception of the proposed ``advice'' exemption 
guidance described above), there are four other significant proposed 
changes: (1) The mandating of electronic filing for each form, with 
language in each set of instructions depicting such process and 
guidance concerning the application for a hardship exemption from such 
electronic filing; (2) the addition of a detailed checklist that Form 
LM-10 and Form LM-20 filers must complete to disclose the scope of 
activities that consultants have engaged, or intend to engage, in under 
a reportable agreement or arrangement; (3) the changes to the Form LM-
20 and instructions, including the requirement for filers to report 
their Employee Identification Number, as applicable, and explanations 
for terms ``agreement or arrangement'' and ``employer''; and (4) the 
changes to the Form LM-10 and instructions, including the changes 
described above to the Form LM-20 and instructions, as well as a 
revamped layout for the Form LM-10, which divides the report into four 
parts, each presenting aspects of the reportable transactions, 
agreements, and arrangements required by sections 203(a)(1)-(5) of the 
LMRDA, in a more user-friendly manner.
    These proposed changes are each discussed in more depth below, and 
the Department invites comments on each of them, as well as any other 
aspects regarding the layout of the forms and instructions.

A. Mandatory Electronic Filing for Form LM-20 and Form LM-10 Filers

    Currently, only the Form LM-2, Form LM-3, Form LM-4, Labor 
Organization Annual Reports, can be submitted to OLMS electronically, 
and only the Form LM-2 must be filed electronically. However, an 
electronic filing option is planned for all LMRDA reports as part of an 
information technology enhancement. Electronic reporting contains 
error-checking and trapping functionality, as well as online, context-
sensitive help, which improves the completeness of the reporting. 
Electronic filing is more efficient for reporting entities, results in 
more immediate availability of the reports on the agency's public 
disclosure Web site, and improves the efficiency of OLMS in processing 
the reports and in reviewing them for reporting compliance. In 
contrast, paper reports must be scanned and processed for data entry 
before they can be posted online for disclosure, which delays their 
availability for public review.
    The Department proposes to mandate that the Form LM-20 and Form LM-
10 be filed electronically. Currently, labor organizations that file 
the Form LM-2 are required by regulation to file electronically, and 
there has been good compliance with this requirement. Like labor 
unions, employers and consultants have the information technology 
resources and capacity to file electronically. Further, OLMS has 
deployed technology improvements that greatly facilitate its electronic 
filing process and eliminate the expenses formerly associated with such 
filing.
    The proposed Form LM-20 and Form LM-10 Instructions outline a 
process for seeking an exemption from the electronic filing requirement 
that is identical to the Form LM-2 process. See Form LM-2 Instructions, 
Part IV: How to File, located at: http://www.dol.gov/olms/regs/compliance/erds/LM2Instr2-2-04koREVISED.pdf. The proposed forms would 
be completed online, electronically signed, and submitted with any 
required attachments to the Department using the OLMS Electronic Forms 
System (EFS). The electronic forms would be downloaded from the OLMS 
Web site at http://www.olms.dol.gov.
    A filer will be able to file a report in paper format only if the 
filer asserts a temporary hardship exemption or applies for and is 
granted a continuing hardship exemption. The temporary hardship 
exemption process, which is currently in place for Form LM-2 filing 
\19\ and would be applied to mandatory electronic filing of the Form 
LM-20 and LM-10, is as follows:
---------------------------------------------------------------------------

    \19\ See http://www.dol.gov/olms/regs/compliance/erds/LM2Instr2-2-04koREVISED.pdf at 2.

    If a filer experiences unanticipated technical difficulties that 
prevent the timely preparation and submission of an electronic 
filing, the organization may file the form in paper format by the 
required due date. An electronic format copy of the filed paper 
format document shall be submitted to the Department within ten 
business days after the required due date. Indicate in Item 1.b 
(Hardship Exempted Report) that the filer is filing under the 
hardship exemption procedures. Unanticipated technical difficulties 
that may result in additional delays should be brought to the 
attention of the OLMS Division of Interpretations and Standards, 
which can be reached at the address below, by e-mail at OLMS-
[email protected], by phone at 202-693-0123, or by fax at 202-693-1340.
    If either the paper filing or the electronic filing is not 
received in the timeframe specified above, the report will be 
considered delinquent.

    For a continuing hardship exemption, which is also applicable to 
Form LM-2 filing \20\ and will be applied to mandatory electronic 
filing of the Form LM-20 and LM-10, a filer may:
---------------------------------------------------------------------------

    \20\ See http://www.dol.gov/olms/regs/compliance/erds/LM2Instr2-2-04koREVISED.pdf at 2-3.

    (a) Apply in writing for a continuing hardship exemption if it 
cannot be filed electronically without undue burden or expense. Such 
written application shall be received at least 30 days prior to the 
required due date of the report(s). The written application shall 
contain the information set forth in paragraph (b). The application 
must be mailed to the following address: U.S. Department of Labor, 
Office of Labor-Management Standards, 200 Constitution Avenue, NW., 
---------------------------------------------------------------------------
Room N-5609, Washington, DC 20210

    Questions regarding the application should be directed to the 
OLMS Division of Interpretations and Standards, which can be reached 
at the above address, by e-mail at [email protected], by phone at 
202-693-0123, or by fax at 202-693-1340.
    (b) The request for the continuing hardship exemption shall 
include, but not be limited to, the following: (1) The justification 
for the

[[Page 36194]]

requested time period of the exemption; (2) the burden and expense 
that the filer would incur if it was required to make an electronic 
submission; and (3) the reasons for not submitting the report(s) 
electronically. The applicant must specify a time period not to 
exceed one year.
    (c) The continuing hardship exemption shall not be deemed 
granted until the Department notifies the applicant in writing. If 
the Department denies the application for an exemption, the filer 
shall file the report(s) in electronic format by the required due 
date. If the Department determines that the grant of the exemption 
is appropriate and consistent with the public interest and the 
protection of union members and so notifies the applicant, the filer 
shall follow the procedures set forth in paragraph (d).
    (d) If the request is granted, the filer shall submit the 
report(s) in paper format by the required due date. The filer may be 
required to submit Form LM-20 in electronic format upon the 
expiration of the period for which the exemption is granted. 
Indicate in Item 1.b (Hardship Exempted Report) that the filer is 
filing under the hardship exemption procedures.
    If either the paper filing or the electronic filing is not 
received in the timeframe specified above, the report will be 
considered delinquent.

    The Department seeks comment on its mandatory electronic filing 
proposal for Form LM-20 and Form LM-10 filers, including any specific 
comments on the process for obtaining a hardship exemption, and the 
proposed revisions to the forms and instructions.

B. Detailing the Activities Undertaken Pursuant to a Reportable 
Agreement or Arrangement

    The current instructions to the Form LM-20 and Form LM-10 do not 
provide detailed guidance to the filer concerning how to report the 
nature of the activities undertaken by a consultant pursuant to an 
agreement or arrangement to persuade. For example, the current Form LM-
20 Instructions \21\ for Item 11, Description of Activities, states:
---------------------------------------------------------------------------

    \21\ The current Form LM-20 form and instructions are available 
on the OLMS Web site at: http://www.dol.gov/olms/regs/compliance/GPEA_Forms/lm-20p.pdf and http://www.dol.gov/olms/regs/compliance/GPEA_Forms/lm-20_Instructions.pdf.

    For each activity to be performed, give a detailed explanation 
of the following:
    11.a. Nature of Activity. Describe the nature of the activity to 
be performed. For example, if the object of the activity is to 
persuade the employees of Employer X to vote ``no'' on a 
representation election, so state.

    Similarly, the current Form LM-10 Instructions \22\ in Item 12, 
Circumstances of all Payments, states:
---------------------------------------------------------------------------

    \22\ The current Form LM-10 form and instructions are available 
on the OLMS Web site at: http://www.dol.gov/olms/regs/compliance/GPEA_Forms/lm-10p.pdf and http://www.dol.gov/olms/regs/compliance/GPEA_Forms/lm-10_instructions.pdf.

    [You] must provide a full explanation identifying the purpose 
and circumstances of the payments, promises, agreements, or 
arrangements included in the report. Your explanation must contain a 
detailed account of services rendered or promised in exchange for 
promises or payments you have already made or agreed to make. Your 
explanation must fully outline the conditions and terms of all 
---------------------------------------------------------------------------
listed agreements.

    In practice, the Department receives only vague descriptions of 
reportable persuader or information supplying activity, such as, 
``employed to give speeches to employees regarding their rights to 
organize and bargain collectively'' and ``presented informational 
meetings to company employees relative to the process of unionization, 
the role of the NLRB, and collective bargaining.''
    As the review of the literature above has demonstrated, a wide 
range of activities and tactics have been utilized by employers, and 
employees and the public have a need to know in detail the types of 
activities in which consultants engage.\23\ Vague and brief narrative 
descriptions and characterizations that are permitted on the current 
Form LM-20 serve little utility, and a checklist of activities is the 
best way to ensure more complete reporting of such persuader 
activities. Additionally, filers are provided an ``other'' box on the 
checklist, and will be required to check this box and separately 
identify any other persuader or information supplying activities that 
are not listed in the checklist.
---------------------------------------------------------------------------

    \23\ As one reviewer has demonstrated, various studies show that 
in response to union organizing campaigns, employers in the U.S. 
utilize the following tactics: Between 82% and 93% of employers held 
forced-attendance (``captive audience'') meetings; between 70% and 
75% of employers distribute leaflets in the workplace; between 76% 
and 98% of employers utilize supervisor one-on-one sessions; between 
48% and 59% of employers promised improvements; between 20% and 30% 
of employers granted unscheduled raises; between 25% and 30% of 
employers fired union supporters; and between 31-50% of employers 
aided anti-union employees committees. See Logan, U.S. Anti-Union 
Consultants at 5, Table 1, compiling and citing results from 
Bronfenbrenner, Employer Behavior at 75-89; Kate Bronfenbrenner, 
U.S. Trade Deficit Review Commission, Uneasy Terrain (2000); Rundle, 
Winning Hearts and Minds at 213-231; and Mehta and Theodore, 
Undermining the Right to Organize. In addition, a 2009 study showed 
that 41% of employers used anti-union DVDs, videos, or Internet; 14% 
used surveillance; 28% attempted to infiltrate organizing 
committees; 64% interrogated workers about union activity, and 63% 
of supervisors interrogated workers during one-on-one meetings. 
Bronfenbrenner, No Holds Barred at 10-11, Table 3.
---------------------------------------------------------------------------

    The Department seeks comment on the proposed checklist approach for 
detailing persuader and information supplying activities, as well as 
the items on the list itself.

