March 30, 2016

The DOL Publishes Final Persuader Rule Limiting the Advice Exemption

3 min

The DOL published a final rule last week revising reporting requirements under the Labor-Management Reporting and Disclosures Act (LMRDA). Under the newly published rule, employers and their labor relations consultants must report not only their agreements for "direct persuader activities," but also their agreements for "indirect persuader activities."

Section 203(b) of the LMRDA, 29 U.S.C. § 433(b), requires employers and labor relations consultants to report agreements under which consultants "directly or indirectly" attempt to persuade employees concerning their rights to organize and bargain collectively. "Labor relations consultant" includes anyone acting as a consultant to the employer, including attorneys. Section 203(c) of the LMRDA exempts from this reporting requirement "advice" given by the consultant to the employer. Previously, the advice exemption excluded from the reporting requirements agreements with consultants, except where the consultant had direct contact with employees.

The DOL's final rule dramatically narrows the scope of the advice exemption by requiring employers and consultants to disclose agreements if consultants have either direct or indirect contact with employees. As a result, reports must now be filed under the following circumstances:

Direct Persuasion

Consultants must continue to report if they engage in any direct communication with employees in order to persuade them concerning their representation and bargaining rights.

Indirect Persuasion

  • Planning, Directing, or Coordinating Supervisors or Managers: Reporting is required if a consultant plans, directs, or coordinates activities by supervisors or other employees to persuade employees.
  • Providing Persuader Materials: A report must be filed if the consultant provides an employer with materials and communications – whether oral, electronic, or written – intended to persuade employees.
  • Conducting a Seminar for Supervisors or Other Employer Representatives: Reporting is required if the consultant conducts seminars in which he/she develops or assists employers in developing anti-union tactics and strategies.
  • Developing or Implementing Personnel Policies or Actions: This covers a consultant's development or implementation of personnel policies or actions for the purpose of persuading employees.

The DOL's final rule is set to take effect on April 25, 2016 and will be applicable to all arrangements, agreements, and payments made on or after July 1, 2016. Employers must make their first report under the new rule within 90 days of the end of the employer's fiscal year.

The implications of the new rule are likely to be far-reaching. For instance, trade associations that provide their members with union- or labor-related educational programs or campaign materials should carefully draft such programs and materials, to avoid being swept up in the rule's reporting obligations.

Not surprisingly, the rule has attracted criticism from a variety of groups, including the American Bar Association, which has expressed concern that the rule intrudes on the attorney-client privilege. Consequently, legal challenges to the rule are expected. Pursuant to such legal challenges, courts could grant temporary restraining orders postponing the effective date of the rule. Other efforts to block the rule (through Congress, for example) are also anticipated.

We will keep you advised. Please contact the authors of this alert if you have any questions.