March 24, 2016Client Alert

U.S. Department of Labor Issues Final Rule Greatly Expanding Scope of Reportable “Persuader” Activities

On March 23, 2016, the U.S. Department of Labor (DOL) issued a final rule, first proposed in June 2011, requiring employers and their labor relations consultants, including law firms, to report to DOL any agreements pursuant to which the consultant undertakes activities with “an object directly or indirectly to persuade employees concerning their rights to organize and bargain collectively.” Reports are to be filed electronically and are subject to immediate public access. Failure to report is subject to criminal sanctions.

The new rule reverses a decades-old DOL interpretation of the “advice” exception to reporting requirements. Previously, if the agreement between the employer and consultant involved nothing more than the consultant providing the employer with materials or advice that the employer had the right to accept or reject, so long as the consultant had no direct contact with employees, no report was required.

The new rule requires an employer to report on Form LM-10 and consultants to report on Form LM-20 information relating to the scope of the agreement and fees paid for the provision of both direct and indirect persuader materials or activities.

The new rule narrows the “advice” exception to oral or written recommendations from the consultant regarding a decision or course of conduct by the employer including, for example, counseling a business about its plans to undertake a particular course of action, legal vulnerabilities and how they may be minimized, identification of unsettled areas of the law and representation of the employer in disputes or negotiations that may arise.

The greatly expanded definition of reportable persuader activities, provided the object is to directly or indirectly persuade employees concerning their rights to organize and bargain collectively, includes, among many other activities:

  • Planning, directing or coordinating activities undertaken by supervisors or other employer representatives with employees.
  • Providing persuader materials or communications to the employer in oral, electronic or written form for dissemination or distribution to employees, including drafting and revising of such materials. (The sale, rental or other use of “off the shelf” persuader materials not created for the particular employer is excluded, unless the consultant assists the employer in selecting materials).
  • Conducting a seminar for supervisors or other employer representatives if the seminar includes development of anti-union tactics and strategies.
  • Developing or implementing personnel policies or actions which have a direct or indirect object of persuading employees concerning their rights to organize and bargain collectively.

The rule is applicable to agreements and payments made on or after July 1, 2016. Legal challenges and an attempt to block enforcement of the new persuader rules are a certainty—the outcome is not.

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