C. Proposed Revised Form LM-20 and Instructions

    The Proposed Form LM-20 and Instructions (see appendix A) largely 
follow the layout of the current form and instructions, although the 
style has been altered. The proposed form is two pages in length and 
contains 14 items. The first page includes the first five items, which 
detail contact and identifying information for the consultant: The file 
number (Item 1.a.) and contact information for the consultant (Item 2), 
including information detailing alternative locations for records (Item 
3), the date the consultant's fiscal year ends (Item 4), and the type 
of filer (Item 5), i.e., an individual, partnership, or corporation. 
The proposed new Item 2 would require the consultant to provide, if 
applicable, its Employer Identification Number (EIN), which would 
assist the Department and public in identifying and analyzing other 
filings by the consultant and any individuals and entities reported on 
the form. The proposed new Items 1.b. and 1.c. are for the filer to 
indicate if the report is filed pursuant to a hardship exemption from 
the proposed electronic filing requirement or is amended, respectively. 
These items are not in the current form.
    Additionally, the first page includes three items describing the 
employer agreement: The employer's contact information (Item 6), which 
adds the requirement to report the employer's EIN, the date the 
agreement was entered into (Item 7), and the person(s) through whom the 
agreement was made (Item 8). Item 8, which currently requires a 
consultant to report only the employer representative through whom the 
reported agreement or arrangement has been made, would be amended to 
require an indirect party to an employer-consultant agreement or 
arrangement to identify in a new Item 8(b) the consultant with whom he 
or she entered into the reportable agreement or arrangement. This 
specificity is added to clarify the reporting now required on the Form 
LM-20 when such indirect parties, or ``sub-consultants,'' are engaged 
by a primary consultant to assist in implementing a reportable 
agreement or arrangement. The primary consultant would report the 
employer representative in a new Item 8(a). This requirement is now 
included in the Form LM-20 Instructions in Part II, Who Must File, but 
its addition on the form itself will enable the Department, employees, 
and the public to more easily understand the nature of the activities 
conducted pursuant to the

[[Page 36195]]

agreement or arrangement and determine if additional reports are owed. 
The front page also includes the signature blocks for the president 
(Item 13) and the treasurer (Item 14), including the date signed and 
telephone number.
    The second page provides more detail concerning the agreement. 
Items 9 and 10 would be unchanged. Item 9 requires the filer to 
indicate if the agreement called for activities concerning persuading 
employees, supplying the employer with information concerning employees 
or a labor organization during a labor dispute, or both. Item 10 asks 
for the terms and conditions of the agreement, and requires written 
agreements to be attached. Item 11 calls for the provision of certain 
details concerning any covered agreement or arrangement, and a proposed 
Item 11.a, as described above in Section VI, B, would require filers to 
check boxes indicating specific activities undertaken as part of the 
agreement or arrangement. There is also an ``other'' box, which 
requires the filer to provide a narrative explanation of any other 
reportable activities planned or undertaken that are not specifically 
contained on the list.
    Additionally, Items 11.b, 11.c, and 11.d, respectively, require the 
consultant, as before the proposed revisions, to indicate the period 
during which activity was performed, the extent of performance, and the 
name and address of the person(s) through whom the activity was 
performed. Item 11.d. would be revised to ask filers to specify if the 
person or persons performing the activities is employed by the 
consultant or serves as an independent contractor. In the latter 
scenario, the person or persons performing the activities is an 
indirect party to an employer-consultant agreement or arrangement, who 
would owe a separate Form LM-20 report. This requirement is not new, 
and it has been incorporated in the Form LM-20 Instructions in Part II, 
Who Must File, but this addition on the form itself will enable the 
Department, employees, and the public to more easily understand the 
nature of the activities conducted pursuant to the agreement or 
arrangement and determine if additional reports are owed. Finally, 
Items 12.a and 12.b require the consultant to identify the employees 
that are targets of the persuader activity and the labor organizations 
that represent or are seeking to represent them, respectively. To 
achieve more specificity, Item 12.a as proposed would include a 
description of the department, job classification(s), work location, 
and/or shift(s) of the employees targeted.
    The proposed Form LM-20 instructions are similar to the current 
version, and they follow the layout of the proposed form. There are 
four significant modifications. First, a clarification of the term 
``agreement or arrangements'' has been added to Part II, Who Must File. 
As there stated: ``The term `agreement or arrangement' should be 
construed broadly and does not need to be in writing.'' Second, as 
discussed above, the proposed form would be submitted electronically, 
and the Department has made changes to the instructions describing the 
signature and submission process, as well as a procedure for filers to 
apply for an exemption from the electronic filing requirement. This 
procedure is modeled on the procedure for filers of the Form LM-2, 
Labor Organization Annual Report. Third, the proposed instructions 
include guidance on the application of the ``advice'' exemption, in the 
general guidance on reporting agreements, arrangements, and activities 
section. Fourth, as discussed, the proposed instructions refer to the 
new checklist of activities undertaken pursuant to the reportable 
agreement or arrangement (see Item 11.a).

D. Proposed Form LM-10 and Instructions

    The proposed Form LM-10 and Instructions (see appendix B) are 
significantly different in layout and style from the current form and 
instructions, although the reporting requirements have been altered 
only in two respects: The interpretation of the ``advice'' exemption is 
now included, and the form now requires detailed information regarding 
specific activities undertaken pursuant to the agreement or 
arrangement.
    The proposed form is four pages in length and contains 19 items. 
The first page includes the first seven items, which provide the 
contact information for the employer. This information includes the 
file number (Item 1.a.), fiscal year covered (Item 2), contact 
information for the employer (Item 3), employer's president or 
corresponding principal officer (Item 4), and any other address 
containing records needed to verify the report (Item 5), at which of 
the listed addresses records are kept (Item 6), and type of 
organization that the employer is, such as an individual, partnership, 
or corporation (Item 7). Item 3 would be revised to require the 
employer to provide its EIN, which will assist the Department and 
public in identifying the employer and analyzing the employer's 
filings. Item 1.b.is for the filer to indicate if the report is filed 
pursuant to a hardship exemption from the proposed electronic filing 
requirement and Item 1.c. is for the filer to indicate whether the 
filing is an amended report. These items are not in the current form. 
The front page also includes the signature blocks, for the president 
(Item 18) and the treasurer (Item 19), including the date signed and 
telephone number.
    The remainder of the proposed form is divided into four parts: 
Parts A, B, C, and D. This layout of the form is designed to clarify 
the Form LM-10 in Item 8, which currently requires the filer to check 
those box(es) (Items 8.a-8.f) that depict the reportable transaction, 
arrangement, or agreement, and then fill out a Part B to detail the 
transaction, arrangement, or agreement. The Department views the steps 
required by Item 8 as unnecessary and confusing. Part B exacerbates the 
confusion, because it is a ``one size fits all'' approach to reporting 
the diverse information required by section 203(a). Instead, the 
Department proposes to abandon the approach of the current form 
contained in Item 8 and Part B, and in its place adopt a four part 
structure that more conveniently presents the required information.
    Proposed Part A requires employers to report payments to unions and 
union officials. The employer must report on the proposed form the 
contact information of the recipient in Item 8. In Item 9, the employer 
must report detailed information concerning the payment(s), including: 
The date of the payment (Item 9.a); the amount of each payment (Item 
9.b), the kind of payment (Item 9.c), and a full explanation for the 
circumstances of the payment (Item 9.d). There are no changes to the 
substantive reporting requirements for payments in Part A, which are 
required pursuant to LMRDA section 203(a)(1).
    Proposed Part B requires employers to report certain payments to 
any of their employees, or any group or committee of such employees, to 
cause them to persuade other employees to exercise or not to exercise, 
or as to the manner of exercising, the right to organize and bargain 
collectively through representatives of their own choosing. The 
employer must report the contact information of the recipient of the 
payment in Item 10. In Item 11, the employer must report detailed 
information concerning the payment(s): The date of the payment (Item 
11.a); the amount of each payment (Item 11.b), the kind of payment 
(Item 11.c), and a full explanation for the circumstances of the 
payment (Item 11.d). There are no changes to the substantive reporting 
requirements in Part B, which are required by LMRDA section 203(a)(2).

[[Page 36196]]

