The Department of Labor (DOL) has issued its much anticipated Final Persuader Rule. The Rule, issued March 24, 2016, significantly narrows activities that are exempt from the reporting requirements of Section 203 of the Labor-Management Reporting and Disclosure Act (“LMRDA”).
Under the LMRDA, employers and any hired consultants are required to report any conduct that constitutes a “persuader activity.” A “persuader activity” is conduct that is designed to persuade employees to engage, or not to engage, in collective bargaining activity and organization. Essentially, it is an activity designed to persuade employees to unionize or, more frequently, not unionize.
Previously, the conduct of consultants (including labor relations counsel) was only considered reportable under the LMRDA if the consultant directly communicated with employees regarding potential unionization. This stood as the test for reportable persuader activity for nearly a half century.
However, under the new rule, only legal advice from a consultant to an employer is within the above exemption. Now, employers and consultants will have to report any conduct that involves planning, directing, or coordinating with managers or supervisors of the employer, along with conduct that involves the development of personnel policies that could persuade employees. They will also have to report if they prepared materials that are distributed to employees regarding potential unionization. The new reporting requirements even extend to spoken words, as consultants must report any union avoidance seminars they conduct. The rule applies to any arrangements or agreements made on or after July 1, 2016.
Particularly controversial is the fact that the relevant reporting form requires the consultant to list the names and addresses of every single employer for which the consultant provided services for the year.
In response to complaints, the DOL issued a “special enforcement policy” that limits the information that must be disclosed by consultants as related to receipts and disbursements on the basis of attorney-client privilege. Nonetheless, the new rule has triggered a wave of litigation, with suits being filed in federal courts in Arkansas, Minnesota, and Texas. Given this, it is likely the rule will continue to be a source of controversy.