Say Goodbye to Attorney-Client Privilege

June 13, 2013

A shocking change in American labor relations is brewing at the U.S. Department of Labor, which is expected some time soon to alter a major regulation, says Diana Furtchgott-Roth, a senior fellow with the Manhattan Institute.

  • The change involves a new interpretation of the "advice exemption" of the Labor Management Reporting and Disclosure Act.
  • Specifically, businesses would have to disclose the names of, and fees paid to, attorneys and consultants who advise them on union-organizing activities.
  • In turn, attorneys and consultants providing such advice would be required to disclose their client lists and the fees they receive.

In making this change, the administration would sweep away over a half-century of precedent and contravene both the clear intent of Congress and the law's express language. This new regulation would:

  • Violate the attorney-client relationship.
  • Effectively strip employers of First Amendment rights.
  • Compromise companies' ability to seek advice in complying with federal labor law.
  • Deny workers the information they need and to which they are legally entitled before they vote on whether to join a union.

The change has been accurately called a "gag rule." The economic fallout of the proposed change, termed the Persuader Rule, would also be dramatic.

  • It would cost $3.2 billion to $4 billion for businesses to familiarize themselves with the new rule, and then annual expenditures in the range of $4.3 billion to $6.5 billion. This rule could cost the economy $60 billion over 10 years.
  • This potential cost would be tens of thousands of times greater than the administration's $826,000 cost estimate, which was low-balled in order to escape the mandatory cost/benefit review that any new rule costing $100 million or more must undergo.

In sum, whether we consider the rule on grounds of fairness to employers and their advisers, or on economic grounds (where its costs are almost certain to be several orders of magnitude more burdensome than the administration's disingenuous estimate) we find that it fails every test. Workers, employers and all Americans deserve better.

Source: Diana Furtchgott-Roth, "Unfriendly Persuasion: Will the Labor Department Disarm Employers in their Struggle with the Unions?" Capital Research Center, May 8, 2013.

 

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