    Proposed Part C requires employers to detail any agreement or 
arrangement with a labor relations consultant or other independent 
contractor or organization in which the consultant, contractor, or 
organization undertakes activities with the object to persuade 
employees or supply information regarding employees and labor 
organizations involved in a labor dispute. The employer must indicate 
whether the agreement or arrangement involves one or both of the above 
purposes by checking the appropriate box in Part C. Next, the employer 
must provide contact information for the consultant in Item 12. A 
proposed revision to Item 12 would require the employer to provide the 
consultant's EIN, as appropriate. The date of the agreement or 
arrangement and its terms and conditions would be reported in Items 
13.a and 13.b, respectively. Item 14 calls for detail concerning the 
agreements undertaken. A proposed Item 14.a, as described above 
regarding the proposed Form LM-20, would require filers to check boxes 
indicating specific activities undertaken or to be undertaken. There is 
also an ``other'' box, which requires the filer to provide a narrative 
explanation for any activities not specified on the list provided on 
the form. Items 14.b, 14.c, and 14.d, respectively, require, as before, 
the employer to indicate the period during which the activity was 
performed, the extent of performance, and the name and address of 
persons through whom the activity was performed. As with Item 11.d of 
the proposed Form LM-20, Item 14.d would require filers to specify 
whether the person performing the activity is employed by the 
consultant or serves as an independent contractor. Items 14.e and 14.f 
require the consultant to identify the employees and any labor 
organization that are targets of the persuader activity. Item 14.e 
would require a description of the department, job classification(s), 
work location, and/or shift of the employees targeted. Finally, the 
employer must provide detailed information concerning any payment(s) 
made pursuant to the agreement or arrangement: The date of the 
payment(s) (Item 15.a); the amount of each payment(s) (Item 15.b); the 
kind of payment(s) (Item 15.c); and a full explanation for the 
circumstances of the payment(s) (Item 15.d). Information reported in 
Part C is required by LMRDA sections 203(a)(4) and (5).
    Proposed Part D requires employers to report certain expenditures 
designed to ``interfere with, restrain, or coerce'' employees regarding 
their rights to organize or bargain collectively, as well as 
expenditures to obtain information concerning the activities of 
employees or a labor organization in connection with a labor dispute 
involving such an employer. The employer must indicate the object of 
the expenditure by checking a box. The employer must report the contact 
information of the recipient of the expenditure in Item 16. In Item 17, 
the employer must report detailed information concerning the 
expenditure(s): The date of the expenditure (Item 17.a); the amount of 
each expenditure (Item 17.b), the kind of expenditure (Item 17.c), and 
a full explanation for the circumstances of the expenditure (Item 
17.d). There are no changes to the substantive reporting requirements 
in Part D, which are required by LMRDA section 203(a)(3).
    The proposed Form LM-10 instructions follow the layout of the 
proposed form. The proposed instructions contain the following specific 
revisions: They include the revised advice interpretation presented in 
the general instructions for Part C; they provide greater detail on how 
to complete the new checklist of activities undertaken pursuant to the 
reportable agreement or arrangement (see Item 14.a); and they contain 
the electronic filing and hardship exemption application procedures 
discussed above. Additionally, the general instructions for Part C--
Persuader Agreements and Arrangements with Labor Relations Consultants 
have been revised to clarify the term ``agreement or arrangement'' and 
``employer,'' as explained above for the proposed Form LM-20 and 
instructions.

VII. Regulatory Procedures

Executive Orders 12866 and 13563

    Executive Orders 13563 and 12866 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. This rule has been designated a ``significant regulatory 
action'' although not economically significant, under section 3(f) of 
Executive Order 12866. Accordingly, the rule has been reviewed by the 
Office of Management and Budget.
    In the Paperwork Reduction Act (PRA) analysis below, the Department 
estimates that the proposed rule will result in a total recurring 
burden on employers, labor relations consultants, and other persons of 
approximately $826,000. This analysis is intended to address the 
analysis requirements of both the PRA and the Executive Orders.

Unfunded Mandates Reform

    This proposed rule will not include any Federal mandate that may 
result in increased expenditures by State, local, and Tribal 
governments, in the aggregate, of $100 million or more, or in increased 
expenditures by the private sector of $100 million or more.

Small Business Regulatory Enforcement Fairness Act of 1996

    This proposed rule is not a major rule as defined by section 804 of 
the Small Business Regulatory Enforcement Fairness Act of 1996. This 
rule will not result in an annual effect on the economy of $100,000,000 
or more; a major increase in costs or prices; or significant adverse 
effects on competition, employment, investment, productivity, 
innovation, or on the ability of the United States-based companies to 
compete with foreign-based companies in domestic and export markets.

Executive Order 13132 (Federalism)

    The Department has reviewed this proposed rule in accordance with 
Executive Order 13132 regarding federalism and has determined that the 
proposed rule does not have federalism implications. Because the 
economic effects under the rule will not be substantial for the reasons 
noted above and because the rule has no direct effect on states or 
their relationship to the Federal government, the rule does not have 
``substantial direct effects on the States, on the relationship between 
the national government and the States, or on the distribution of power 
and responsibilities among the various levels of government.''

Analysis of Costs for Paperwork Reduction Act, Executive Orders 12866 
and 13563 and Regulatory Flexibility Act

    In order to meet the requirements of the Regulatory Flexibility Act 
(RFA), 5 U.S.C. 601 et seq., Executive Order 13272, and the Paperwork 
Reduction Act (PRA), 44 U.S.C. 3501 et seq., and the PRA's implementing 
regulations, 5 CFR part 1320, the Department has undertaken an analysis 
of the financial burdens to covered employers, labor relations 
consultants, and others associated with complying with the requirements 
contained in this proposed

[[Page 36197]]

rule. The focus of the RFA and Executive Order 13272 is to ensure that 
agencies ``review rules to assess and take appropriate account of the 
potential impact on small businesses, small governmental jurisdictions, 
and small organizations, as provided by the [RFA].'' Executive Order 
13272, Sec. 1. The more specific focus of the PRA is ``to reduce, 
minimize and control burdens and maximize the practical utility and 
public benefit of the information created, collected, disclosed, 
maintained, used, shared and disseminated by or for the Federal 
government.'' 5 CFR 1320.1.
    Compliance with the requirements of this proposed rule involves 
information recordkeeping and information reporting tasks. Therefore, 
the overall impact to covered employers, labor relations consultants, 
and other persons, and in particular, to small employers and other 
organizations that are the focus of the RFA, is essentially equivalent 
to the financial impact to such entities assessed for the purposes of 
the PRA. As a result, the Department's assessment of the compliance 
costs to covered entities for the purposes of the PRA is used as a 
basis for the analysis of the impact of those compliance costs to small 
entities addressed by the RFA. The Department's analysis of PRA costs, 
and the quantitative methods employed to reach conclusions regarding 
costs, are presented first. The conclusions regarding compliance costs 
in the PRA analysis are then employed to assess the impact on small 
entities for the purposes of the RFA analysis, which follows 
immediately after it.

Paperwork Reduction Act

    This statement is prepared in accordance with the PRA, 44 U.S.C. 
3501. As discussed in the preamble, this proposed rule would implement 
an information collection that meets the requirements of the PRA in 
that: (1) The information collection has practical utility to labor 
organizations, their members, employees, other members of the public, 
and the Department; (2) the rule does not require the collection of 
information that is duplicative of other reasonably accessible 
information; (3) the provisions reduce to the extent practicable and 
appropriate the burden on employers, labor relations consultants, and 
other persons who must provide the information, including small 
entities; (4) the form, instructions, and explanatory information in 
the preamble are written in plain language that will be understandable 
by reporting entities; (5) the disclosure requirements are implemented 
in ways consistent and compatible, to the maximum extent practicable, 
with the existing reporting and recordkeeping practices of employers, 
labor relations consultants, and other persons who must comply with 
them; (6) this preamble informs reporting entities of the reasons that 
the information will be collected, the way in which it will be used, 
the Department's estimate of the average burden of compliance, the fact 
that reporting is mandatory, the fact that all information collected 
will be made public, and the fact that they need not respond unless the 
form displays a currently valid OMB control number; (7) the Department 
has explained its plans for the efficient and effective management and 
use of the information to be collected, to enhance its utility to the 
Department and the public; (8) the Department has explained why the 
method of collecting information is ``appropriate to the purpose for 
which the information is to be collected;'' and (9) the changes 
implemented by this rule make extensive, appropriate use of information 
technology ``to reduce burden and improve data quality, agency 
efficiency and responsiveness to the public.'' 5 CFR 1320.9; see also 
44 U.S.C. 3506(c).

A. Summary of the Rule: Need and Economic Impact

    The following is a summary of the need for and objectives of the 
proposed rule. A more complete discussion of various aspects of the 
proposal is found in the preamble.
    The proposed rule would amend the form, instructions, and reporting 
requirements for the Form LM-10, Employer Report, and the Form LM-20, 
Agreements and Activities Report, each of which are filed pursuant to 
section 203 of the Labor-Management Reporting and Disclosure Act 
(LMRDA), 29 U.S.C. 433. Section 203 establishes reporting and 
disclosure requirements for employers and persons, including labor 
relations consultants, who enter into any agreement or arrangement 
whereby the consultant (or other person) undertakes activities to 
persuade employees as to their rights to organize and bargain 
collectively or to obtain certain information concerning the activities 
of employees or a labor organization in connection with a labor dispute 
involving the employer. Each party must also disclose payments made 
pursuant to such agreement or arrangement. An employer, additionally, 
must disclose certain other payments, including payments to its own 
employees, to persuade employees as to their bargaining rights and to 
obtain certain information in connection with a labor dispute. 
Employers report such information on the Form LM-10, which is an annual 
report due 90 days after the employer's fiscal year. Consultants file 
the Form LM-20, which is due 30 days after entering into each agreement 
or arrangement with an employer to persuade.
    The LMRDA was enacted to protect the rights and interests of 
employees, labor organizations and their members, and the public 
generally as they relate to the activities of labor organizations, 
employers, labor relations consultants, and labor organization 
officers, employees, and representatives. Provisions of the LMRDA 
include financial reporting and disclosure requirements for labor 
organizations, employers, labor relations consultants, and others as 
set forth in Title II of the Act. See 29 U.S.C. 431-36, 441.
    In this proposed rule, the Department proposes to narrow its 
interpretation of the ``advice'' exemption of section 203(c) of the 
LMRDA, which provides, in part, that employers and consultants are not 
required to file a report by reason of the consultant's giving or 
agreeing to give ``advice'' to the employer. Under current policy, as 
articulated in the LMRDA Interpretative Manual and in a Federal 
Register notice published on April 11, 2001 (66 FR 18864), this so-
called ``advice'' exemption has been broadly interpreted to exclude 
from the reporting any agreement under which a consultant engages in 
activities on behalf of the employer to persuade employees concerning 
their bargaining rights but has no direct contact with employees, even 
where the consultant is orchestrating, planning, or directing a 
campaign to defeat a union organizing effort.
    The Department views its current policy concerning the scope of the 
``advice'' exemption as over-broad, and that a narrower construction 
will result in reporting that more closely reflects the employer and 
consultant reporting intended by the LMRDA. Strong evidence indicates 
that since the enactment of the LMRDA in 1959, the use of such 
consultants by employers to combat union organizing efforts has 
proliferated. Nevertheless, since it began administering the statute in 
1960 the Department has consistently received a small quantity of LM-20 
reports relative to the greatly increased employer use of the labor 
relations consultant industry, which suggests substantial 
underreporting by employers and consultants. Moreover, evidence 
indicates that the Department's broad interpretation of the advice 
exemption has contributed to this underreporting.

