Olms interpretative Manual

“ADVICE”EXEMPTION

265.001LMRDA,SECTION203(c)

Nothing in this section shall be construed to require any employer or other person to file areport covering the services of such person by reason of his giving or agreeing to give advice tosuch employer or representing or agreeing to represent such employer before any court,administrative agency, or tribunal of arbitration or engaging or agreeing to engage in collectivebargaining on behalf of such employer with respect to wages, hours, or other terms or conditionsofemploymentorthenegotiationofanagreement or any questionarising thereunder.

265.002SEE29CFR406.5

265.005SCOPEOFTHE“ADVICE”EXEMPTION

Section 203(b) provides for reports from every person who pursuant to an agreement orarrangement 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 “. . .byreason of his giving or agreeing togiveadvicetosuchemployer...”

The question of application of the “advice” exemption requires an examination of theintrinsic nature and purpose of the arrangement to ascertain whether it essentially callsexclusively for advice or for other services in whole or in part. Such a test cannot bemechanically or perfunctorily applied.It involves a careful scrutiny of the basic fundamentalcharacteristics of any arrangement to determine whether giving advice or furnishing some otherservicesistherealunderlying motivation for it.

As to specific kinds of activity, it is plain that the preparation of written material by alawyer, consultant, or other independent contractor which he directly delivers or disseminates toemployees for the purpose of persuading them with respect to their organizational or bargainingrights is reportable.Moreover, the fact that such material may be delivered or disseminatedthrough an agent would not alter the result.Such undertakings obviously do not call for thegivingofadvicetoanemployer.

However, it is equally plain that where an employer drafts a speech, letter or documentwhich he intends to deliver or disseminate to his employees for the purpose of persuading themin the exercise of their rights, and asks a lawyer or other person for advice concerning itslegality, the giving of such advice, whether in written or oral form, is not in itself sufficient torequire a report.Furthermore, we are now of the opinion that the revision of the material by thelawyer or other person is a form of written advice given the employer which would notnecessitate areport.

A more difficult problem is presented where the lawyer or middleman prepares an entirespeech or document for the employer.We have concluded that such an activity can reasonablybe regarded as a form of written advice where it is carried out as part of a bona fide undertakingwhichcontemplatesthefurnishingofadvicetoanemployer.Consequently, such activity in

itself will not ordinarily require reporting unless there is some indication that the underlyingmotive is not to advise the employer.In a situation where the employer is free to accept or rejectthe written material prepared for him and there is no indication that the middleman is operatingunder a deceptive arrangement with the employer, the fact that the middleman drafts the materialinitsentiretywillnotinitselfgenerally besufficient torequire a report.

265.100RECOMMENDATIONSONHIRING

Activities such as recommending the names of manufacturers’ agents and salariedpersonnel would not normally need to be reported under the provisions of the Act.However, if,in recommending an individual to a client for approval, the intention of a labor consultant is toprovide the employer with an employee who will perform any of the activities set forth in section203(b),suchanactivitymustbereported.

265.200ADVICEONAPPLICABILITYOFLMRA

A situation in which an attorney gives advice with respect to the provisions of the LMRAof 1947 to an employer involved in an organizational drive need not be reported, since such acasewouldbeencompassedbytheexemption foradvice containedinsection203(c).

265.300REVEALINGSUBSTANCEOFADVICE

There is no requirement that an attorney shall disclose in his report the advice he gave toan employer though he is called upon to report, in his LM-21 report, the sums of money he waspaidfor labor relations advice and services.

265.400APPLICABILITYOFTHEEXCLUSIONTOADDITIONALACTIVITIES

Section 203(c) of the Act does not require the filing of reports when an attorney is solelyadvising a client and representing him in judicial, administrative or arbitral proceedings or incollective bargaining.However, if any agreement or arrangement with an employer covers,besides these services, other activities which are covered by the reporting requirements of section203, the exclusion of section 203(c) does not apply, and the information for the entire agreementorarrangement must be reported.