On March 24, the Department of Labor published its long-awaited revisions to its regulations regarding the “persuader” reporting requirement under Section 203 of the Labor Management Reporting and Disclosure Act (LMRDA). As we have previously reported, Section 203 of the LMRDA requires labor relations consultants and the employers who hire them to report their agreements and arrangements, including amounts paid, if the consultants are hired to “persuade” employees on the subject of union representation or collective bargaining rights.
For decades, the reporting requirement generally has been understood to apply only to consultants who communicate directly with employees. “Advice” in the form of drafting of speeches, talking points, policies, materials and documents for an employer’s use during a representation campaign and supervisor training was considered exempt from reporting under “advice exemption” set forth in Section 203(c).
In the Final Rule, the DOL expands the duty to report for the stated purpose of “giv[ing] workers the information that they need to decide how to exercise their voice and cast their votes. It will provide new clarity to workers and the public.” The Final Rule requires employers and consultants to report not only direct persuader activity, but also indirect activity such as: 1) planning, directing or coordinating managers in persuader activity; 2) providing persuader materials to employers to disseminate to workers; 3) conducting union avoidance seminars; and 4) developing or implementing personnel policies or actions to persuade workers. Examples of reportable persuader activity under the rule include planning or conducting employee meetings, training supervisors to conduct meetings, and drafting speeches or supervisor training materials.
The Final Rule, which goes into effect on April 25, 2016, and requires disclosure of arrangements, agreements, and payments made on or after July 1, 2016, is available here. The DOL’s summary of the rule is here. Employers and consultants must report their arrangements through revised Form LM-20 (Agreement and Activities Report) and revised Form LM-10 (Employer Report).
In defense of the new rule, the DOL maintains that it does not prohibit employers from using consultants or limiting their services, but only requires that such arrangements be reported. Moreover, the DOL explains that genuine “advice,” defined as “recommendations regarding a decision or course of conduct,” is still exempt from reporting, as is an agreement by which only legal services are provided. With respect to legal services, the DOL maintains that the rule “does not affect attorney-client privilege. It only requires the disclosure of the identity of the client, the fee arrangement, and scope and nature of the persuader agreement in cases where the consultant has agreed to provide services other than legal services – specifically, to take action with the intent to persuade employees regarding union representation or collective bargaining.”
We expect legal challenges to the DOL’s action. Various trade associations and the American Bar Association, among others, have long expressed their objections to the DOL’s re-write of the persuader reporting rule and federal court litigation is likely.