[[Page 36198]]

    The result of the substantial underreporting of employer-consultant 
agreements and arrangements, as outlined above, is the failure to 
advance Congressional objectives concerning labor-management 
transparency. Furthermore, considerable evidence suggests that the lack 
of reporting from the consultant industry and employers who rely on 
consultants has had a deleterious effect on labor-management relations, 
and regulatory action to revise the advice exemption interpretation is 
needed to provide labor-management transparency for the public, and to 
provide workers with information critical to their effective 
participation in the workplace. Specifically, the Department views the 
lack of reporting and disclosure by consultants and employers as 
disrupting employee free choice regarding their rights to organize and 
bargain collectively and permitting the use of unlawful tactics by 
employers.
    Congress intended that employees would be timely informed of their 
employer's decision to engage the services of consultants in order to 
persuade them how to exercise their rights. Congress intended that this 
information, including ``a detailed statement of the terms and 
conditions'' of the agreement or arrangement would be publicly 
available no later than 30 days after the employer and consultant 
entered into such relationship. 29 U.S.C. 433(b)(2). With such 
information, employees are better able to assess the actions of the 
employer and the employer's message to them as they are considering 
whether or not to vote in favor of a union or exercise other aspects of 
their rights to engage in or refrain from engaging in collective 
bargaining.
    Where persuader activities are not reported, employees may be less 
able to effectively exercise their rights under Section 7 of the 
National Labor Relations Act and, in some instances, the lack of 
information will affect their individual and collective choices on 
whether or not to select a union as the exclusive bargaining 
representative or how to vote in contract ratification or strike 
authorization votes. The public disclosure benefit to the employees and 
to the public at large cannot reasonably be ascertained due to the 
uncertainty in knowing whether employees would have participated or not 
in a representation election or cast their ballots differently if they 
had timely known of the consultant's persuader activities. The real 
value of the LMRDA public disclosure of information is in its 
availability to workers and the public in accordance with Congressional 
intent. Such information gives employees the knowledge of the 
underlying source of the information directed at them, aids them in 
evaluating its merit and motivation, and assists them in developing 
independent and well-informed conclusions regarding union 
representation.
    The Department also proposes to revise the Form LM-10, the Form LM-
20, and the corresponding instructions. These changes include 
modifications of the layout of the forms and instructions to better 
outline the reporting requirements and improve the readability of the 
information. The proposed revised forms also require greater detail 
about the activities conducted by consultants pursuant to agreements 
and arrangements with employers.
    Finally, the Department proposes that Form LM-10 and LM-20 filers 
submit reports electronically, but also has provided a process for a 
continuing hardship exemption, whereby filers may apply to submit 
hardcopy forms. Currently, labor organizations that file the Form LM-2 
Labor Organization Annual Report are required by regulation to file 
electronically, and there has been good compliance with this submission 
requirement. Employers and consultants likely have the information 
technology resources and capacity to file electronically, as well. 
Moreover, an electronic filing option is also planned for all LMRDA 
reports as part of an information technology enhancement, including for 
those forms that cannot now be electronically filed, such as the Form 
LM-10 and Form LM-20. This addition should greatly reduce the burden on 
filers to electronically sign and submit their forms.

B. Overview of the Proposed Form LM-10, Form LM-20, and Instructions

1. Proposed Form LM-20 and Instructions
    The Proposed Form LM-20 and Instructions (see appendix A) are 
described in section VI. C., above, and this discussion is incorporated 
here by reference.\24\
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    \24\ The current Form LM-20 form and instructions are available 
on the OLMS website at: http://www.dol.gov/olms/regs/compliance/GPEA_Forms/lm-20p.pdf and http://www.dol.gov/olms/regs/compliance/GPEA_Forms/lm-20_Instructions.pdf.
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2. Proposed Form LM-10 and Instructions
    The Proposed Form LM-10 and Instructions (see appendix B) are 
described in section VI. D., above, and this discussion is incorporated 
here by reference.\25\
---------------------------------------------------------------------------

    \25\ The current Form LM-10 form and instructions are available 
on the OLMS website at: http://www.dol.gov/olms/regs/compliance/GPEA_Forms/lm-10p.pdf and http://www.dol.gov/olms/regs/compliance/GPEA_Forms/lm-10_instructions.pdf.
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C. Methodology for the Burden Estimates \26\
---------------------------------------------------------------------------

    \26\ Some of the burden numbers included in both this PRA 
analysis and regulatory flexibility analysis will not add perfectly 
due to rounding.
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    The Department first estimated the number of Form LM-10 and Form 
LM-20 filers that will submit the revised form, as well as the increase 
in submissions that result from the proposed rule. Then, the estimated 
number of minutes that each filer will need to meet the reporting and 
recordkeeping burden of the proposed forms was calculated, as was the 
total burden hours. The Department then estimated the cost to each 
filer for meeting those burden hours, as well as the total cost to all 
filers. Federal costs associated with the proposed rule were also 
estimated. Please note that some of the burden numbers included in this 
PRA analysis will not add perfectly due to rounding. Additionally, the 
Department notes that the burden figures provided below are intended to 
be reasonable estimates, for the average filer, and not precise 
statements of the number of filers and hour and cost burden for every 
filer. The Department invites general and specific comments on each 
estimate, assumptions made, and any other aspect of this analysis.
1. Number of Proposed Form LM-20 and Form LM-10 Filers
    The Department estimates 2,601 proposed Form LM-20 filers and 3,414 
proposed Form LM-10 filers. The Form LM-20 total represents an increase 
of 2,410 Form LM-20 reports over the total of 191 reports estimated in 
the Department's most recent Information Collection Request (ICR) 
submission to the Office of Management and Budget (OMB). The Form LM-10 
total represents a 2,484 increase over the average of 930 Form LM-10 
reports received during FY 2008 and FY 2009.\27\
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    \27\ The Department did not utilize the Form LM-10 reports 
estimate from its recent ICR submission to OMB, because this total 
did not break the reports out pursuant to subsection of section 
203(a), as did the FY 2007 and FY 2008 study explained below, and 
the total of 930 reports is almost identical to the 938 Form LM-10 
reports estimated in the recent ICR submission.
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a. Form LM-20 Total Filer Estimate
    The Department estimates 2,601 proposed Form LM-20 filers, which 
represents an increase of 2,410 Form LM-20 reports over the total of 
191

[[Page 36199]]

reports estimated in the Department's most recent ICR submission to the 
OMB. To estimate the total number of proposed Form LM-20 filers, the 
Department employed the median rate (75%) of employer utilization of 
consultants to run an anti-union campaign when faced with an organizing 
effort, which was set out in Section IV. E. above. The Department is 
aware of no data set that will reflect all instances in which a labor 
consultant will engage in reportable persuader activity and that there 
is no ready proxy for estimating the use of employer consultants in 
contexts other than in election cases, such as employer efforts to 
persuade employees during collective bargaining, a strike, or other 
labor dispute. The Department believes, however, that the number of 
representation and decertification elections supervised by the National 
Labor Relations Board (NLRB) and the National Mediation Board (NMB), 
the agencies that enforce private sector labor-management relations 
statutes, provides an appropriate benchmark for estimating the number 
of reports that will be filed under the proposed rule. The Department 
invites comment on this approach.
    In order to estimate the number of Form LM-20 reports involving 
agreements and arrangements to persuade employees, the Department 
applied the 75% employer utilization rate of consultants to data from 
the NLRB and NMB. As shown above in Section IV. F., the NLRB received 
3,429.2 representation cases in during the fiscal years 2005-2009.\28\ 
The NMB handled an average of 38.8 representation cases in during the 
same period.\29\ Applying the 75% figure to 3,468 (the combined NLRB 
and NMB representation case total), results in 2,601 Form LM-20 
reports. The Department then subtracted out the 191 reports estimated 
in the Department's most recent ICR submission to the OMB, which 
results in a Form LM-20 report increase of 2,410.
---------------------------------------------------------------------------

