As we have previously reported, the U.S. Department of Labor is in the process of revising its "persuader" reporting rule under the Labor Management Reporting and Disclosure Act. The DOL announced late in 2015 that it expected to issue the new rule in March 2016, and as we went to press the final rule was with the Office of Management and Budget, the last step before issuance.

Current regulations require employers and their labor consultants who engage in any "persuader activity" to file extensive reports about their use of consultants and lawyers. But the current regulations contain an "advice exemption" for attorneys and consultants who assist employers in labor relations activities so long as the activities are "advisory" to the employer (that is, the attorneys and consultants communicate with the employer and not directly with employees).

The final regulations are likely to attempt to narrow the advice exemption, essentially to limit exempt "advice" to providing representation in labor-related legal and administrative proceedings. Other "advice" will be labeled by the new regulations as "persuader activity" and not "advice." Such a narrowing contrary to the plain meaning of the word "advice" will largely swallow the "advice exemption" and mean that many more entities — employers, attorneys, and consultants — will have an obligation to report financial information on labor relations activity, expansively defined, on mandatory DOL forms, one of which is currently unsuited to the anticipated regulations. The reporting obligations are huge and come with potential criminal sanctions for failure to comply.

The DOL has held back on issuing the rule, presumably because of the anticipated political and legal firestorm. The new interpretation of the advice exemption is expected to encroach on the attorney-client privilege and may deter smaller employers from seeking legal advice in labor matters. This is expected to hinder employer effectiveness in union campaigns while increasing the risk that some employers will commit unfair labor practices because they don't have the benefit of legal advice. Court challenges to the rule are likely.