Employers: Beware DOL’s proposed rules

by Randy Evans

As the investigation into the Internal Revenue Service’s illegal targeting of conservative groups continues to expand, questions are starting to emerge regarding whether such targeting is limited to the IRS. Of course, the full story regarding the IRS is far from being told, with key people asserting the Fifth Amendment right against self-incrimination and others withholding information based on an assortment of claims and privileges.

Yet, it appears that using the power of the government to target and adversely impact specific groups whose opinions and positions do not line up with the administration’s policies is not new. One good example of such a use of governmental power arises out of proposed regulations from the U.S. Department of Labor relating to the unionization of employee workforces.

Specifically, the Department of Labor proposed a new regulation that would require employers to complete and submit a form that requires disclosure of information received from the employers’ attorneys, including the terms of their attorney-client relationship, the amount paid and the activities performed. Needless to say, the proposed regulation was met with vigorous opposition by the American Bar Association (ABA) and a wide array of business organizations.

Indeed, the typically reserved ABA said this: “[T]he Proposed Rule could chill and seriously undermine the confidential client-lawyer relationship. In addition, by imposing these unfair reporting burdens on both the lawyers and the employer clients they represent, the Proposed Rule could very well discourage many employers from seeking the expert legal representation they need, thereby effectively denying them their fundamental right to counsel.”

In addition to the impact on fundamental rights, there is a price tag associated with the Department of Labor’s proposed rule changes. According to a recent analysis by the Manhattan Institute, the “proposed rule could cost the economy between $7.5 and $10.6 billion per year thereafter.” According to the Department of Labor, the total estimated costs imposed by the proposed rule on filers would be $825,886.11.

Not surprisingly, Congressman John Kline, R-Minn., chairman of the House Committee on Education and the Workforce, and Congressman Phil Roe, R-Tenn., chairman of the Subcommittee on Health, Employment, Labor, and Pensions, have called on the administration and the Department of Labor to withdraw the proposed rule. If the proposed rule is not withdrawn, then they have asked that the Department of Labor “provide all documents and communications relating to the proposed and final rules’ burden analysis no later than June 12, 2013.” Georgia Congressman Tom Price is also a member of the Committee.

Certainly, the implications for employers struggling in a weakened economy are notable. After all, employers provide the jobs necessary for a meaningful economic recovery. The simple step of adding costly paperwork to the already burdensome bureaucratic regulations makes growth and expansion much more difficult.

And, affirmatively imposing restrictions on the ability of employers to fully communicate with employees about the issues surrounding a decision to unionize can only be described as an attempt to tip the scales on an issue that should be left to employees to decide. But, the act of undermining the right of employers to independent counsel appears to be several steps too far. Indeed, the penalty for violating the rule can include criminal penalties — a year in jail and a fine of $10,000.

In the context of wiretapping of news reporters and targeting taxpayers based on their political beliefs, it appears that for this administration, the end always justifies the means, even if it violates fundamental protections afforded U. S. citizens — including the right to independent counsel with the full protections of the attorney-client privilege. The goal of the proposed rule is to prevent employers from consulting with counsel about union organizing efforts and one of the best ways to do that is to chill both employers and attorneys through these kinds of disclosure rules.

Notably, the proposed rule is aimed decidedly at employers, not unions. Like the IRS scandal, there is little pretense about who is targeted and why.

On Jan. 23, 2013, Hilda Solis resigned as Secretary of Labor. And, it appears that her successor has encountered some difficulties in the confirmation process. In the interim, watch for both the House and the Senate to take a long and hard look at the proposed rule and its implications for employers and their attorneys.

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