You are at work one day and a couple of police vehicles pull up. They go into the administrative office area and the next thing you know, your CEO is escorted out in handcuffs. While the local news crews are capturing the moment permanently, a buzz quickly circulates through the company that the union had him arrested for egregious corporate corruption. The “perp walk” is reserved for hardened criminals in order to give our law enforcement agencies an opportunity to showcase their abilities to protect the public. Always gaining headlines are white-collar arrests where CEOs get put on display. Think Madoff or Lay. Company leaders beware! Thanks to the Department of Labor (DOL), unions may soon have a new tool to coerce your company into forced unionism — and it may mean you go to jail. The kicker under the new rules proposed by the DOL: this can take place all because of a water-cooler conversation of which the CEO is unaware.
On election day while everyone else was watching the results, the DOL began the process of reinterpreting rules from the Labor Management Disclosure and Reporting Act concerning persuader activity. It seems that the Solis DOL has decided that the current practice is overly broad and wants to narrow the scope. The reinterpretation will require more reporting for companies, their lawyers, and consultants.
The Labor Management Disclosure and Reporting, also known as Landrum-Griffin Act (1959) came as a result of wide spread corruption throughout union leadership ranks. Remember seeing old black-and-white clips of Jimmy Hoffa, Sr. — then president of the Teamsters Union — pleading the Fifth Amendment more than a hundred times during congressional hearings? As a result, Congress passed the above legislation forcing unions to start reporting how they spend the money they receive from member dues. In addition, it also required companies, law firms, and consultants to report their activities and expenditures used to persuade employees to vote against a union in a campaign. The latter is covered under section 203 of the LMDRA, and this is the section that the Solis Department of Labor is moving to reinterpret and/or make rule changes to cause the above scenario to take place.
Here is what Joe Brock, former Teamster organizer and local president, had to say about the proposed rule change:
Armed with this tool, I would use this threat to my fullest capability. Just as I used the Unfair Labor Practice (ULP) charge against employers when they would fire an employee, ANY employee with or without cause, I would be able to use this tool in such a fashion. However, this would be a much more effective deterrent as employers would soon fear any conversation with employees, no matter how innocuous.
It has long been a requirement for consultants and law firms who meet directly with employees during a union campaign for the purpose of influencing their vote against the petitioning union to report that time. This is called “Persuader Activity” and can be generalized as “if an employee hears it, reads it or sees it, it has to be reported per section 203(b) of the LMDRA.” There are some advice exemptions, however, that may change in this reinterpretation and or rule change as well. The problem with the advice exemption change is this could force law firms to report all advice to all of the firm’s clients no matter if it falls within the campaign that is relative or not. These new requirement simply thumbs its nose at attorney-client privilege. For example if a law firm does labor law for 100 clients but only does persuader work for one. The law firm would be responsible for reporting on all 100 clients.
Under section 203(e) of the LMDRA it clearly states that officers and supervisors of a company do not have to report their persuader activities during a union campaign. This is the change that triggers the above scenario. The change will require companies to report all conversations that management has with employees about the unions. Dave Bego, President of Executive Management Service and author of the book Devil at My Doorstep, states, “If the Department of Labor makes this rule change unions will use it to entrap companies and force neutrality agreements.” Bego is very familiar with neutrality agreements (forced unionism), as the Service Employees International Union (SEIU) laid siege to his company during a three-year corporate campaign trying to coerce his company into a union shop.
Another aspect of this rule change that not many have connected the dots to is the Sarbanes-Oxley Act 2002. As you recall, Sarbanes-Oxley was enacted in the wake of the Enron implosion, when Congress tightened accounting regulations. Where it applies here is that publicly traded companies must report on their 10K filings to the Securities Exchange Commission any potential criminal liabilities. With the statements of the former union organizer, we would speculate that publicly traded companies will be regulated into more liability. Essentially, this makes every company that is non-union responsible to report potential criminal claims based on unfounded allegations.
This move by the DOL is another example of the current administration attempting to make good on their payback promise to the unions — pushing through regulation what they could not through legislation. These particular changes will have adverse consequence the nations businesses, small and large, and the workers they employ.