    \28\ See 2009 NLRB Annual Report, Table 1 at 91: http://www.nlrb.gov/shared_files/Annual_Reports/NLRB2009.pdf.
    \29\ See 2009 NMB Annual Report, Table 1 at 79 at: http://www.nmb.gov/documents/2009annual-report.pdf.
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    The Department therefore estimates that the proposed Form LM-20 
will generate 2,601 reports, which is an increase of 2,410 over the 
previous estimate. The Department notes that, pursuant to the terms of 
the statute and the instructions to the form, sub-consultants who enter 
into agreements to aid the consultant in its efforts to persuade the 
employer's employees, are also required to submit Form LM-20 reports. 
Furthermore, it is possible that an employer could enter into 
reportable agreements with multiple consultants during an anti-union 
organizing effort. However, the Department assumes in its estimate that 
most employers will hire one consultant for each representational or 
decertification election. The Department invites comment on this 
assumption, including any data on the use of sub-consultants and 
multiple agreements or arrangements entered into by employers.
b. Form LM-10 Total Filer Estimate
    The Department estimates 3,414 proposed Form LM-10 filers, for a 
total increase of 2,484 over the average of 930 Form LM-10 reports 
received during FY 2007 and FY 2008. The Form LM-10 analysis follows 
the above analysis, although the form has other aspects that are not 
affected by today's rule. Specifically, an employer must report certain 
payments to unions and union officials pursuant to section 203(a)(1), 
as well as other persuader and information gathering related payments 
pursuant to section 203(a)(2) and 202(a)(3). For these portions of the 
Form LM-10, the Department utilized data obtained from a review of Form 
LM-10 submissions in FY 2007 and FY 2008. This analysis revealed that, 
for the two year period, there were 1,616 forms that revealed 
information reported pursuant to section 203(a)(1), six reports 
pursuant to section 203(a)(2), and three for section 203(a)(3). 
Further, there were a total of 233 Form LM-10 reports filed pursuant to 
sections 202(a)(4) and (5).
    The Department assumes for this calculation that each Form LM-10 
report submitted will involve just one of the above statutory 
provisions, although in practice there may be some overlap. Thus, the 
Department combines the estimated 2,601agreements and arrangements, 
calculated for the Form LM-20, with 813 (the average number of Form LM-
10 reports in the above two year period indicating that the forms were 
submitted pursuant to sections 203(a)(1)-(3), the non-consultant 
agreement or arrangement provisions). This yields a total estimate of 
3,414 proposed Form LM-10 reports, which represents a 2,484 increase 
over the average of 930 Form LM-10 reports received during FY 2007 and 
FY 2008.
    As part of this proposed Form LM-10 estimate, the Department notes 
that the issues of the number of agreements or arrangements that an 
employer makes with third parties, as well as the number of potential 
sub-consultants, are not relevant here, as any number of agreements or 
arrangements entered into will be reported on one Form LM-10 report per 
employer.
2. Hours To Complete and File the Proposed Form LM-20 and Form LM-10
    The Department has estimated the number of minutes that each Form 
LM-20 and Form LM-10 filer will need for completing and filing the 
proposed forms (reporting burden), as well as the minutes needed to 
track and maintain records necessary to complete the forms 
(recordkeeping burden). The estimates for the Form LM-20 are included 
in Tables 1 and 2, and the estimates for the Form LM-10 are included in 
Tables 3 and 4. The tables describe the information sought by the 
proposed forms and instructions, where on each form the particular 
information is to be reported, if applicable, and the amount of time 
estimated for completion of each item of information. The estimates for 
the reporting burden associated with completing certain items of the 
forms and reading the instructions, as well as the related 
recordkeeping requirements, are based on similar estimates utilized in 
the recent Form LM-30 Labor Organization Officer and Employee Report 
rulemaking, pursuant to section 202 of the LMRDA. While the information 
required to be reported in that form differs from the Form LM-10 and 
LM-20, and union officers differ from attorneys who complete the 
employer and consultant forms, the similarities in the forms, 
particularly the information items and length of the instructions, 
provide a reasonable basis for these estimates.
    Further, the estimates include the time associated with gathering 
documentation and any work needed to complete the forms. For example, 
the estimates include reading the instructions, gathering relevant 
documentation and information, and checking the appropriate persuader 
or information supplying activities boxes. The Department also notes 
that there are no calculations required for the Form LM-20, as it does 
not require the reporting of financial transactions (although Item 10, 
Terms and Conditions, requires reporting of aspects related to rate of 
consultant pay). The aspect of the Form LM-10 affected by this 
rulemaking, concerning the details of persuader agreements, requires 
the reporting disbursements made to the consultant, without any 
calculations.
    Additionally, the estimates below are for all filers, including 
first-time filers and subsequent filers. While the Department 
considered separately estimating burdens for first-time and subsequent 
filers, the nature of Form

[[Page 36200]]

LM-20 and Form LM-10 reporting militates against such a decision. 
Employers, labor relations consultants, and others may not be required 
to file reports for multiple fiscal years. In those cases in which the 
Department has reduced burden estimates for subsequent-year filings, it 
generally did so with regard to annual reports, specifically labor 
organization annual reports, Forms LM-2, LM-3, and LM-4. In contrast, 
the Form LM-20 and Form LM-10, like the Form LM-30, is only required 
for employers, labor relations consultants, and other filers in years 
that they engage in reportable transactions. As such, the burden 
estimates assume that the filer has never before filed a Form LM-20 or 
Form LM-10.
a. Recordkeeping Burden Hours To Complete the Form LM-20
    The recordkeeping estimate of 15 minutes per filer represents a 13 
minute increase from the 2 minute estimate for the current Form LM-20, 
as prepared for the Department's most recent information collection 
request for OMB 1215-0188. See also the current Form LM-20 and 
instructions. This estimate reflects the Department's reevaluation of 
the effort needed to document the nature of the agreement or 
arrangement with an employer, as well as the types of activities 
engaged in pursuant to such agreement or arrangement. Additionally, the 
Department assumes that consultants retain most of the records needed 
to complete the form in the normal course of their business. Finally, 
the 15 minutes accounts for the 5-year retention period required by 
statute. See section 206, 29 U.S.C. 436.
b. Reporting Burden Hours for the Form LM-20
    The reporting burden of 45 minutes per filer represents a 25 minute 
increase from the 20 minute estimate for the current Form LM-20, as 
prepared for the Department's most recent information collection 
request for OMB 1215-0188. See also the current Form LM-20 and 
instructions. This estimate reflects the Department's reevaluation of 
the effort needed to record the nature of the agreement or arrangement 
with an employer, as well as the types of activities engaged in 
pursuant to such agreement or arrangement. It also includes the time 
required to read the Form LM-20 instructions to discover whether or not 
a report is owed and determine the correct manner to report the 
necessary information. The Department estimates that the average filer 
will need 10 minutes to read the instructions, which includes the time 
needed to apply the Department's proposed revised interpretation of the 
``advice exemption.'' \30\
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    \30\ Additionally, the Department estimates that those persons 
who are not required to file the Form LM-20 will spend ten minutes 
reading the instructions. This burden is not included in the total 
reporting burden, since these persons do not file and are thus not 
respondents.
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    The Department views the simple data entries required by Items 1.a 
through 1.c, 4, 5, 7, and 11b-c as only requiring 30 seconds each. 
These items only require simple data entry regarding dates or file 
numbers, checking boxes, or, in the case of 11.c, a simple answer 
regarding the extent or performance for the activities undertaken 
pursuant to the agreement or arrangement. Additionally, Item 9 includes 
two boxes to check identifying generally the nature of the activities 
performed, so the Department estimates that this item will require one 
minute to complete. The Department estimates that a filer will be able 
to enter his or her own contact information in only two minutes, 
including its Employer Identification Number (EIN), if applicable, in 
Item 2, as well as two minutes for any additional contact information 
in Item 3. Further, the filer will require two minutes to record in 
Item 8(a) or Item 8(b) the names of the employer's representatives or 
officials of the prime consultant with whom the filer entered into the 
agreement or arrangement, as well as two minutes to identify in Item 
11.d the individuals who carried out the activities for the employer. 
The filer will need four minutes, however, to enter the information for 
the employer in Item 6, including the EIN, if applicable, as this 
information may not be as readily available as the filer's own.
    The Department estimates that it will take filers five minutes to 
describe in Item 10 in narrative form the nature of the agreement or 
arrangement, as well as attach the written agreement (if applicable), 
and five minutes to complete the checklist in Item 11.a, which 
illustrates the nature of the activities undertaken pursuant to the 
agreement or arrangement. It will also take one minute each for Items 
12.a and 12.b, in order to identify the subject group of employee(s) 
and organization(s).
    Finally, the Department estimates that a Form LM-20 filer will 
utilize five minutes to check responses and review the completed 
report, and will require one minute per official to sign and verify the 
report in Items 13 and 14 (for two minutes total for these two items). 
The Department introduced in calendar year 2010 a cost-free and simple 
electronic filing and signing protocol, which will reduce burden on 
filers.
    As a result, the Department estimates that a filer of the proposed 
revised Form LM-20 will incur 60 minutes in reporting and recordkeeping 
burden to file a complete form. This compares with the 22 minutes per 
filer in the currently approved information collection request. See 
Table 1 below.
---------------------------------------------------------------------------

    \31\ The Department includes this item and an estimated time of 
completion in an effort to provide a thorough burden analysis. 
However, the Department does not consider it likely that this item 
will need to be competed, so it has not been included in the total 
below.
    \32\ The Department includes this item and an estimated time of 
completion in an effort to provide a through burden analysis. 
However, the Department does not consider it likely that the average 
filer will need to complete this item, so it has not been included 
in the total below.

      Table 1--Form LM-20 Filer Recordkeeping and Reporting Burden
                              [In minutes]
------------------------------------------------------------------------
                                    Section of        Recurring burden
      Burden description          proposed form            hours
------------------------------------------------------------------------
Maintaining and gathering       Recordkeeping      15 minutes.
 records.                        Burden.
Reading the instructions to     Reporting Burden.  10 minutes.
 determine applicability of
 the form and how to complete
 it.
Reporting LM-20 file number...  Item 1.a.........  30 seconds.
Identifying if report filed     Item 1.b.........  30 seconds.\31\
 under a Hardship Exemption.
Identifying if report is        Item 1.c.........  30 seconds.\32\
 amended.
Reporting filer's contact       Item 2...........  2 minutes.
 information.
Identifying Other Address       Item 3...........  2 minutes.
 Where Records Are Kept.

[[Page 36201]]

 
Date Fiscal Year Ends.........  Item 4...........  30 seconds.
Type of Person................  Item 5...........  30 seconds.
Full Name and Address of        Item 6...........  4 minutes.
 Employer.
Date of Agreement or            Item 7...........  30 seconds.
 Arrangement.
Person(s) Through Whom          Items 8(a) and     2 minutes.
 Agreement or Arrangement Made.  (b).
Object of Activities..........  Item 9...........  1 minute.
Terms and Conditions..........  Item 10..........  5 minutes.
Nature of Activities..........  Item 11.a........  5 minutes.
Period During Which Activity    Item 11.b........  30 seconds.
 Performed.
Extent of Performance.........  Item 11.c........  30 seconds.
Name and Address of Person      Item 11.d........  2 minutes.
 Through Whom Performed.
Identify the Subject Group of   Item 12.a........  1 minute.
 Employee(s).
Identify the Subject Labor      Item 12.b........  1 minute.
 Organization(s).
Checking Responses............  N/A..............  5 minutes.
Signature and verification....  Items 13-14......  2 minutes.
                               -----------------------------------------
    Total Recordkeeping Burden  .................  15 minutes.
     Hour Estimate per Form LM-
     20 Filer.
    Total Reporting Burden      .................  45 minutes.
     Hour Estimate per Form LM-
     20 Filer.
                               -----------------------------------------
        Total Burden Estimate   .................  60 minutes.
         per Form LM-20 Filer.
------------------------------------------------------------------------

c. Total Form LM-20 Reporting and Recordkeeping Burden
    As stated, the Department estimates that the burden of maintaining 
and gathering records is 15 minutes and that it will receive 2,601 
proposed Form LM-20 reports. Thus, the estimated recordkeeping burden 
for all filers is 30,855 minutes (15 x 2,601 = 39,015 minutes) or 
approximately 650 hours (39,015/60 = 650.25). The remaining times (45 
minutes) represents the burden involved with reviewing the instructions 
and reporting the data. The total estimated reporting burden for all 
filers is 117,045 minutes (45 x 2,601 = 117,045 minutes) or 
approximately 1,951 hours (117,045/60 = 1950.75 hours). The total 
estimated burden for all filers is, therefore, 156,060 minutes or 2,601 
hours (650 + 1,951 = 2,601). See Table 2 below.
    The total recordkeeping of 650 hours represents a 644.27 hour 
increase over the 5.73 hours Form LM-20 recordkeeping estimate 
presented in the Department's most recent ICR submission to OMB, and 
the total reporting burden of 1,951 hours represents a 1887.97 hour 
increase over the 63.03 hours Form LM-20 reporting burden estimate 
presented in the ICR submission. The total burden of 2,601 hours is a 
2,532 hour increase over the estimated 69 hours Form LM-20 burden total 
in the most recent ICR submission.

