On March 24, 2016, the U.S. Department of Labor (DOL) will publish new regulations expanding the obligations of employers and lawyers to report certain information to the DOL under the Labor Management Reporting and Disclosure Act of 1959 (LMRDA).
Lawyers (or labor relations consultants) will now have to report any engagement whose object is to directly or indirectly persuade employees concerning their rights to organize a union or bargain collectively. This is a change to a long-standing rule that has been in place for nearly 50 years. Until now, neither employers nor lawyers were required to report such engagements, provided that the lawyers communicated only with management. This is what has been known traditionally as the “advice exception” to the reporting rules.
The DOL is now abandoning its long-held bright-line rule. Under this new interpretation, a lawyer’s services will be reportable activity even if there is no direct contact between the lawyer and employees of the employer, if the object of the services is to directly or indirectly “persuade” employees.
In such a case, both the law firm and the employer will have to file reports with the DOL. Lawyers will be required to file a report with the DOL within 30 days after being engaged by the client to provide “persuader” services. The report they must make is known as the LM-20 Agreement and Activities Report, and it must identify (among other things) the name of the client, the terms of the engagement, the scope of services to be provided, and the group of employees and union involved, if any. The law firm will also be required to file an annual report at the end of its fiscal year, supplying data on its receipts and disbursements related to providing “labor relations advice or services.”
The employer will also have to file its own report. The employer’s report must be filed on Form LM-10 within 90 days of the end of the employer’s fiscal year. It must disclose:
- the date of each reportable arrangement and the date and amount of each transaction made pursuant to that arrangement;
- the name, address, and position of the person with whom the agreement or transaction was made; and
- “a full explanation of the circumstances of all payments made, including the terms of any agreement or understanding pursuant to which they were made.” This includes attaching a copy of any written agreement between the employer and the persuader.
The LM-10 must be signed by the president and treasurer (or corresponding principal officers) of the employer.
The new regulations are scheduled to take effect on April 25, 2016, and will apply to arrangements, agreements, and payments made on or after July 1, 2016. It is likely, however, that lawsuits will be filed before then challenging the enforceability of these new regulations. It is possible that a stay could be enacted in one or more of those lawsuits that will delay the implementation of the regulations, and employers should monitor developments relating to these regulations to determine if or when they will have any reporting obligations.