Labor-Management Reporting and Disclosure Act; Interpretation of the “Advice” Exemption, 36178-36230 [2011-14357]

Agencies

• DEPARTMENT OF LABOR
• Office of Labor-Management Standards

[Federal Register Volume 76, Number 119 (Tuesday, June 21, 2011)]
[Proposed Rules]
[Pages 36178-36230]
From the Federal Register Online via the Government Printing 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 https://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 https://www.regulations.gov, hand-delivered, or mailed will be 
accepted. Comments will be available for public inspection at https://www.regulations.gov and during normal business hours at the above 
address.
    The Department will post all comments received on https://www.regulations.gov without making any change to the comments, 
including any personal information provided. The https://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 https://www.regulations.gov Web 
site. It is the responsibility of the commenter to safeguard this 
information. Comments submitted through https://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, olms-public@dol.gov, (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: https://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 I