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July 14, 2016Client Alert

Update on the U.S. Department of Labor Persuader Rule Reporting Requirements

As discussed in a previous Michael Best client alert, the U.S. Department of Labor (DOL) issued its final “persuader rule” on March 23, 2016, which greatly expanded the need for employers and their labor relations consultants, including law firms, to file detailed public reports with respect to activities undertaken with “an object directly or indirectly to persuade employees concerning their rights to organize and bargain collectively.”

On June 27, 2016, the United States District Court for the Northern District of Texas issued a preliminary injunction finding, in part, that DOL’s new persuader rule would require attorneys to disclose confidential client information; that DOL lacked the statutory authority to promulgate and enforce the new persuader rule; that the rule was arbitrary, capricious and an abuse of discretion; and, violated constitutionally protected rights of free speech and association. The Court expressly enjoined DOL on a national basis from implementing any and all aspects of the new persuader rule, until such time that the Court issued a final decision after a future trial on the merits of the case, or until an appellate court ruled on the Court’s Order. DOL has not yet appealed the Court’s Order granting injunctive relief, and no trial date has been set.

On July 1, 2016, the Office of Labor Management Standards of DOL, which enforces persuader reporting requirements, issued a written direction stating that due to the nationwide preliminary injunction, the new reporting requirements for employers and the filing by them of the revised 2016 Form LM-10, as well as the reporting requirements for their consultants and law firms, including the revised 2016 Form LM-20, “will not be applicable until further notice from the Department.” DOL stated that employers and their consultants/law firms should continue to apply the pre-2016 rules, forms and instructions, if applicable.

Employers now have a golden, but perhaps limited, opportunity to utilize their law firms for such activities as supervisory training, providing material or communications for dissemination to employees, conducting union avoidance seminars, and developing or implementing personnel policies, handbooks or actions, without having to report such activities, even though an object is to persuade employees with respect to their rights to organize and bargain collectively. These activities will be viewed as non-reportable “advice” activities under pre-2016 rules, rather than reportable indirect persuader activities under the new, but temporarily enjoined persuader rule.

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