Five years after it first began working on the rule, the U.S. Department of Labor on Thursday published the final version of its controversial “Persuader Rule.” Section 203 of the Labor Management Reporting and Disclosure Act requires an employer to report the identity, fee arrangement, and scope of activities performed by outside labor relations consultants that either directly or indirectly persuade employees to engage in or refrain from union organizing. It exempts from disclosure, however, services that simply constitute advice to the employer. The DOL had long interpreted this advice exemption as excluding from the LMRDA’s reporting requirements activities that do not involve direct communications between consultants and employees. The new rule eliminates the exclusion of indirect communications from the LMRDA’s reporting requirements, and focuses the reporting requirement on whether the consultant’s activities are intended to persuade employees.
The new rule could raise serious attorney-client privilege concerns for employers, and remains vague as to when advice conduct may cross the line to become persuasion activity. Accordingly, employers should consult with their labor attorneys to determine what activities are likely to trigger reporting requirements. We also expect the rule to be heavily challenged by the business community. As of now, the Persuader Rule will take effect on April 25, 2016, and will apply to arrangements and agreements entered into on or after July 1, 2016.