   Table 2--Total Reporting and Recordkeeping Burden for the Estimated
                         2,601 Form LM-20 Filers
                               [In hours]
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Total Recordkeeping Burden....................................       650
Total Reporting Burden........................................     1,951
Total Burden..................................................     2,601
------------------------------------------------------------------------

d. Recordkeeping Burden Hours To Complete the Form LM-10
    The recordkeeping estimate of 25 minutes per filer represents a 20 
minute increase from the 5 minute estimate for the current Form LM-10, 
as prepared for the Department's most recent information collection 
request for OMB 1215-0188. See also the current Form LM-10 and 
instructions. This estimate reflects the Department's reevaluation of 
the effort needed to document the nature of the agreement or 
arrangement with an employer, as well as the types of activities 
engaged in pursuant to such agreement or arrangement. The Department 
assumes that employers retain most of the records needed to complete 
the form in the ordinary course of their business. Furthermore, the 15 
minutes accounts for the 5-year retention period required by statute. 
See section 206, 29 U.S.C. 436. Finally, the Department notes that the 
estimate for the Form LM-10 recordkeeping burden is 10 minutes longer 
than that for the Form LM-20, which reflects the greater amount of 
information reported on the Form LM-10.
e. Reporting Burden Hours To Complete the Form LM-10
    In proposing these estimates, the Department is aware that not all 
employers required to file the Form LM-10 will need to complete each 
Part of the form. However, for purposes of assessing an average burden 
per filer, the Department assumes that the Form LM-10 filer engages in 
reportable transactions, agreements, or arrangements in all four of the 
proposed parts.
    The reporting burden of 120 minutes per filer represents an 85 
minute increase from the 35 minute estimate for the current Form LM-10, 
as prepared for the Department's most recent information collection 
request for OMB 1215-0188. See also the current Form LM-10 and 
instructions. This estimate reflects the Department's reevaluation of 
the effort needed to record the nature of the agreement or arrangement 
with a consultant and the types of activities engaged in pursuant to 
such agreement or arrangement, as well as record and enter each 
reportable payment or expenditure. It also includes the time required 
to read the Form LM-10 instructions to discover whether or not a report 
is owed and determine the correct manner to report the necessary 
information. The Department estimates that the average filer will need 
20 minutes to read the instructions, which includes the time needed to 
apply the Department's proposed revised interpretation of the 
``advice''

[[Page 36202]]

exemption.\33\ This estimate is ten minutes greater than for the Form 
LM-20 instructions, as the Form LM-10 is a more complex report.
---------------------------------------------------------------------------

    \33\ Additionally, the Department estimates that those persons 
who are not required to file the Form LM-10 will spend ten minutes 
reading the instructions. This burden is not included in the total 
reporting burden, since these persons do not file and are thus not 
respondents.
---------------------------------------------------------------------------

    The Department estimates, as with the Form LM-20, that it will take 
30 seconds to complete each item that calls for entering dates, 
checking appropriate boxes, as well as entering the amount of a payment 
or expenditure and its type (see Items 1.a, 1.b, 1.c, 2, 6, 7, 9.a, 
9.b, 9.c, 11.a, 11.b, 11.c, 13.a, 14.b, 15.a, 15.b, 15.c, 17.a, 17.b, 
and 17.c). Additionally, Parts C and D call for checking multiple 
boxes, which the Department also estimates will take 30 seconds each, 
or one minute for Part C and Part D, respectively.
    The Department also estimated that it would take one minute to 
identify the employee and labor organization target of persuader 
activities, as well as indicating the extent to which the activities 
have been performed (see Items 14.c, 14.e, 14.f, respectively).
    Further, the Department estimates, as with the Form LM-20, that it 
will take two minutes for the employer to complete items calling for 
its own identifying information (see Items 3-5 and 14.d), including its 
EIN, if applicable and four minutes for items calling for another's 
identifying information, including EIN, if applicable (see Items 8, 10, 
12, 14.d, and 16). The Department also estimates that it will take five 
minutes to detail the circumstances of each payment or expenditure, 
terms and conditions of any agreement or arrangement, and any 
activities pursuant to such agreement or arrangement (see Items 9.d, 
11.d, 13.b, 14.a, 15.d, and 17.d).
    Finally, the Department estimates that a Form LM-10 filer will 
utilize five minutes to check responses and review the completed 
report, and will require one minute per official to sign and verify the 
report in Items 18 and 19 (for two minutes total for these two items). 
The Department introduced in calendar year 2010 a cost-free and simple 
electronic filing and signing protocol, which will reduce burden on 
filers.
    As a result, the Department estimates that a filer of the proposed 
revised Form LM-10 will incur 120 minutes in reporting and 
recordkeeping burden to file a complete form. This compares with the 35 
minutes per filer in the currently approved information collection 
request. See Table 3 below.

      Table 3--Form LM-10 Filer Recordkeeping and Reporting Burden
                              [In minutes]
------------------------------------------------------------------------
                                    Section of       Recurring  burden
      Burden description          proposed form            hours
------------------------------------------------------------------------
Maintaining and gathering       Recordkeeping      25 minutes.
 records.                        Burden.
Reading the instructions to     Reporting Burden.  20 minutes.
 determine applicability of
 the form and how to complete
 it.
Reporting LM-10 file number...  Item 1.a.........  30 seconds.
Identifying if report filed     Item 1.b.........  30 seconds.\34\
 under a Hardship Exemption.
Identifying if report is        Item 1.c.........  30 seconds.\35\
 amended.
Fiscal Year Covered...........  Item 2...........  30 seconds.
Reporting employer's contact    Item 3...........  2 minutes.
 information.
Reporting president's contact   Item 4...........  2 minutes.
 information if different than
 3.
Identifying Other Address       Item 5...........  2 minutes.
 Where Records Are Kept.
Identifying where records are   Item 6...........  30 seconds.
 kept.
Type of Organization..........  Item 7...........  30 seconds.
Reporting union or union        Item 8...........  4 minutes.
 official's contact
 information (Part A).
Date of Part A payments.......  Item 9.a.........  30 seconds.
Amount of Part A payments.....  Item 9.b.........  30 seconds.
Kind of Part A payments.......  Item 9.c.........  30 seconds.
Explaining Part A payments....  Item 9.d.........  5 minutes.
Identifying recipient's name    Item 10..........  4 minutes.
 and contact information.
Date of Part B payments.......  Item 11.a........  30 seconds.
Amount of Part B payments.....  Item 11.b........  30 seconds.
Kind of Part B payments.......  Item 11.c........  30 seconds.
Explaining Part B payments....  Item 11.d........  5 minutes.
Part C: Identifying object(s)   Part C...........  1 minute.
 of the agreement or
 arrangement.
Identifying name and contact    Item 12..........  4 minutes.
 information for individual
 with whom agreement or
 arrangement was made.
Indicating the date of the      Item 13.a........  30 seconds.
 agreement or arrangement.
Detailing the terms and         Item 13.b........  5 minutes.
 conditions of agreement or
 arrangement.
Identifying specific            Item 14.a........  5 minutes.
 activities to be performed.
Identifying period during       Item 14.b........  30 seconds.
 which performed.
Identifying the extent          Item 14.c........  1 minute.
 performed.
Identifying name of person(s)   Item 14.d........  2 minutes.
 through whom activities were
 performed.
Identify the Subject Group of   Item 14.e........  1 minute.
 Employee(s).
Identify the Subject Labor      Item 14.f........  1 minute.
 Organization(s).
Indicating the date of each     Item 15.a........  30 seconds.
 payment pursuant to agreement
 or arrangement.
Indicating the amount of each   Item 15.b........  30 seconds.
 payment.
Indicating the kind of payment  Item 15.c........  30 seconds.
Explanation for the             Item 15.d........  5 minutes.
 circumstances surrounding the
 payment(s).
Part D: Identifying purpose of  Part D...........  1 minute.
 expenditure(s).
Part D: Identifying             Item 16..........  4 minutes.
 recipient's name and contact
 information.
Date of Part D payments.......  Item 17.a........  30 seconds.
Amount of Part D payments.....  Item 17.b........  30 seconds.
Kind of Part D payments.......  Item 17.c........  30 seconds.
Explaining Part D payments....  Item 17.d........  5 minutes.

[[Page 36203]]

 
Checking Responses............  N/A..............  5 minutes.
Signature and verification....  Items 18-19......  2 minutes.
                               -----------------------------------------
    Total Recordkeeping Burden  .................  25 minutes.
     Hour Estimate Per Form LM-
     10 Filer.
    Total Reporting Burden      .................  95 minutes.
     Hour Estimate Per Form LM-
     10 Filer.
        Total Burden Estimate   .................  120 minutes.
         per Form LM-10 Filer.
------------------------------------------------------------------------

f. Total Form LM-10 Reporting and Recordkeeping Burdens
---------------------------------------------------------------------------

    \34\ The Department includes this item and an estimated time of 
completion in an effort to provide a thorough burden analysis. 
However, the Department does not consider it likely that this item 
will need to be completed, so it has not been included in the total 
below.
    \35\ The Department includes this item and an estimated time of 
completion in an effort to provide a thorough burden analysis. 
However, the Department does not consider it likely that the average 
filer will need to complete this item, so it has not been included 
in the total below.
---------------------------------------------------------------------------

    As stated, the Department estimates that it will receive 3,414 
proposed Form LM-10 reports. Thus, the estimated recordkeeping burden 
for all filers is 85,350 minutes (25 x 3,414 = 85,350 minutes) or 
approximately 1,423 hours (85,350/60 = 1,422.5). The total estimated 
reporting burden for all filers is 324,330 minutes (95 x 3,414 = 
324,330 minutes) or approximately 5,406 hours (324,330/60 = 5,405.5 
hours).
    The total estimated burden for all filers is, therefore, 
approximately 409,680 minutes or 6,828 hours. See Table 4 below. The 
total recordkeeping of 1,423 hours represents a 1,347.96 hour increase 
over the 75.04 hour Form LM-10 recordkeeping estimate presented in the 
Department's most recent ICR submission to OMB, and the total reporting 
burden of 5,406 hours represents a 4,937 hour increase over the 469 
hour Form LM-10 reporting burden estimate presented in the ICR request. 
The total burden of 6,829 hours is a 6,285 hour increase over the 544 
hour Form LM-10 burden hour total in the most recent ICR submission.

