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Fireworks on July 1st?

Photo of Steven Snyder

We expect to see fireworks on July 4th, but it is July 1st that is causing a commotion both in West Virginia and around the country. That is because two laws are set to take effect on July 1st - if they can overcome legal challenges.

Unions do not want their Freedom, thank you very much

The Charleston Gazette-Mail reports that eleven labor unions have filed lawsuits challenging the "Workplace Freedom Act" enacted earlier this year. That Act forbids unions and employers from entering into agreements whereby all workers must belong to a union or pay compensation to a union for the services it provides to workers.

The unions reportedly have sought a preliminary injunction to block the law from taking effect on July 1st. The newspaper reports that unions won a similar case in Wisconsin, but that case is on appeal to that state's supreme court. It would not be surprising if the unions that filed their eleven suits in Kanawha County Circuit Court eventually end up arguing their cases in the West Virginia Supreme Court.

Win Friends, Influence People - and tell the DOL

Dale Carnegie wrote the bestselling book, How to Win Friends and Influence People. If Mr. Carnegie were alive and working for your company, would you have to report him to the Department of Labor? Perhaps so. Effective July 1st, the DOL is expanding the reach of its "persuader" rule - if it can overcome legal challenges to the revised rule.

The Labor-Management Reporting and Disclosure Act of 1959 ("LMRDA") is designed to force unions and employers to annually report certain information. Among other required disclosures, employers must identify compensation paid to independent contractors who are hired to work on anti-union organizing or union avoidance efforts.

In the words of the LMRDA, every employer must disclose "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.

Pursuant to the LMRDA, the DOL promulgated the "persuader rule." 29 C.F.R. § 405. This rule requires employers and their union avoidance consultants to periodically complete DOL forms that detail their contractual relationships.

The DOL is expanding the scope of the "persuader" rule to include independent contractors who give advice to company officials who are battling union drives, such as outside labor attorneys and consultants. Previously, the DOL only required disclosure of arrangements with persons who had direct contact with the employees..

Here is how the DOL justifies the expanded "persuader" rule: "Workers often don't know that their employer hired a consultant to manage its message in union organizing campaigns, including by scripting speeches by managers, talking points, letters, and other documents. Consultants may also direct supervisors to express specific viewpoints that don't match those supervisors' actual views as individuals - something workers may find relevant in assessing the information they receive from their supervisors."

According to the DOL, the following activities will now fall under the expanded "persuader" rule:

· Planning, directing, or coordinating activities undertaken by supervisors or other employer representatives including meetings and interactions with employees;

· Providing material or communications for dissemination to employees;

· Conducting a union avoidance seminar for supervisors or other employer representatives; and

· Developing or implementing personnel policies, practices or actions for the employer.

Attorneys frequently engage in the activities listed above. Under the expanded rule, companies will be required to disclose any agreements or arrangements with attorneys and other independent contractors who are engaged in those activities if the agreements or arrangements were entered into on or after July 1st. Compensation paid after that date must also be reported.

The DOL has not persuaded attorneys or companies that the expanded "persuader rule" is a good idea. Many attorneys and employers believe that the new reporting requirement will undermine the attorney-client privilege and will inhibit the seeking and giving of legal advice. Since society benefits when employers act legally, inhibiting the flow of legal advice could have negative consequences.

Not surprisingly, unhappy employers and attorneys have filed lawsuits to block the DOL from implementing the new persuader rule. On Monday, a federal judge in Texas reportedly issued a nationwide injunction to stop the DOL, finding that the new rule likely exceeds the DOL's authority under the LMRDA and would violate the First Amendment. Now it will be up to the DOL to persuade the Court of Appeals that the judge is wrong. If only Dale Carnegie were alive to help.

Steven L. Snyder practices labor and employment law at Jenkins Fenstermaker, PLLC and serves as an arbitrator and mediator for the American Arbitration Association.

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