The U.S. Department of Labor (DOL) recently issued a rule significantly expanding the scope of information employers may be required to publically report to the government. The so-called “persuader rule” requires employers (both union and non-union) to publically report when they use consultants (including lawyers) for labor relations advice given for the purpose of persuading employees not to unionize. Employers that do not have written multi-year agreements signed before July 1, 2016 (more on this below) risk significant civil and even criminal penalties for failure to report.
Where does this new persuader rule come from?
The starting point is the Labor-Management Reporting and Disclosure Act of 1959 (LMRDA), which requires public reporting by employers and the consultants they retain to persuade employees on union organizing or collective bargaining. The LMRDA’s reporting requirement has an important exception: Employers do not have to file reports covering advice provided by consultants/counsel. For the last 50 plus years, this “advice exception” protected most lawyer-to-employer communication from disclosure. Reporting obligations were only triggered when the attorney communicated directly to rank-and-file employees. However, the new rule drastically narrows this “advice exemption.” The end result is that indirect persuader communication, (i.e., lawyer-to-employer communication) might now trigger reporting obligations.
What is now reportable?
In addition to direct communication between counsel and the rank-and-file employees (which has always been reportable), the persuader rule requires reporting of indirect communication intended to persuade employees not to organize or collectively bargain. This includes:
- directing or coordinating activities by supervisors (including advising on when and where to meet, guidance on topics to be discussed at a meeting, orchestrating next steps in a campaign, and identifying materials to provide to employees);
- drafting, editing or choosing materials to distribute to employees regarding unionization;
- holding seminars that discuss union-avoidance; and
- developing personnel policies related to union-avoidance.
For example, if an attorney drafts material or communications for an employer that will be sent from the employer to its employees, and such material or communications is specifically created to persuade those employees not to unionize, that needs to be reported to the government. Similarly, an attorney drafting policies or a Handbook with the goal of persuading employees not to unionize would also require reporting under the new rule.
Implementation date and legal challenges
The new rule requires reporting of persuader activities made on or after July 1, 2016. Several lawsuits challenging the new rule have been filed by groups opposing the rule, including Skoler Abbott. Our firm, along with several other management-side law firms across the United States, sued the Department of Labor and asked the court to strike down the new rule for a variety of reasons. A recent decision from the judge in our case, Labnet, Inc. d/b/a Worklaw Network v. U.S. Department of Labor, gives us hope that the rule will eventually be overturned. In the meantime, employers need to prepare for the July 1, 2016, reporting date.
What can you do about it?
Fortunately, there is a workaround for employers who act quickly. The DOL recently explained that multi-year agreements with their labor consultants and/or lawyers before July 1, 2016, will be excluded from the new rule, even if the legal services and payments occur after July 1, 2016. Employers should reach out to their legal counsel as soon possible to determine whether counsel performs “reportable” work for the employer and, if so, whether existing agreements need to be revised or re-executed before July 1. Even if employers do not currently have an attorney doing reportable work for them, entering into an agreement prior to July 1, 2016 will allow employers to use counsel for such work in the future without incurring reporting obligations. At Skoler Abbott we are currently working with clients to do this and minimize the impact of this new rule on them.