Executive Summary: Previously, we alerted our clients that the U.S. Department of Labor (DOL) issued the final version of its "persuader rule," which requires employers, third-party lawyers and other labor consultants to disclose to the DOL any arrangement to persuade employees directly or indirectly concerning the right to organize or bargain collectively. The rule applies to all types of union avoidance advice and other related activities, such as responses to an actual union organizing campaign, certain activities associated with collective bargaining, or simply day-to-day preventive training and policy making done with an "object to persuade."
Although direct persuasion has always been reportable, the new rule seeks to cover "indirect" persuader activity. Specifically, the new rule requires employers and consultants, including lawyers, to report when, without having direct contact with employees, and with the object to persuade, they:
- plan, direct, or coordinate activities, including meetings and interactions with employees, that are undertaken by supervisors or other employer representatives;
- provide material or communications to the employer, in oral, written, or electronic form, for dissemination or distribution to employees;
- conduct a seminar for supervisors or other employer representatives; or
- develop or implement personnel policies, practices, or actions for the employer.
Under the new rule, legal advice is still exempt, but only so long as there is no underlying purpose to persuade. Both the attorney and the client will be required to report all agreements and understandings in which "an object" of the services is to persuade employees concerning their rights to organize and bargain collectively. These reports must be filed electronically and, once filed, become publicly available records. The rule will apply "to arrangements and agreements as well as payments (including reimbursed expenses) made on or after July 1, 2016."
Since the publication of the final rule, and our initial Legal Alert, several important events have occurred. First, various law firms, business groups and industry associations filed three separate lawsuits in federal courts in Texas, Michigan and Wisconsin aimed at enjoining the implementation of the new rule. Ten states have intervened in the Texas lawsuit arguing that the rule infringes on their right to regulate the legal profession. Rulings are expected on these suits before the July 1 effective date. Second, and most significantly for this Legal Alert, the lawsuits forced the DOL to clarify its position concerning the effective date of the new rule. Specifically, the DOL has indicated that the new rule will not apply to any agreements or understandings, even multi-year agreements or understandings, entered into prior to July 1, 2016, even if the performance and/or payment takes place after July 1.
As a result of this clarification by the DOL, we recommend clients enter into written engagement letters before July 1, 2016 that define as specifically as possible the scope of indirect persuader activities to be performed or that could be performed in the future on their behalf. Doing so will enable the parties to those agreements to avoid filing the required LM-10 (Employer form) and LM-20 and LM-21 (Consultant forms). Assuming the DOL does not retreat from its latest position, these pre-July 1 agreements will enable our clients to continue to rely on trained and experienced labor lawyersto provide the same services they have historically performed withoutconcern over having to complete and file government reports, which will become public records and which may be obtained by unions and other similar groups.