New Persuader Rules Create Problems for Employers and Consultants
For decades, the U.S. Department of Labor (DOL) has required companies and individuals who engage in “persuader activities” with regard to union organizing and collective bargaining to file annual reports with the federal government. The form discloses financial information about clients that receive labor law assistance from the “persuader.” Persuader activities are generally defined as activities that are undertaken with an objective of persuading employees to exercise or not exercise their right to organize and bargain collectively.
Exception to the Rule
There has always been an “advice” exception to the persuader rules for consultants who provide advice but don’t meet directly with employees. With a stroke of the rulemaking pen, however, the DOL has nearly written this exception out. For example, for years management consultants have been required to provide a report whenever they’ve entered into an agreement or arrangement under which they undertake activities with either of the following objectives:
(1) To persuade employees with regard to exercising their rights to organize and bargain collectively; or
(2) To provide an employer certain information related to the activities of its employees or a labor organization in connection with a labor dispute involving the employer.
Historically, such agreements were reportable only if the consultant was engaged in persuader activities—i.e., actions, conduct, or communications undertaken with the object of affecting an employee’s decision about his representation or collective bargaining rights. The classic example would be when a management consultant conducted a counterunion-organizing campaign on behalf of an employer.
Under the advice exception, consultants whose role was limited to giving advice to employers were exempt from the reporting requirements. “Advice” meant oral or written recommendations about a decision or course of conduct, including what an employer may lawfully say to employees, or providing guidance on National Labor Relations Board (NLRB) practices or precedent. Additionally, no report was required if a lawyer or consultant provided “advice” in the form of reviewing and revising the employer’s persuasive materials, communications, or policies to ensure their legality. Consultants who simply represented the employer before a court, agency, or arbitrator, or bargained union contracts on behalf of an employer were also not required to make reports.
DOL Concern About Growth of the Industry
In the “Executive Summary” section of the new regulations, the DOL noted recent studies showing that since the Labor Management Reporting and Disclosure Act (LMRDA) was enacted, anywhere from 71 percent to 80 percent of union-organizing drives involve one or more consultants retained by employers. Those studies demonstrate that employer campaigns against unions have become not only standardized but almost formulaic as a result of employers frequently turning to labor relations consultants to manage their opposition to unionization.
According to the DOL, antiunion efforts almost exclusively involve indirect persuasion. The DOL is apparently concerned that only a relatively small number of
reports about persuader agreements and arrangements have been filed with the agency despite employers’ frequent use of such consultants.
Changes Under the New Rules
Under the new persuader rules, which are scheduled to take effect on July 1, 2016, the “advice” exception to the reporting requirements has been significantly narrowed, to the point that much of what was previously considered indirect advice exempt from the reporting requirements will no longer be exempt. Previously, when the consultant or attorney had no face-to-face contact with employees, there was no reporting requirement. Under the new rules, such activity will be considered indirect persuader activity, which must be reported. Reportable indirect persuader activities will include scripting campaign materials (e.g., drafting letters, fliers, or e-mails to be distributed to employees), writing speeches for management to give to employees, and controlling the timing, sequence, and frequency of antiunion events. In describing what would be considered indirect persuasion, the regulations include the following:
• Planning, directing, or coordinating supervisors or managers. The DOL will require reporting if the consultant, with an object to persuade, plans, directs, or coordinates activities undertaken by supervisors or other employer representatives. This would include both meetings and less structured interactions with employees.
• Providing persuader materials. The DOL will require reporting if the consultant provides, again with an object to persuade, material or communications to the employer in oral, electronic, or written form for dissemination or distribution to employees. Revisions to materials solely for ensuring their legality as opposed to enhancing their persuasive qualities would not be reportable.
• Conducting a seminar for supervisors or other employer representatives. Seminars presented by consultants for purposes of developing or assisting in developing antiunion tactics and strategies for use by the employer, supervisors, or other representatives are now reportable.
• Developing or implementing personnel policies or actions. Reporting will be required if the consultant develops or implements personnel policies or actions for the employer with an object of persuading employees about their representation choice. As part of the new rules, the instructions to the Form LM-10 (the form completed by employers) and Form LM-20 (the form completed by consultants) provide examples of reportable and nonreportable arrangements or agreements. Lawsuits have been filed in an effort to halt implementation of the regulations, which were published in the Federal Register on March 24. A number of lawsuits filed by law firms allege, in part, that the rules infringe on the attorney-client relationship by requiring the reporting of confidential and privileged information. Lawsuits filed by other groups are attacking the regulations on other legal grounds.
Only time will tell whether the final persuader regulations are truly “final.” In at least one of the legal challenges, the plaintiffs have sought a temporary injunction to prevent the regulations from going into effect. If an injunction isn’t granted, the rules will take effect July 1 and be applicable to persuader activities that occur after that date. If you use attorneys or management consultants to provide services that are arguably persuader activities, you should pay close attention to this issue to determine whether you have any reporting obligations.
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This article, slightly modified to note recent updates, was featured in the June 2016 issue of the Wisconsin Employment Law Letter, which is edited by Axley Brynelson Attorney Saul Glazer and published by BLR®—Business & Legal Resources. Reproduced here with the permission of BLR®—Business & Legal Resources.