Publication of the Department of Labor’s final revisions to the Labor-Management Reporting and Disclosure Act (LMRDA), requiring employers and others to report arrangements, receipts, and expenditures derived from providing services defined as persuasive activities, has been delayed until March 2014, according to the DOL’s latest regulatory agenda. The proposed revisions to the LMRDA would change reporting obligations (to the DOL) significantly for companies and their consultants, including law firms that advise employers where an object thereof, directly or indirectly, is to persuade employees to exercise or not to exercise, or persuade employees as to the manner of exercising, the right to organize and bargain collectively through representatives of their own choosing.
Under Sections 203(a) and (b) of the LMRDA, employers and their “labor relations consultants” must report to the DOL “[a]ny agreement or arrangement with a labor relations consultant or other independent contractor or organization pursuant to which such person undertakes activities where an object thereof, directly or indirectly, is to persuade employees to exercise or not to exercise, or persuade employees as to the manner of exercising, the right to organize and bargain collectively through representatives of their own choosing ….” For decades, essentially, only (1) direct persuasive communications between consultants (or attorneys) and employees and (2) indirect communications that did not meet the broad definition of the “advice exception” were reportable.
The advice exception in Section 203(c) of the LMRDA exempts from the reporting requirements “the services of such [consultant] by reason of his giving or agreeing to give advice to such employer….”
The new rule, among other things, would severely curtail the “advice exception” to the reporting requirement, rendering much of the legal advice now provided by attorneys (currently exempt from reporting) to be “reportable.” The current rule, in effect since 1962, is easily understood and simply applied. Direct persuasive communications between a consultant/attorney and an employee must be reported. Communications between a consultant/attorney and an employer, manager or supervisor (although persuasive) is not reportable and is deemed advice so long as the client may review, revise and/or reject the advice. The rule’s revised interpretations contrast advice (such as an oral or written recommendation to management regarding a decision or a course of conduct) with a sweeping new view of persuader activity. Under the new DOL rule, the issue centers on the nature of the communication — if the object of the communication, direct or indirect, is persuasive, the activity is reportable.
The DOL proposal has been controversial — it generated approximately 9,000 comments when it was originally published in 2011 (76 Fed. Reg. 36178). Since then, the DOL has postponed issuing a final rule. Most recently, the DOL’s semiannual regulatory agenda, released in July, called for the final persuader rule to be issued in November 2013. However, on November 26th, the DOL released a new regulatory agenda indicating it will not issue the final rule until next March.
If, as expected, the DOL’s new “persuader activity” rule is adopted substantially as proposed, it will make it more difficult for employers, without incurring a reporting obligation, to communicate effectively facts and opinions to employees prior to union representation elections conducted by the National Labor Relations Board. It also may interfere with an employer’s right to counsel, particularly in obtaining legal advice to avoid unlawful or objectionable conduct under the National Labor Relations Act in communicating properly with employees on labor relations issues.