Employers have long been required by the Labor Management Reporting and Disclosure Act (LMRDA) to report the amount of money spent on the use of "persuaders" during union campaigns, but now the Department of Labor's Office of Labor Management Standards (OLMS) has proposed a new rule, currently under review by the Biden administration, modifying the rules regarding employer disclosures. In doing so, the Biden administration is seeking to require employers to disclose at least part of the compensation paid to their own employees, to the extent those individualsengage in "reportable" activities.
The LMRDA establishes reporting and recordkeeping requirements for employers and labor relations consultants. Under LMRDA Section 203(a), an employer must report within 90 days of the close of its fiscal year, on Form LM-10, any reportable activities that are undertaken to "persuade other employees to exercise or not to exercise" under the National Labor Relations Act (NLRA).
OLMS, which oversees and enforces these reporting obligations, says employers now also may be required to report any portion of an employee's compensation, or the "split" of income received by its own employees to the extent any portion was attributable to time spent performing "persuader-like" activities. This would even include "the pro rata share of the supervisor's wages that were spent undertaking the reportable activity." Willfully failing to make these disclosures may subject an employer to criminal penalties including fines of up to $10,000 and imprisonment.
This announcement is an unprecedented and expansive new burden for employers in terms of their reporting obligations under the LMRDA. This is especially true given that Section 8(c) of the NLRA protects an employer's ability to express its views regarding organizing activity. The requirement could have a substantial impact on employers with their own in-house labor relations staff.
The proposed rule was sent to the Office of Management and Budget (OMB) for review in early July. Once approved, the DOL will release the text of the proposed rule and begin collecting public comment – a lengthy process before the rule will see final adoption. In light of the U.S. Supreme Court's recent decision in Loper Bright, the rule is likely to face immediate legal challenges concerning the DOL's authority to adopt such a measure under the LMRDA.
Congressional Republicans have already signaled opposition to this proposal. As the labor landscape continues to evolve under the Biden administration's pro-union agenda, employers should continue to be mindful of proposed changes like this and be prepared to respond. We will continue to keep you informed of further developments.
[I]f finalized, [the rule] will likely be challenged under the recent Loper Bright precedent from the US Supreme Court, which says that courts shouldn't automatically defer to agencies' interpretations of unclear laws.
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