On March 23, 2016, the Department of Labor (DOL) finalized a long-awaited rule that will require many employers to disclose the identities of outside consultants they hire to defeat workers’ union organizing efforts.

The so-called “persuader rule” will close a longstanding reporting gap in the Labor Management Reporting and Disclosure Act (LMRDA) that only required an employer to disclose that it had hired an outside firm if the consultant made direct contact with employees. Under its prior interpretation of the persuader rule, the DOL effectively exempted agreements for activities involving indirect persuasion of employees. The DOL concluded that, despite the fact that employers utilize consultants in between 71 and 87 percent of all anti-union campaigns and programs, most agreements or arrangements went unreported due to the DOL’s interpretation of LMRDA §203.

As a result of the rule changes, employers will be required to report any actions, conduct or communications that are undertaken, either explicitly or implicitly, directly or indirectly, with an object to persuade employees concerning their rights to organize and bargain collectively. The new rule will require disclosure when a consultant:

  • Plans, directs or coordinates activities undertaken by supervisors or managers.
  • Provides persuader materials that the employer will disseminate or distribute to employees.
  • Conducts a seminar for supervisors or other employer representatives where the consultant assists the employer in developing anti-union tactics and strategies.
  • Develops or implements personnel policies or actions.

The final rule also limits an employer’s ability to shield disclosure on the premise that the consultant is only providing advice to the employer. Exempt “advice” activities will now be limited to oral or written recommendations regarding a decision or course of conduct. The employer’s ability to “accept or reject” the consultant’s materials or actions will no longer protect indirect persuader activities from disclosure. As a result, employers and consultants must now report agreements in which the consultant has no face-to-face contact with employees, yet still engages in activities behind the scenes to persuade employees.

The DOL will revise Forms LM-20 and LM-10 to reflect more detailed reporting and will also require employers to file these forms electronically. Employers and consultants will be required to disclose the purpose of the arrangement, and to provide a full explanation of the terms and conditions of the arrangement, the specific activities to be undertaken, the extent of the performance, and the identification of employees and labor organizations that are the targets of the persuader activity.

The final rule will be applicable to arrangements, agreements and payments made on or after July 1, 2016. We expect more commentary before July 1 regarding the breadth of the advice exemption. Contact any of our lawyers with questions concerning the new persuader rule or if you may now be required to report consultant persuader activities.