Final Persuader Rule, Broadens Union-Related Reporting Obligations for Employers and Management Consultants
On March 24, 2016, the U.S. Department of Labor (“DOL”) issued a new regulation interpreting the “advice exemption” to the Labor Management Reporting and Disclosure Act (“LMRDA”). The Act requires both employers and labor relations consultants to report agreements under which the consultant engages in activities that are intended to persuade employees regarding their rights to organize and bargain collectively.
An important exemption ton these reporting requirements concerns “advice” given to the employers. Specifically, Section 203(c) of the Act states the following:
Nothing in this section shall be construed to require any employer or other person to file a report covering the services of such person by reason of his giving or agreeing to give advice to such employer or representing or agreeing to represent such employer before any court, administrative agency, or tribunal of arbitration or engaging or agreeing to engage in collective bargaining on behalf of such employer with respect to wages, hours, or other terms or conditions of employment or the negotiation of an agreement or any question arising thereunder. – 29 USC § 433(c)
Previous regulations interpreted this exemption fairly broadly, essentially holding that, so long as the consultant did not meet directly with employees, and the employer was free to accept or reject the consultant’s advice, the relationship was not reportable.
The new regulations, however, significantly narrow the exemption. Under the new regulations, “advice” appears limited to situations in which the consultant counsels an employer on whether an intended communication complies with the law, offers guidance on best practices or provides input on NLRB practice or procedures.
On the other hand, any “persuader activity” – that is, any activity to “manage or direct the business’s campaign to sway workers against choosing a union” – is subject to the reporting requirements of the Act. This is true even where the consultant is engaged in “indirect persuasion.” The regulations provide the following non-exclusive examples of activities that constitute indirect persuasion:
- Planning, directing, or coordinating persuasion activity by supervisors or managers.
- Providing persuader materials. This includes revising the employer’s own materials, where the intent of the revision is to “enhance persuasion,” as opposed to merely ensuring legality.
- Conducting a seminar for supervisors or other employer representatives. This includes seminars that involve the “development of persuader tactics that the employer and its supervisors and other representatives can use to persuade employees.” This however does not include seminars that focus exclusively on maintaining a legally compliant workplace, or seek to solicit “persuader services” business.
- Developing or implementing personnel policies or actions, where the personnel policies or actions are relating to persuading employees with respect to union organizing.
The information that is required to be reported under the rule includes the following:
- A copy of the persuader agreement between the employer and consultant (including attorneys);
- the identity of the persons and employers that are parties to the agreement;
- a description of the terms and conditions of the agreement;
- the nature of the persuader and information-supplying activities, direct or indirect, undertaken or to be undertaken pursuant to the agreement (as identified via a checklist);
- a description of any reportable persuader and information-supplying activities: the period during which the activities were performed, and the extent to which the activities have been performed as of the date of the report’s submission; and
- the name(s) of the person(s) who performed the persuader or information-supplying activities; and the dates, amounts, and purposes of payments made under the agreement.
The new rule will become effective on April 25, 2016 (30 days after publication), and will be applicable to arrangements, agreements, and payments made on after July 1, 2016. The full text of the Persuader Rule is available here.
The new rule has already been subject to legal challenge. On March 30, a coalition of employer groups, including the National Association of Manufacturers, filed suit in the United States District Court for the Eastern District of Arkansas, alleging that the DOL’s new regulations exceed the agency’s authority, are vague, arbitrary and capricious, violate the First Amendment and the National Labor Relations Act, and unlawfully infringe upon the attorney-client privilege. Among other relief, the lawsuit seeks a preliminary injunction against enforcement of the regulations pending legal challenge. Similar lawsuits in other venues are likely to follow. We will continue to monitor this litigation.
If you have any questions about the content of this client alert, please contact any MHS attorney.