New Persuader Rule Hampers Employers

On March 24th, the U.S. Department of Labor published its controversial amendment to the so-called “persuader” rule.   The DOL’s final version of revisions to the rule will be effective starting July 1, 2016, and purports to expand the reporting obligation of employers who retain consultants, including law firms, to engage in activities directly or indirectly the object of which is to 1) persuade  employees to exercise or not exercise their right to organize and bargain collectively, or 2) provide the employer information concerning employee or a labor organization in connection with a labor dispute in which the employer is involved.

Employer reports must include information concerning the nature of the agreement or arrangement and the cost/fees incurred for the provision of such services.  Importantly, while the fact that persuader activities are provided will be reportable, the substance of the advice provided by legal counsel is not.  Consultants and law firms providing such “persuader” services are also required to submit annual reports to the DOL.

The Change

Presently, employers and consultants must file reports only when consultants are retained to engage in persuader activities directly with employees.  As interpreted, the current rule essentially excluded any reporting by legal counsel working indirectly with an employer to manage strategy and communications related to union avoidance activities.  Under the DOL’s revised rule, the scope of what must be disclosed is expanded to include indirect activities such as planning, directing or coordinating with employers engaged in a union election campaign, and/or providing scripts and campaign materials to employers for use in such a campaign.

Exemptions

The DOL’s attempt to revise the persuader rule began in 2011 and has been the subject of widespread opposition.  It is almost certain to face additional challenge from Congressional Republicans, employer organizations, and perhaps even the American Bar Association.  While response to the revised rule is certain to be strong, it is important for employers to understand that much of the advice and counsel provided by outside counsel is exempted from the reporting obligation imposed by the revised rule.  Specifically, the reporting obligation will not extend to many services offered by legal counsel, including:

  • Legal services generally – including guidance on employer policies and best practices, and the conduct of seminars and training on various labor and employment related topics (including employee rights under Section 7 of the NLRA);
  • Representation in civil or administrative litigation or arbitration; and
  • Advice and counsel relating to collective bargaining negotiations;

Bottom Line

Employers wishing to take full advantage of the exemptions outlined above, are advise to treat union avoidance and campaign activities as discrete representations to avoid unnecessarily incurring an obligation to report information relating to otherwise excluded representations.  Look for additional detailed analysis of the new persuader rule over the next few weeks, as discussion of and challenges to the revised rule shed additional light on what it may mean for employers.