   Table 4--Total Reporting and Recordkeeping Burden for the Estimated
                         3,414 Form LM-10 Filers
                               [In hours]
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Total Recordkeeping Burden....................................     1,423
Total Reporting Burden........................................     5,406
Total Burden..................................................     6,829
------------------------------------------------------------------------

3. Cost of Submitting the Form LM-20 and Form LM-10
    The total cost imposed by the proposed rule on Form LM-20 and Form 
LM-10 filers is $825,886.11. See Table 5 below. This is a $801,508.11 
increase over the $24,378 estimated for the two forms in the most 
recent ICR submission.
a. Form LM-20
    To determine the cost per filer to submit the Form LM-20, the 
Department assumed that each filer would utilize the services of an 
attorney to complete the form. This is consistent with past 
calculations of costs per filer for the Form LM-20, and the assumption 
also corresponds to the analysis above in which the Department notes 
that the consultant industry consists in large part of practicing 
attorneys. The Department also considers non-attorney consultant firms 
as likely utilizing the services of attorneys to complete the form.
    To determine the hourly compensation for attorneys for the purposes 
of this analysis, the Department first identified the average hourly 
salary for lawyers, $62.03, as derived from the Occupational Employment 
and Wages Survey for 2009, Table 1 on page 10, from the Bureau of Labor 
Statistics (BLS) at http://www.bls.gov/news.release/pdf/ocwage.pdf. 
Next, the Department increased these figures by 41.2% to account for 
total compensation.\36\ Thus, the Department adjusted the $62.03 figure 
upwards by 41.2% to reach the average hourly compensation for attorneys 
for the purposes of this analysis: $87.59.
---------------------------------------------------------------------------

    \36\ See Employer Costs for Employee Compensation Summary, from 
the BLS, at http://www.bls.gov/news.release/ecec.nr0.htm. The 
Department increased the average hourly wage rate for employees 
($19.41 in 2009) by the percentage total of the average hourly 
compensation figure ($8.00 in 2009) over the average hourly wage.
---------------------------------------------------------------------------

    Applying this hourly total compensation to the estimated one hour 
reporting and recordkeeping burden, yields an estimated cost of $87.59 
($87.59 x one hour) per filer. This is $80.29 greater than the $7.30 
estimate in the most recent ICR submission. The total cost for the 
estimated 2,601 Form LM-20 filers is therefore $227,821.59, which is 
$226,427.59 greater than the $1,394 total burden estimate for the Form 
LM-20 in the most recent ICR submission.
b. Form LM-10
    As with the Form LM-20 calculation above, the Department assumed 
that each filer would utilize the services of an attorney to complete 
the form. This is consistent with past calculations of costs per filer 
for the Form LM-10. The Department also considers that consultant firms 
are likely utilizing the services of attorneys to complete the form.
    Applying this hourly total compensation to the estimated two hour 
reporting and recordkeeping burden, yields an estimated cost of $175.18 
($87.59 x two hours) per filer. This is $150.68 greater than the 
estimated $24.50 Form LM-10 burden presented in the most recent ICR 
submission. The total cost for the estimated 3,414 Form LM-10 filers is 
therefore $598,064.52, which is $575,080.52 greater than the $22,984 
estimated for the most recent ICR submission.
c. Federal Costs
    In its recent submission for revision of OMB 1215-0188, 
which contains all LMRDA forms (except the pre-2007 Form LM-30, which 
was approved under OMB 1215-0205), the Department estimates 
that its costs associated with the LMRDA forms are $2,710,726 for the 
OLMS national office and $3,779,778 for the OLMS field offices, for a 
total Federal cost of $6,490,504. Federal estimated costs include costs 
for contractors and operational expenses such as equipment, overhead, 
and printing as well as salaries and benefits for the OLMS staff in the 
National Office and field offices who are involved with reporting and 
disclosure activities. These estimates include time devoted

[[Page 36204]]

to: (a) Receipt and processing of reports; (b) disclosing reports to 
the public; (c) obtaining delinquent reports; (d) reviewing reports; 
(e) obtaining amended reports if reports are determined to be 
deficient; and (f) providing compliance assistance training on 
recordkeeping and reporting requirements.

                                                    Table 5--Reporting and Recordkeeping Burden Hours and Costs for Form LM-20 and Form LM-10
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                    Reporting         Total       Recordkeeping       Total       Total burden
                   Number of filers per form                        hours per       reporting       hours per     recordkeeping     hours per     Total burden    Average cost      Total cost
                                                                      filer           hours           filer           hours           filer           hours         per filer
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Form LM-20: 2,601..............................................            0.75        1,950.75            0.25          650.25            1.00           2,601          $87.59      $227,821.59
Form LM-10: 3,414..............................................          1.5833           5,406          0.4166           1,423            2.00           6,829          175.18       598,064.52
                                                                --------------------------------------------------------------------------------------------------------------------------------
    Total......................................................  ..............  ..............  ..............  ..............  ..............  ..............  ..............       825,886.11
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

5. Request for Public Comment
    Currently, the Department is soliciting comments concerning the 
information collection request (``ICR'') for the information collection 
requirements included in this proposed regulation at section 405.2, 
Annual report, and at section 406.2, Agreement and activities report, 
of title 29, Code of Federal Regulations, which, when implemented will 
revise the existing OMB control number 1245-0003. A copy of this ICR, 
with applicable supporting documentation, including among other things 
a description of the likely respondents, proposed frequency of 
response, and estimated total burden may be obtained from the 
RegInfo.gov Web site at http://www.reginfo.gov/public/do/PRAMain or by 
contacting Andrew R. Davis at (202) 693-0123. Please note that comments 
submitted in response to this notice will be made a matter of public 
record.
    The Department hereby announces that it has submitted a copy of the 
proposed regulation to the Office of Management and Budget (``OMB'') in 
accordance with 44 U.S.C. 3507(d) for review of its information 
collections. The Department and OMB are particularly interested in 
comments that:
     Evaluate whether the proposed collection of information is 
necessary for the proper performance of the functions of the agency, 
including whether the information will have practical utility;
     Evaluate the accuracy of the agency's estimate of the 
burden of the collection of information, including the validity of the 
methodology and assumptions used;
     Enhance the quality, utility, and clarity of the 
information to be collected; and
     Minimize the burden of the collection of information on 
those who are to respond, including through the use of appropriate 
automated, electronic, mechanical, or other technological collection 
techniques or other forms of information technology, e.g., by 
permitting electronic submission of responses.
    Type of Review: Revision of a currently approved collection.
    Agency: Office of Labor-Management Standards.
    Title: Labor Organization and Auxiliary Reports.
    OMB Number: 1245-0003.
    Affected Public: Private Sector: employers and labor relations 
consultants.
    Number of Annual Responses: 38,570.
    Frequency of Response: Annual for most forms.
    Estimated Total Annual Burden Hours: 4,420,458.
    Estimated Total Annual Burden Cost: $185,719,212.
    Potential respondents are hereby duly notified that such persons 
are not required to respond to a collection of information or revision 
thereof unless approved by OMB under the PRA and it displays a 
currently valid OMB control number. See 35 U.S.C. 
3506(c)(1)(B)(iii)(V). In accordance with 5 CFR 1320.11(k), the 
Department will publish a notice in the Federal Register informing the 
public of OMB's decision with respect to the ICR submitted thereto 
under the PRA.

Regulatory Flexibility Analysis

    The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601 et seq., 
requires agencies to consider the impact of their regulatory proposals 
on small entities, analyze effective alternatives that minimize small 
entity impacts, and make initial analyses available for public comment. 
5 U.S.C. 603, 604. If an agency determines that its rule will not have 
a significant economic impact on a substantial number of small 
entities, it must certify that conclusion to the Small Business 
Administration (SBA). 5 U.S.C. 605(b).
1. Statement of the Need for, and Objectives of, the Proposed Rule
    See Paperwork Reduction Act, section A, which is incorporated here 
by reference.
2. Legal Basis for Rule
    The legal authority for this proposed rule is section 208 of the 
LMRDA. 29 U.S.C. 438. Section 208 provides that the Secretary of Labor 
shall have authority to issue, amend, and rescind rules and regulations 
prescribing the form and publication of reports required to be filed 
under title II of the Act, and such other reasonable rules and 
regulations as she may find necessary to prevent the circumvention or 
evasion of the reporting requirements. 29 U.S.C. 438.
3. Number of Small Entities Covered Under the Proposal
    The Department estimates that there are approximately 2,549 small 
entities affected by the Form LM-20 portion of the proposed rule and 
3,404 employers, for a total of 5,953 small entities affected by the 
proposed rule.
    To determine the number of labor relations consultants and similar 
entities affected by the Form LM-20 portion of the proposed rule, which 
can be classified as small entities, the Department analyzed data from 
the U.S. Census Bureau's North American Industry Classification System 
Codes (NAICS) for ``Human Resources Consulting Services,'' which 
includes ``Labor Relations Consulting Services.'' \37\ Additionally, 
the Department utilized the Small Business Administration's (``SBA'') 
``small business'' standard of $7 million in average annual receipts 
for ``Human Resources Consulting Services,'' NAICS code 541612.\38\
---------------------------------------------------------------------------

    \37\ See Statistics of U.S. Businesses: 2007: NAICS 541612--
Human resources & executive search consulting services, United 
States, accessed at: http://www.census.gov/econ/susb/.
    \38\ See U.S. Small Business Administration's Table of Small 
Business Size Standards Matched to the North American Industry 
Classification System Codes at 32, accessed at: http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf.
---------------------------------------------------------------------------

    A review of the above data reveals that there are 13,575 firms 
within the ``Human Resources Consulting Services'' NAICS category, with 
13,307

[[Page 36205]]

of them (approximately 98% of the total) with less than $7 million in 
payroll. See, supra, Statistics of U.S. Businesses: 2007: NAICS 541612. 
The Department notes that labor relations consultants are a subset of 
the total of the ``Human Resources Consulting Category,'' and that 
total annual receipts of the firms is undoubtedly greater than the 
total payroll figure listed in the NAICS. However, based on the best 
available data, the Department has employed the 98% figure to determine 
the estimated percentage of 2,601 labor relations consultants that 
qualify as small entities pursuant to the proposed rule. Thus, the 
Department estimates that there are approximately 2,549 small entities 
(2,601 x 0.98) affected by the Form LM-20 portion of the proposed rule.
    To determine the number of employers that can be classified as 
small entities, pursuant to the Form LM-10 portion of the proposed 
rule, the Department notes that the SBA considers 99.7 percent of all 
employer firms to qualify as small entities.\39\ Further, the proposed 
rule affects all private sector employers. Thus, the Department 
concludes that approximately 3,404 (3,414 x 0.997) of the employers 
affected by the proposed rule constitute small entities.
---------------------------------------------------------------------------

    \39\ See http://web.sba.gov/faqs/faqIndexAll.cfm?areaid=24.
---------------------------------------------------------------------------

4. Relevant Federal Requirements Duplicating, Overlapping or 
Conflicting With the Rule
    The Department is not aware of any other Federal requirements 
requiring reporting of the activities, agreements, and arrangements 
covered by this proposed rule.
5. Differing Compliance or Reporting Requirements for Small Entities
    Under the proposed rule, the Form LM-20 reporting and recordkeeping 
requirements apply equally to all persons required to file a Form LM-
20, and the Form LM-10 reporting and recordkeeping requirements apply 
equally to all employers covered under the LMRDA.
6. Clarification, Consolidation and Simplification of Compliance and 
Reporting Requirements for Small Entities
    The revised format of the Form LM-10, which organizes the material 
in a more user-friendly manner, will simplify filing by small entity 
employers. Furthermore, the addition of instructions regarding the 
``advice'' exemption into the Form LM-20 and Form LM-10 instructions 
will improve the ease of filing.
    OLMS will provide compliance assistance for any questions or 
difficulties that may arise from using the electronic filing system. A 
toll-free help desk is staffed during normal business hours and can be 
reached by telephone at 1-866-401-1109.
7. Steps Taken To Reduce Burden
    The Department proposes that Form LM-10 and LM-20 filers submit 
reports electronically. Currently, labor organizations that file the 
Form LM-2 Labor Organization Annual Report are required by regulation 
to file electronically, and there has been good compliance with these 
requirements. The Department reasonably expects that employers and 
consultants will have the information technology resources and capacity 
to file electronically, as well.
    The use of electronic forms helps reduce burden by making it 
possible to download information from previously filed reports directly 
into the form; enables most schedule information to be imported into 
the form; makes it easier to enter information; and automatically 
performs calculations and checks for typographical and mathematical 
errors and other discrepancies, which assists reporting compliance and 
reduces the likelihood that the filer will have to file an amended 
report. The error summaries provided by the electronic system, combined 
with the speed and ease of electronic filing, also make it easier for 
both the reporting organization and OLMS to identify errors in both 
current and previously filed reports and to file amended reports to 
correct them.
    Moreover, a simplified electronic filing option is also planned for 
all LMRDA reports as part of an information technology enhancement, 
including for those forms that cannot currently be filed 
electronically, such as the Form LM-10 and Form LM-20. This addition 
should greatly reduce the burden on filers to electronically sign and 
submit their forms. Further, for those filers unable to submit 
electronically, they will be permitted to apply for a continuing 
hardship exemption that permits filers to submit hardcopy forms.
8. Reporting, Recording and Other Compliance Requirements of the Rule
    The proposed rule is not expected to have a significant economic 
impact on a substantial number of small entities. The LMRDA is 
primarily a reporting and disclosure statute. Accordingly, the primary 
economic impact will be the cost of retaining and reporting required 
information. It establishes various reporting requirements for 
employers, labor relations consultants, and others, pursuant to Title 
II of the Act. Accordingly, the primary economic impact of the proposed 
rule will be the cost to reporting entities of compiling, recording, 
and reporting required information.
    The Regulatory Flexibility Act does not define either ``significant 
economic impact'' or ``substantial'' as it relates to the number of 
regulated entities. 5 U.S.C. 601. In the absence of specific 
definitions, ``what is `significant' or `substantial' will vary 
depending on the problem that needs to be addressed, the rule's 
requirements, and the preliminary assessment of the rule's impact.'' 
See SBA's Office of Advocacy, A Guide for Government Agencies: How to 
Comply with the Regulatory Flexibility Act at 17.\40\ As to economic 
impact, one important indicator is the cost of compliance in relation 
to revenue of the entity. Id.
---------------------------------------------------------------------------

    \40\ The Guide may be accessed at http://www.sba.gov/advo/laws/rfaguide.pdf.
---------------------------------------------------------------------------

    As noted above, the Department estimates that there are 
approximately 2,549 labor relations consultants and other entities with 
under $7 million in total annual revenue, thus constituting small 
entities. Further, the Department estimated that there are 3,404 
employer small entities, for a total of 5,953 small entities affected 
by the proposed rule. As noted in the PRA analysis, supra, the 
Department estimated that a Form LM-20 filer would spend $87.59 
completing the form, while a Form LM-10 filer would spend $175.18. The 
average firm within the ``Human Resources and Consulting Services'' 
NAICS category spends $780,297 on payroll, and the average firm with 
between 1 and 4 employees spends $109,394 on payroll. See, supra, 
Statistics of U.S. Businesses: 2007: NAICS 541612. The estimated cost 
of preparing and submitting a Form LM-20 represents approximately one 
tenth of one percent (0.0112% or $87.59/$780,297) of the total annual 
payroll of a small entity in this NAICS category, which would be an 
even smaller percentage of total revenue. Further, the estimated cost 
represents approximately 0.08% ($87.59/$109,394) of the total payroll 
for firms in this NAICS category with between one and four employees.
    For all employers, the average payroll cost is $722,757.70, and for 
employers with between one and four employees, the average payroll cost 
is $59,723.88. See U.S. Census Bureau, Statistics about Business Size 
(including Small Business), Table 2a. Employment Size of

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Employer and Nonemployer Firms, 2004, at http://www.census.gov/epcd/www/smallbus.html. The cost of completing the Form LM-10, $175.18, 
represents only, approximately, 0.02% and 0.29%, respectively for the 
above two categories ($175.18/$722,757.70 and $175.18/$59,723.88). The 
Department thus concludes that this economic impact is not significant, 
as that term is employed for the purpose of this analysis.
    The Department estimates that there are approximately 2,549 small 
entities affected by the Form LM-20 portion of the proposed rule and 
3,404 employers, for a total of 5,953 small entities affected by the 
proposed rule. Based on the compliance cost calculations above, the 
Department concludes that the proposed rule will not have a significant 
economic impact on a substantial number of these small entities. 
Therefore, under 5 U.S.C. 605, the Department certifies that the 
proposed rule will not have a significant economic impact on a 
substantial number of small entities.

Electronic Filing of Forms and Availability of Collected Data

    Appropriate information technology is used to reduce burden and 
improve efficiency and responsiveness. The Form LM-20 and Form LM-10 
reports now in use can be accessed and completed at the OLMS Web site. 
OLMS has implemented a system enabling such filers to submit forms 
electronically with electronic signatures.
    The OLMS Online Disclosure Web site at 
http:[sol][sol]www.unionreports.gov is available for public use. The 
Web site contains a copy of each Form LM-20 and Form LM-10 report for 
reporting years 2000 and thereafter, as well as an indexed computer 
database of the information in each report that is searchable through 
the Internet.
    Information about this system can be obtained on the OLMS Web site 
at http:[sol][sol]www.olms.dol.gov.

List of Subjects

29 CFR Part 405

    Labor management relations, Reporting and recordkeeping 
requirements.

CFR Part 406

    Labor management relations, Reporting and recordkeeping 
requirements.

    Accordingly, for the reasons provided above, the Department 
proposes to amend parts 405 and 406 of Title 29, Chapter IV of the Code 
of Federal Regulations as set forth below:

PART 405--EMPLOYER REPORTS

    1. The authority citation for part 405 is revised to read as 
follows:

    Authority: Labor-Management Reporting and Disclosure Act Secs. 
203, 207, 208, 73 Stat. 526, 529 (29 U.S.C. 433, 437, 438); 
Secretary's Order No. 08-2009, 74 FR 58835 (Nov. 13, 2009).

    2. Section 405.5 is amended by remove the phrase ``the second 
paragraph under the instructions for Question 8A of Form LM-10'' and 
adding in its place ``the instructions for Part A of the Form LM-10''.
    3. Section 405.7 is amended by remove the phrase ``Question 8C of 
Form LM-10'' and adding in its place ``Part D of the Form LM-10''.

PART 406--REPORTING BY LABOR RELATIONS CONSULTANTS AND OTHER 
PERSONS, CERTAIN AGREEMENTS WITH EMPLOYERS

    4. The authority citation for part 406 is revised to read as 
follows:

    Authority: Labor-Management Reporting and Disclosure Act Secs. 
203, 207, 208, 73 Stat. 526, 529 (29 U.S.C. 433, 437, 438); 
Secretary's Order No. 08-2009, 74 FR 58835 (Nov. 13, 2009).

    Signed in Washington, DC, this 6th day of June 2011.
John Lund,
Director, Office of Labor-Management Standards.

    Note: The following appendices will not appear in the Code of 
Federal Regulations.

Appendices: Proposed Forms and Instructions

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[FR Doc. 2011-14357 Filed 6-20-11; 8:45 am]
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